Qantas 2004 Annual Report Download - page 68

66 Qantas Annual Report 2004
Notes to the Financial Statements continued
for the year ended 30 June 2004
9. Director and executive disclosures continued
ELEMENTS OF REMUNERATION OF SPECIFIED DIRECTORS AND SPECIFIED EXECUTIVES continued
Description Rationale
POST EMPLOYMENT BENEFITS
End of Service Payments
Executive Directors and Specified Executives are entitled to service End of service payments are considered effective retention
payments on termination, generally based on FAR, as set out in mechanisms. These are payable upon cessation of employment
individual employment contracts. and provide compensation for constraints regarding working for
a competitor for up to 12 months.
Superannuation Contributions
Statutory and salary sacrifice superannuation payments made on Statutory requirement.
behalf of the Directors and Specified Executives.
Travel Entitlements
See commentary on travel entitlements under non-cash benefits on page 65.
EQUITY BENEFITS
Deferred Share Plan (DSP)
The DSP Terms & Conditions were approved by Shareholders The provision of equity benefits establishes a link between
on 17 October 2002. The DSP governs the provision of equity shareholder value creation, financial performance and executive
benefits. remuneration.
Performance Share Plan (PSP)1
Deferred shares are awarded, with the value being a percentage The performance condition aligns remuneration and growth in
of FAR, based on performance against balanced scorecard conditions shareholder value.
relating to customer, operational, people and financial performance.
Shares are held in trust and are subject to holding locks. Upon
expiry of the relevant holding lock, shares will be transferred to
the Executive. If the Executive terminates employment before the
holding lock is lifted, the shares are forfeited.
Performance Rights Plan (PRP)
Executive Directors and Specified Executives may be granted rights The performance condition of target RoTGA was chosen in 2003
to acquire shares in Qantas at a future date for no payment. Vesting as it measures financial performance that reflects an appropriate
is based on the achievement of annual RoTGA targets over the return on capital. This aligns remuneration and growth in
three years to 30 June 2006. Vested rights may be converted into shareholder value.
ordinary shares after three years. If the target is not met or the
Executive ceases employment prior to 30 June 2006, all of the Future grants will be assessed against a relative TSR performance
rights granted will lapse. condition.
Qantas Long-Term Executive Incentive Plan (QLTEIP) – suspended in 2002
QLTEIP granted entitlements to unissued shares in Qantas in the This performance condition aligns remuneration and growth in
years ended 30 June 2000 and 2001. Vesting is based on Qantas shareholder value.
Relative Total Shareholder Return (TSR) compared to ASX 200
entities and global airlines. Entitlements vest between three and
five years following award date and are conditional on the Executive
remaining employed. To the extent that Entitlements vest, they may
be converted into ordinary shares within eight years of the grant
date in proportion to the gain in share price after which entitlements
will lapse.
1 The Board can exercise its discretion to adjust the PCP or PSP if the company does not meet its target as approved by the Board. This discretionary element
is in place to take into account adverse external factors that may impact the airline. The rationale for this is the Executive Directors and Specified Executives
have no control over external global events, however, they are accountable for the ability of the airline to cope with external events. To date, the Board has
not exercised this discretion in relation to any of the plans in operation.