Qantas 2008 Annual Report Download - page 66

64 Qantas Annual Report 2008
Directors’ Report
for the year ended 30 June 2008
Remuneration Report (Audited) continued
Short-term Employee Benefits of Key Management Personnel and Highest Remunerated Executives
for the Year Ended 30 June 2008 continued
Short-term Employee Benefi ts
Other KMP and Highest Remunerated Executives Year
Cash
FAR
$
Cash
Incentives
$
Non-cash
Benefi ts
$
Total
$
John Borghetti, 2008 1,146,085 1,336,000 206,793 2,688,878
EGM Qantas 2007 1,119,474 1,380,000 183,720 2,683,194
Kevin Brown, 2008 722,821 674,000 213,566 1,610,387
EGM People 2007 673,573 625,000 186,114 1,484,687
David Cox, 2008 641,716 451,000 139,599 1,232,315
EGM Engineering 2007 607,076 505,000 102,211 1,214,287
Grant Fenn, 2008 740,690 642,000 210,615 1,593,305
EGM Freight Enterprises 2007 680,113 625,000 210,506 1,515,619
Alan Joyce, 2008 1,092,614 1,207,000 95,800 2,395,414
CEO Jetstar 2007 778,646 775,000 105,592 1,659,238
Total remuneration for Key Management Executives 2008 4,343,926 4,310,000 866,373 9,520,299
2007 3,858,882 3,910,000 788,143 8,557,025
Share-based Payments
Performance Equity Plan
The Performance Equity Plan comprises the PSP (a medium-term
incentive) and the PRP (a long-term incentive). Both elements are
designed to strengthen the alignment of the interests of Executives
with those of shareholders.
The equity benefi ts under the Performance Equity Plan are delivered
under the Terms & Conditions and various rules of the DSP. The DSP
Terms & Conditions were initially approved by shareholders at the 2002
AGM. At the 2006 AGM, shareholders again approved the DSP as the
vehicle for the provision of equity benefi ts by Qantas.
Performance Share Plan
Purpose
The PSP is a medium-term deferred share incentive designed to reward
Executives when a Balanced Scorecard of key Qantas Group measures
(detailed below) is achieved over the year and to encourage retention
through a two year deferral period.
Approach
For each participating Executive, the target reward under the plan is
set as a percentage of FAR. This percentage varies according to the
Executive’s level of responsibility.
On an annual basis, the Qantas Board approves awards under the PSP
based on the achievement by the Qantas Group against the Balanced
Scorecard of Customer, Operational, People and Financial measures.
Each measure is assessed separately for performance against target
and threshold. There is also differentiated distribution of the pool
to Executives based on the IPF.
Shares are purchased on-market or issued and are held subject to a
holding lock for 10 years. However, Executives can call for the deferred
shares prior to the expiration of the holding lock, but not before the end
of one year from the completion of the performance period for up to
half of the deferred shares and the end of two years in relation to the
remaining deferred shares. The mandatory minimum holding lock
periods provide this Plan with its medium-term focus on share price.
Any dividends paid on the deferred shares during the holding lock
period will be distributed to the relevant Executive.
Generally, any deferred shares which remain subject to the holding lock
will be forfeited if the relevant Executive ceases employment with the
Qantas Group.
Performance Measures and Rationale
For 2007/08, the PSP target was a Balanced Scorecard of Customer,
Operational, People and Financial measures. Customer satisfaction
is measured by reference to an external Skytrax survey. The operational
performance (punctuality) is measured against an on-time arrivals
target. People performance is measured against a Lost Time Injury
Frequency Rate target. Financial performance uses an internal unit
cost reduction measure.
The Balanced Scorecard performance criteria aim to align Executive
remuneration with the key value drivers for the Qantas Group and
complement the short-term fi nancial targets which are the focus of
the PCP. The targets are set by the Qantas Board annually at the start
of the year.
At the conclusion of the year, the Balanced Scorecard results are
provided to the Qantas Board so it can make an assessment as to
whether the targets have been met and whether the deferred shares
are subsequently granted.
Determining Payment Pool
The ‘at target’ pool, i.e. the amount that would deliver the full PSP award
to all participating Executives, is available when the Balanced Scorecard
targets approved by the Qantas Board are met.
Determining Individual Payments
Each individual’s ‘at target’ payment is determined by Qantas Group
performance and the pool awarded as described above. An Executive’s
actual reward is calculated by multiplying their ‘at target’ PSP award
by their IPF.
The grant date and number of deferred shares awarded to KMP are
outlined on page 126 and 127.
Performance Rights Plan
Purpose
The PRP is the long-term element of the Performance Equity Plan.
It has been implemented as a reward program that aligns the
interests of participating Executives with the longer-term interests
of shareholders. It also helps to retain participating Executives.
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