IAG 2011 Annual Review

REMUNERATION COMPONENT		STRATEGIC PURPOSE
Fixed Remuneration
Cash	Base salary and superannuation	Attract and retain high quality people
At Risk Remuneration
Cash Short term incentive (STI)	2/3 of STI outcome paid as cash in September	Align reward to shareholder interest Strike a balance between short and long term results and reward for exceptional performance Retain high quality people
Deferred Short term incentive (STI)	1/3 of STI outcome is deferred over a period of two years, subject to ongoing employment conditions Provided as grant of rights in the form of deferred award rights The actual value of shares will depend on the future share price IAG board has discretion to adjust downwards to protect the financial soundness of the Group or to ensure that an inappropriate reward outcome does not occur
Long term incentive (LTI)	Provided as grant of rights in the form of executive performance rights 3-5 year period Subject to performance hurdles, relative total shareholder return and return on equity, being achieved IAG board has discretion to adjust downwards to protect the financial soundness of the Group or to ensure that an inappropriate reward outcome does not occur	Align reward to shareholder interest Align remuneration with longer term financial performance Retain high quality people

During the 2011 financial year, the IAG board undertook the following initiatives:

• actively monitored compliance against the APRA standards covering the governance of remuneration to ensure appropriateness of the Group’s remuneration policy;
• met with APRA to discuss good governance and IAG’s approach to remuneration;
• updated deferred STI and LTI terms to provide the board with discretion to adjust rewards downwards to protect the financial soundness of the Group in circumstances where the board determines an adjustment is necessary to ensure that an inappropriate reward outcome does not occur; and
• engaged remuneration consultants from PricewaterhouseCoopers to review the executive remuneration strategy in line with market practice and governance requirements.

The board is confident these changes support IAG’s aim to ensure remuneration practices are in step with community and shareholder expectations and our aim to improve financial and operational results.

The tables below provide a summary of the remuneration received/receivable during the financial year by IAG directors and executives. Detailed information is contained in IAG’s 2011 annual report, available online at www.iag.com.au/results.

INDEPENDENT NON-EXECUTIVE DIRECTORS	SHORT TERM BENEFITS		POST EMPLOYMENT BENEFITS		OTHER LONG TERM EMPLOY- MENT BENEFITS	TERM- INATION BENEFITS	SHARE BASED PAYMENT	TOTAL
2011 2010	IAG board fees received as cash $000	Other board and committee fees $000	Super- annuation $000	Retire- ment benefits $000	$000	$000	IAG board fees received as IAG shares $000	$000
Brian Schwartz	453 137	203 71	24 14	– –	– –	– –	– 19	680 241
Yasmin Allen	161 144	68 87	15 14	– –	– –	– –	– 13	244 258
Peter Bush Director since 7 December 2010	89	15	9	–	–	–	–	113
Phillip Colebatch	156 119	18 50	16 15	– –	– –	– –	– 31	190 215
Hugh Fletcher	156 107	107 111	16 16	– –	– –	– –	– 43	279 277
Anna Hynes	156 138	32 27	17 16	– –	– –	– –	– 13	205 194
Philip Twyman	159 136	50 27	15 14	– –	– –	– –	– 16	224 193
Retired director
James Strong Retired on 26 August 2010	73 400	30 195	9 14	295 –	– –	– –	– 94	407 703

EXECUTIVES	SHORT TERM EMPLOYMENT BENEFITS			POST EMPLOYMENT BENEFITS		OTHER LONG TERM EMPLOY- MENT BENEFITS	TERM- INATION BENEFITS	SUBTOTAL (EX- CLUDES SHARE BASED PAYMENT)	SHARE BASED PAYMENT (SUBJECT TO CONTINUING EMPLOYMENT AND/OR PERFORMANCE HURDLES)		TOTAL
2011 2010 (a)	Base salary $000	Short term incentive $000	Other $000	Super- annuation $000	Retire- ment benefits $000	Long service leave accruals $000	$000	$000	Value of deferred short term incentive $000	Value of rights/ shares granted $000	$000
Executives (including executive director) who are Key Management Personnel (KMP)
Michael Wilkins Managing Director and Chief Executive Officer	1,996 1,868	1,104 765	– –	38 38	– –	– 12	– –	3,138 2,683	467 282	2,136 1,330	5,741 4,295
Justin Breheny Chief Executive Officer, Asia	812 802	429 396	– –	50 50	– –	1 7	– –	1,292 1,255	197 182	824 702	2,313 2,139
Andy Cornish Chief Executive Officer, Australia Direct	962 860	610 504	– –	15 23	– –	1 3	– –	1,588 1,390	200 119	732 423	2,520 1,932
Ian Foy(b) Chief Executive Officer, UK	567 464	292 290	575 –	99 73	– –	– –	– –	1,533 827	100 70	538 339	2,171 1,236
Peter Harmer Chief Executive Officer, CGU, KMP since 8 November 2010	597	275	–	16	–	1	–	889	–	88	977
Nicholas Hawkins Chief Financial Officer	915 863	460 354	– –	25 25	– –	22 4	– –	1,422 1,246	174 151	851 664	2,447 2,061
Jacki Johnson(b) Chief Executive Officer, New Zealand	735 774	337 343	55 –	7 22	– –	34 7	– –	1,168 1,146	187 188	825 650	2,180 1,984
Leona Murphy(b) Chief Strategy Officer	811 688	404 291	– –	25 25	– –	1 5	– –	1,241 1,009	151 119	677 430	2,069 1,558
Executives who ceased as KMP
Karl Armstrong Former acting Chief Executive Officer, New Zealand, KMP only for the period from 1 September 2010 to 31 October 2010	76	15	1	8	–	–	–	100	–	–	100
Neil Utley(b) Former Managing Director, UK, KMP until 31 October 2010	247 854	– –	9 789	32 107	– –	– –	942 –	1,230 1,750	50 282	(1,342) 863	(62) 2,895
Duncan West(b) Former Chief Executive Officer, CGU, KMP until 31 January 2011	548 898	– 481	– –	15 25	– –	(15) 6	– –	548 1,410	25 140	(856) 584	(283) 2,134

(a) Base salary includes amounts paid in cash and salary sacrifice items such as superannuation, cars (including the 30% tax rebate on car expenses), parking, and annual leave accruals, as determined in accordance with AASB 119 Employee Benefits. Prior year's base salary was restated to include the 30% tax rebate on car expenses for certain KMP who have salary sacrifice arrangements on car. Total amount restated was $90,000. (b) During the year, there were a number of changes in role of the executives: - Ian Foy, former Chief Executive Officer, New Zealand became Chief Executive Officer, UK from 1 September 2010, succeeding Neil Utley; - Jacki Johnson, former Chief Executive Officer, The Buzz, became the Chief Executive Officer, New Zealand, from 1 November 2010, succeeding Ian Foy; and - Leona Murphy, the former Group Executive, Corporate Office became Chief Executive Officer, The Buzz from 1 November 2010 succeeding Jacki Johnson. In July 2011, Leona changed title to Chief Strategy Officer and The Buzz business passed to the Australia Direct operation.