Qantas 2007 Annual Report Download - page 61

59Qantas |Annual Report 2007
Directors’ Report
for the year ended 30 June 2007
Remuneration Report (Audited)
Details of the nature and amount of Executive and Non-Executive Director remuneration and reference to where they have been incorporated into the
Qantas Annual Report is set out below:
Requirement IncludedintheQantasAnnualReport
Corporations Act
Remuneration Policy–Refer below
Remuneration disclosures for Directors and each of the five highest
remunerated Executives for the year
–Refer below
Australian Accounting Standards Board 2 Share-based Payment
and AASB 124 Related Party Disclosures
Key Management Personnel (KMP) remuneration disclosures
–Refer below
Key Management Personnel equity benefit disclosures–Note 24 to the Financial Statements
ASX Corporate Governance Council: Corporate Governance Principle 9
Remunerate fairly and responsibly–Refer below
2006/07 Executive Remuneration Philosophy and Objectives–Refer below
2006/07 Executive Remuneration Philosphy and Objectives
Qantas needs to be able to attract, retain and appropriately reward a
capable Executive team to meet the unique challenges it faces as a major
international airline based in Australia.
Qantas’ philosophy for the remuneration of its Executives is to align their
earnings with their duties and responsibilities and to pay for performance.
These objectives are achieved via a reward program that involves a
combination of:
Fixed Annual Remuneration (FAR);
the Performance Plan, comprising:
the Performance Cash Plan (PCP) – a short-term cash incentive;
the Performance Equity Plan – comprising a medium-term incentive,
the Performance Share Plan (PSP) and a long-term incentive, the
Performance Rights Plan (PRP); and
the Retention Plan (RP), involving awards of deferred shares or cash
to a small number of selected Executives whose retention is
considered vital to the Qantas Group; and
concessionary travel entitlements, targeted key milestone bonus
arrangements and other discretionary benefits considered appropriate
from time to time.
The Remuneration Committee (a committee of the Board) has the role of
reviewing and making recommendations on the Qantas Executive
Remuneration Policy.
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In doing so, the Remuneration Committee seeks advice from a range of
independent external specialists. The guiding principles applied by the
Remuneration Committee in managing remuneration for Executives are
that:
appropriate market benchmarks are reviewed in setting all elements
of reward;
differentiation to recognise performance is involved in all pay increases,
both fixed and ‘at risk’;
‘at risk’ pay decisions are based on a formal performance management
system; and
longer-term rewards align the interests of Executives with shareholders
and support a culture of employee share ownership.
Overall, the mix of the remuneration program reflects market practice but
is tailored to the specific circumstances of Qantas.
The importance of a stable and talented senior Executive team has always
been a priority for Qantas. This has been highlighted over recent years
with many major issues needing to be addressed with the aviation industry
and within Qantas, including succession within the Executive ranks. To
ensure the continuity of a successful team, Qantas has made awards under
the Retention Plan.
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Reward Framework
Fixed Annual Remuneration Set with reference to role, market and experience
Performance Plan
Performance Cash Plan Short-term Group Financial Target
Performance
Equity Plan
Performance
Share Plan Medium-term
Balanced Scorecard Target
Customer Operational People Financial
Performance
Rights Plan Long-term Total Shareholder Return
Retention Plan
Targeted incentives and retention arrangements for a small number
of key Executives, based on the Board’s assessment of market conditions
and the commercial needs of Qantas.
Other benefits, such as concessionary travel and salary sacrifice arrangements
(e.g. for motor vehicles and superannuation) Reflect industry and market practice