D. EXECUTIVE REMUNERATION STRUCTURE
I. Summary of remuneration components
The remuneration components for the Executives are explained below:
TABLE 2 - SUMMARY OF REMUNERATION COMPONENTS
REMUNERATION COMPONENT
STRATEGIC PURPOSE
Fixed remuneration Cash
Base salary and superannuation.
Attract and retain high quality
people.
At-risk remuneration Cash STI
2/3 of the STI outcome paid as cash following the
end of year assessment and approval by the
Board.
Motivate and reward
performance within a financial
year.
Deferred STI
1/3 of the STI outcome is deferred over a period
of two years, subject to ongoing employment
conditions.
Provided as a grant of rights in the form of DAR.
Number of DAR issued based on face value of an
IAG ordinary share.
The actual value of shares will depend on the
future share price.
The Board has discretion to adjust remuneration
to protect the financial soundness of the Group or
to ensure an appropriate reward outcome.
Align reward to shareholder
interests.
Strike a balance between short
and long term results and reward
for exceptional performance.
Retain high quality people.
Protect the financial soundness
of the Group.
LTI
Provided as a grant of rights in the form of EPR.
Number of EPR issued based on face value of an
IAG ordinary share.
3-4 year performance period.
Subject to performance hurdles of relative TSR
and ROE being achieved.
The Board has discretion to adjust remuneration
to protect the financial soundness of the Group or
to ensure an appropriate reward outcome.
Align reward to shareholder
interests.
Align remuneration with longer
term financial performance.
Retain high quality people.
Protect the financial soundness
of the Group.
II. Potential remuneration mix
Total remuneration for the Group CEO and the Executive team comprises a mix of fixed remuneration and maximum potential at-risk
remuneration (STI and LTI). The mix, shown in the graph below, is designed to pay Executives competitively based on their
performance, while providing strong governance to protect the financial soundness of the business and shareholders’ interests.
Notes:
Potential remuneration is based on current remuneration at 30 June 2015. STI and LTI are based on maximum opportunities.
22 IAG ANNUAL REPORT 2015
