Qantas 2006 Annual Report Download - page 62

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60
Directors’ Report
for the year ended 30 June 2006
Description Rationale
EQUITY BENEFITS CONTINUED
Retention Reward Plan
The Retention Reward Plan provides for deferred share or deferred cash
awards, subject to satisfactory service, typically for a period of three years.
For select KMP, awards for the three years 2006/07 to 2008/09 are being
made in deferred shares.
The volatility of the airline industry creates a challenge for the retention
of an effective management team. Continuity of management is key to the
acceleration of the transformation program over the coming plan period.
LEGACY PLANS
Senior Manager Long-Term Incentive Plan1
Certain Executives were awarded a number of deferred shares subject to a
four-year holding lock provided the Executive remains employed by the
Qantas Group. These shares will be held on behalf of each Executive by the
Trustee until the expiry of the holding lock period. Any dividends paid on the
shares will be distributed to the relevant Executive.
The grant date and number of shares awarded to Executive Directors and
Key Management Executives is outlined on page 107.
This was an interim plan following the suspension of QLTEIP. No awards
have been made since April 2003.
Qantas Long-Term Executive Incentive Plan
Under QLTEIP, certain Executives were granted Entitlements to unissued
shares in Qantas in the years ended 30 June 2000, 2001 and 2002. Vesting is
based on Qantas relative TSR compared to ASX 200 Industrials Index and a
basket of global airlines. Entitlements may vest between three and five years
following award date and are generally conditional on the Executive
remaining employed. To the extent that Entitlements vest, they may be
converted into shares within eight years of the award date in proportion to
the gain in share price. Entitlements will lapse on the eighth anniversary of
the date of award.
The first index is determined as the percentile performance of Qantas (based
on average Relative TSR) within a modified S&P/ASX 200 Industrials Index.
The index excludes Banks, Infrastructure and Utilities, Insurance, Investments
and Financial Services, Media, Property Trusts and Telecommunications.
At grant date it included 86 stocks.
At grant date, the basket of global airlines included Air Canada, Air New
Zealand, AMR Corporation (American Airlines), British Airways, Cathay
Pacific, Delta Airlines, Japan Airlines, KLM Royal Dutch Airlines (data no
longer applicable), Lufthansa, Northwest Airlines, Singapore Airlines and
UAL Corporation (United Airlines).
For further details of QLTEIP, see page 107.
This performance condition aligns remuneration and growth in shareholder
value. The plan was suspended in July 2002.
1 The relevant plan for the Executive Directors is the 2002 Executive Director Long-Term Incentive Plan.
DIRECTOR AND EXECUTIVE REMUNERATION DISCLOSURES (AUDITED) CONTINUED