CONTENTS
PAGE
A
Remuneration explained
17
B
2015 snapshot
19
C
Executive remuneration governance
21
D Executive remuneration structure
22
E
Linking performance and reward
25
F
Executive remuneration outcomes in detail
28
G Executive employment agreements
31
H Non-Executive Director remuneration
32
I
Other benefits
33
J
Related party interests
33
A. REMUNERATION EXPLAINED
I. Key terms and definitions
The key terms and definitions used throughout this report are explained below:
TERM
DEFINITION
Actual remuneration
The dollar value of remuneration actually received by the Executives in the financial year. This
is the sum of fixed remuneration plus the cash portion of the STI plus the value of DAR vested
during the year plus the value of LTI in the form of EPR vested during the year.
At-risk remuneration
The components of remuneration that are at-risk because they depend on a combination of the
financial performance of the Group and the Executives' performance against individual financial
and non-financial measures. At-risk remuneration typically includes STI (cash and deferred
remuneration) and LTI.
Base salary
The cash component of fixed remuneration.
Cash return on equity (ROE)
Based on cash earnings on average total shareholders’ equity during the financial year. Cash
earnings is defined as net profit after tax attributable to IAG shareholders plus amortisation and
impairment of acquired identifiable intangible assets and adjusted for unusual items (non-
recurring in nature, for example the expenses associated with restructuring). Cash ROE is used
to calculate one half of the outcome in the LTI plan.
Cash STI
The two-thirds portion of STI for the year ended 30 June 2015 that is paid in the form of cash in
September 2015, following the end of year assessment and approval by the Board of Directors.
Corporate Office Executives
The Chief Financial Officer, Chief Risk Officer, Chief Strategy Officer and Chief Executive, IAG
Labs.
Deferred STI/Deferred Award Rights
(DAR)
The one-third portion of STI that is deferred over a period of two years and awarded in the form
of DAR. At the date of vesting, the holder of DAR is eligible to receive one IAG ordinary share per
DAR, by paying the exercise price of $1 per tranche of DAR exercised.
Divisional Executives
The Executives with responsibility for managing a division.
Executive team
The Executives who report directly to the Group CEO.
Executives
The Group CEO and the Executive team.
Fixed remuneration
Base salary plus superannuation. Individuals can determine the mix of base salary and
superannuation they receive in line with legislative requirements.
Group CEO
IAG’s Managing Director and Chief Executive Officer.
Key management personnel (KMP) The Group CEO and the Executive team responsible for managing the Group and the Board.
Long term incentive (LTI)/Executive
Performance Rights (EPR)
A grant of rights in the form of EPR that are exercisable for IAG ordinary shares or cash between
three and four years after the grant date if performance hurdles are achieved.
People and Remuneration
Committee (PARC)
The Board committee which oversees IAG's remuneration practices.
Short term incentive (STI)
The part of annual at-risk remuneration that is designed to motivate and reward for
performance, typically in that financial year. STI results are determined by performance against
a balanced scorecard, based on goals which reflect financial and non-financial measures. For
the Group CEO and the Executive team, one third of STI is deferred for a period of two years.
Total shareholder return (TSR)
Used as one measure of Group performance over a period of time. TSR combines share price
appreciation and dividends paid to show total return to shareholders, relative to that of other
companies in the peer group. IAG uses relative TSR performance to calculate one half of the LTI
outcome.
WACC
Weighted average cost of capital.
This report meets the remuneration reporting requirements of the Corporations Act 2001 and Accounting Standard AASB 124 Related
Party Disclosures. The term remuneration used in this report has the same meaning as compensation as prescribed in AASB 124.
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