Qantas 2012 Annual Report Download - page 45

FOR THE YEAR ENDED 30 JUNE 2012
Directors’ Report continued
Base Pay
Each year, the Remuneration Committee reviews the base pay for the CEO and each member of the Executive Committee.
Base pay is set with reference to external benchmark data against comparable roles in companies listed on the ASX and
international airlines.
A more detailed description of base pay and how it is set is provided on page 50.
Annual Incentive
The annual incentive plan for the CEO and Executive Committee at Qantas is known as the STIP.
Each year Executives may receive an award that is a combination of a cash bonus and an award of restricted shares if the plan’s
performance conditions are achieved.
As part of its annual review of the Executive Remuneration Framework, the Remuneration Committee performed a detailed review
of the STIP, including:
— Assessing alternative approaches to short term incentive plan design
— Reviewing the criteria used to assess both company and individual performance under the STIP, ensuring STIP outcomes are
aligned with performance
The outcome of the review was that the Remuneration Committee chose to:
— Retain the current structure of the STIP
— Explicitly align the STIP performance measures to the execution of the Qantas Group strategy
Following this review, the Board set the following scorecard of performance conditions for the 2011/12 STIP:
Strategic Objective Performance Measures
Scorecard
Weighting
. Delivering sustainable returns
to shareholders
Underlying Profit Before Tax (% weighting)
Unit cost (.% weighting)
Operating cash flow to net debt (.% weighting)
%
. Safety is always our first priority People safety %
. Building on the strong
domestic business
Domestic market share
Frequent Flyer membership numbers
Punctuality: Qantas domestic and Jetstar domestic
Customer Experience - Net Promoter Score (NPS)
for Qantas domestic and Jetstar domestic
.%
. Transforming Qantas International Strengthen Asia: networks, partnerships and ventures
Execution of the transformation agenda in Maintenance and Catering
Punctuality: Qantas international
Customer Experience - NPS: Qantas international
.%
. Growing Jetstar in Asia Launch Jetstar Japan
Restructuring of Jetstar in Vietnam
Punctuality: Jetstar international and Jetstar Asia
Customer Experience - NPS: Jetstar international and Jetstar Asia
%
Total %
The STIP is described in more detail on pages 50 to 54. The 2011/12 STIP outcome is detailed on page 53.
Long Term Incentive
The long term incentive plan at Qantas is known as the LTIP. It involves the granting of Rights over Qantas shares and participation
is limited to Senior Executives of the Qantas Group.
If performance conditions over a three year period are achieved, the Rights vest and convert to Qantas shares on a one-for-one
basis. If performance conditions are not met, the Rights lapse.
For the 2012-2014 LTIP the performance conditions are:
— The relative Total Shareholder Return (TSR) of Qantas compared to the S&P/ASX100 Index
— The relative TSR of Qantas compared to an airline peer group
The LTIP is described in more detail on pages 54 to 56.
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