Qantas 2014 Annual Report Download - page 47

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QANTAS ANNUAL REPORT 2014
INTRODUCTION
OVERVIEW OF THE EXECUTIVE REMUNERATION FRAMEWORK
The objectives of the Executive Remuneration Framework are to attract, motivate, retain and appropriately reward a capable
Executive team. This is achieved by setting pay at an appropriate level and by linking remuneration outcomes to Qantas’
performance. The Qantas Executive Remuneration Framework and the remuneration outcomes for 2013/2014 are summarised
as follows:
The Executive Remuneration Framework for 2013/2014
Executive Remuneration Component Delivery Performance Measures 2013/2014 Remuneration Outcome
Base Pay
A guaranteed salary level
inclusive of superannuation.
A more detailed description
isprovided on pages 50 to 51.
Cash, superannuation and
other benefits.
An individual’s Base Pay is
fixed/guaranteed element
ofremuneration.
No increases to the Base Pay
ofthe CEO and KMP.
Additionally, the CEO opted to
forego five per cent of his Base
Pay (from 1 January 2014).
Annual Incentive
Referred to as the Short Term
Incentive Plan (STIP).
A more detailed description is
provided on pages 51 to 55.
Two-thirds cash, one-third
shares (with a two year
trading restriction).
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.
A scorecard of performance
measures.
Underlying PBT is the primary
performance measure (with a
50 per cent weighting).
Other performance measures
are explicitly aligned to the
execution of the Qantas Group
strategy, including delivering
on the transformation agenda.
No awards were made under
the 2013/14 STIP.
Under the default design
of the annual incentive, the
performance against the
non-financial measures
could trigger a partial award.
However for 2013/2014, in
light of the overall financial
performance of the Qantas
Group, the Board used its
discretion to determine that no
annual incentives be awarded.
Long Term Incentive
Referred to as the Long Term
Incentive Plan (LTIP).
The LTIP is described in more
detail on pages 55 to 56.
Rights over Qantas shares.
If performance conditions
over a three year period are
achieved, the Rights vest and
convert to Qantas shares on
aone-for-one basis.
The performance measures
for each of the 2012–2014
LTIP, 2013–2015 LTIP and
2014–2016 LTIP are the relative
Total Shareholder Return
(TSR) performance of Qantas
compared to:
–Companies with ordinary
shares included in the S&P/
ASX 100 (ASX100), and
–An airline peer group (Global
Listed Airlines)
No awards vested.
LTIP awards under the
2012–2014 LTIP were tested
as at 30 June 2014 and the
performance hurdles were
notachieved.
Therefore, 2012–2014 LTIP
Rights did not vest and all
Rights lapsed.
Changes to the Executive Remuneration Framework for 2014/2015
Changes to Pay Mix for 2014/2015
For 2014/2015 only, the pay mix for the CEO and Executive Management will change, with a decrease in weighting towards annual
incentive and an increase in weighting towards long term incentives. In addition, the broader Management population will be invited
to participate in the LTIP for 2014/2015 only (generally, participation in the LTIP is limited to Senior Executives).
This one-off change aligns the entire Management team with the immediate priorities of the transformation agenda, including the
achievement of $2 billion in cost reductions over the next three years.
These changes do not increase the “at target” pay for each manager, as each manager’s LTIP opportunity will be offset by a reduction
in their annual incentive opportunity. For Mr Joyce, this change involves:
–Decreasing his “at target” STIP opportunity for 2014/2015 to 80 per cent of Base Pay (2013/2014: 120 per cent of Base Pay)
–Increasing his “at target” LTIP opportunity for 2014/2015 to 120 per cent of Base Pay (2013/2014: 80 per cent of Base Pay)