Qantas 2016 Annual Report Download - page 41

Directors’ Report continued
For the year ended 30 June 2016
The current performance measures have also resulted in appropriate remuneration outcomes over recent
years with vesting levels strongly aligned with the Qantas Group’s financial performance.
Performance
Conditions
The performance measures for each of the 2014–2016 LTIP (tested at 30 June 2016), 2015–2017 LTIP (to be
tested as at 30 June 2017) and 2016–2018 LTIP (to be tested as at 30 June 2018) are:
–The relative TSR of Qantas compared to companies with ordinary shares included in the ASX100
–The relative TSR of Qantas compared to Global Listed Airlines
These Rights will only vest in full if Qantas’ TSR performance ranks at or above the 75th percentile compared
to both the ASX100 and the Global Listed Airlines peer groups. At the end of the performance period, the
TSR performance of Qantas and each comparator company will be determined based on the average closing
shares price over the final six months of the performance period.
Qantas’ Financial Framework also targets top quartile TSR performance relative to ASX100 companies and
global airline peers and therefore relative TSR performance against these peer groups has been chosen
as the performance measures for the LTIP. The peer groups selected provide a comparison of relative
shareholder returns relevant to most Qantas investors:
–The ASX100 peer group was chosen for relevance to investors with a primary interest in the equity market
for major Australian listed companies, of which Qantas is one
–The Global Listed Airlines peer group was chosen for relevance to investors, including investors based
outside Australia, whose focus is on the aviation industry sector and measuring returns from listed
companies impacted by comparable external factors
The vesting scale for each measure is:
Companies with Ordinary Shares included in the ASX100
Up to one-half of the total number of Rights granted may vest based on the relative TSR performance of
Qantas in comparison to the ASX100 as follows:
Qantas TSR Performance compared to the ASX100 Vesting Scale
Below 50th percentile Nil vesting
Between 50th and 75th percentile Linear scale: 50% to 99% vesting
At or above 75th percentile 100% vesting
Global Listed Airlines Peer Group
Up to one-half of the total number of Rights granted may vest based on the relative TSR performance of
Qantas in comparison to the Global Listed Airlines peer group selected by the Board as follows:
Qantas TSR Performance compared to the Global Listed Airlines Peer Group Vesting Scale
Below 50th percentile Nil vesting
Between 50th and 75th percentile Linear scale: 50% to 99% vesting
At or above 75th percentile 100% vesting
The Global Listed Airlines peer group has been selected with regard to its representation of Qantas’ key
markets, full-service and value-based airlines and the level of government involvement. For the 2014–2016
LTIP and 2015–2017 LTIP, the Global Listed Airlines peer group includes: Air Asia, Air France/KLM, Air New
Zealand, All Nippon Airways, International Airlines Group, Cathay Pacific, Delta Airlines, easyJet, Japan
Airlines, LATAM Airlines Group, Lufthansa, Ryanair, Singapore Airlines, Southwest Airlines, Tiger Airways
and Virgin Australia. The 2016–2018 LTIP also includes American Airlines and United Continental.
Cessation of
Employment
In general, any Rights which have not vested will be forfeited if the relevant Executive ceases employment
with the Qantas Group.
In limited circumstances approved by the Board (for example, retirement, employer-initiated terminations
(with no record of poor performance), death or total and permanent disablement), a deferred cash payment
may be made at the end of the performance period. This payment is determined with regard to the value of
the LTIP Rights which would have vested had they not lapsed, and:
–The portion of the performance period that the Executive served prior to termination
–The actual level of vesting that is ultimately achieved at the end of the performance period
The Board retains discretion to determine otherwise in appropriate circumstances, which may include
retaining some or all of the LTIP Rights.
REMUNERATION REPORT (AUDITED) CONTINUED
39
QANTAS ANNUAL REPORT 2016