Qantas 2012 Annual Report Download - page 57

FOR THE YEAR ENDED 30 JUNE 2012
Directors’ Report continued
Long Term
Incentive Plan
also referred
to as the LTIP
(continued)
What are the LTIP performance conditions and how is performance assessed?
For the 2011-2013 LTIP and the 2012-2014 LTIP the performance conditions are:
— The relative TSR of Qantas compared to the S&P/ASX100 Index, and
— The relative TSR of Qantas compared to an airline peer group (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 S&P/ASX100 Index and the basket of Global Listed Airlines.
These performance hurdles were chosen to provide a comparison of relative shareholder returns
that is relevant to most Qantas investors:
— The S&P/ASX100 Index was chosen for relevance to investors with a primary interest in the equity
market for major Australian listed companies, of which Qantas is one, and
— The basket of Global Listed Airlines was chosen for relevance to investors including investors
based outside Australia, whose focus is on the aviation industry sector
The vesting scale for each measure is:
Companies with Ordinary Shares included in the S&P/ASX100 Index
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 S&P/ASX100 Index as follows:
Qantas TSR Performance compared to the S&P/ASX100 Index Vesting Scale
Below th percentile Nil vesting
Between th to th percentile Linear scale: % to % vesting
At or above 75th percentile 100% vesting
Basket of Global Listed Airlines
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 basket of Global Listed Airlines selected by the Board as follows:
Qantas TSR Performance compared to the Airline Basket Vesting Scale
Below th percentile Nil vesting
Between th to th percentile Linear scale: % to % vesting
At or above 75th percentile 100% vesting
The basket of Global Listed Airlines has been selected with regard to financial standing, level of government
involvement and its representation of Qantas’ key competitor markets. The basket of Global Listed Airlines
contains the following full-service and value-based airlines: Air France/KLM, Air New Zealand, American Airlines
(AMR Corporation), British Airways/Iberia (International Airlines Group), Cathay Pacific, Delta Airlines, Easyjet,
Lufthansa, Ryanair, Singapore Airlines, Southwest Airlines, Tiger Airways, Virgin Australia. Air Asia was also
included in the basket of Global Listed Airlines for awards made under the 2012-2014 LTIP.
How are Rights treated on termination?
In general, any Rights which have not vested will be forfeited if the relevant Executive ceases employment
with the Qantas Group.
In limited circumstances (for example, retirement, redundancy, 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:
— Part of the performance period that the Executive served prior to termination, and
— 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 leaving
some or all of the LTIP Rights on “foot”, or for some or all of the LTIP Rights to vest on cessation of employment
having regard to the portion of the performance period that has elapsed and the degree to which the
performance conditions have been achieved.
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