Qantas 2013 Annual Report Download - page 85

83
QANTAS ANNUAL REPORT 2013
Base Pay
also referred to
as Fixed Annual
Remuneration
orFAR
(continued)
What was the outcome of the 2012 and 2013 FAR reviews?
Mr Joyce did not participate in the 2012 FAR review and his FAR (of $2,125,000) remained unchanged for 2012/2013.
The re-organisation of Qantas Airlines into separate international and domestic businesses resulted in changes
to the Executive Management team. The Board conducted a FAR review effective 1 July 2012 and made a number
of changes to the remuneration of Executive Management to reect their increased responsibilities following the
restructure. The responsibilities of the KMP members of this team changed as follows:
»Gareth Evans, in addition to his responsibilities as Chief Financial Ofcer, assumed the responsibility for
Group Strategy and Information Technology
»Lesley Grant assumed the role of CEO Qantas Loyalty
»Simon Hickey assumed the role of CEO Qantas International
»Jayne Hrdlicka assumed the role of CEO Jetstar Group
»Lyell Strambi assumed the role of CEO Qantas Domestic
The total base pay of the Executive Management team decreased due to the overall reduction in the number of
Executive Management positions following the restructure. The FAR for each Executive KMP isoutlined on page 89.
The base pay for the Chairman, CEO and Executive Management will remain unchanged for 2013/2014.
Annual Incentive
also referred to
as the Short Term
Incentive Plan
orSTIP
What is the STIP?
The STIP is the annual at risk incentive plan for members of Qantas Executive Management. Each year these
Executives may receive an award that is a combination of cash and restricted shares to the extent that
theplan’s performance conditions are achieved.
How are the STIP performance conditions chosen and how is performance assessed?
The Board set a “scorecard” of performance conditions for the 2012/13 STIP, explicitly aligning the performance
measures to the Qantas Group strategy. Underlying PBT is the key budgetary and nancial performance
measure for the Qantas Group and is therefore the key performance measure in the STIP scorecard.
The Board sets targets for each scorecard measure, and at the end of the year the Board assesses
performance against each scorecard measure and determines the overall STIP scorecard outcome.
Each STIP scorecard category has:
»A threshold level of performance, below which no contribution is made to the scorecard
»A target level of performance, at which there is a full contribution to the scorecard
»An overdrive level of performance, which results in an above target contribution to the scorecard
A detailed description of the STIP scorecard is provided on pages 84 and 86.
The Board retains absolute discretion over all awards made under incentive plans at Qantas, including the
STIP. For example, the Board may decide to adjust the STIP scorecard outcome where it determines that
it does not reect the performance achieved during the year. Circumstances may occur where scorecard
measures have been achieved or exceeded, but in the view of the Board it is inappropriate to make an
award under the STIP. The Board may determine that either no award will be made, or that any award will
be entirely deferred and/or delivered in Qantas shares. On the other hand, there may be circumstances
where performance is below an agreed target, however, the Board determines that it is appropriate to pay
some STIP award. While the STIP does not have a formal “prot gate”, the Board may also use its discretion
to notpay aSTIP award where it believes that the prot result does not warrant an award.
How are STIP awards delivered?
To the extent that the performance conditions are achieved, two-thirds of the STIP award will be paid as
acash bonus, with the remaining one-third deferred into Qantas shares with a two year restriction period.
The Board retains discretion as to how STIP awards are delivered. In each of the 2009/10 STIP, 2010/11 STIP and
2011/12 STIP, the Board exercised this discretion and determined that immediate cash bonuses would not be
paid and instead deferred all awards under the STIP.
How are STIP awards disclosed in the remuneration tables?
Remuneration Outcomes Table
The full value of the STIP awarded for the corresponding year is disclosed in the table on page 81.
Statutory Remuneration Table
Disclosure of STIP awards in the statutory remuneration table on page 82 is more complicated. In the statutory
remuneration table, STIP awards are disclosed as either:
»A “cash incentive” for any cash bonus paid or
»As a “share-based payment” for any component awarded either in deferred shares or deferred cash which
is exposed to share price movements during the restriction period
Where “share based” STIP awards involve deferral over multiple reporting periods, they are reported against
each period in accordance with accounting standards.