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2. EXECUTIVES
2.1 Executive Remuneration Policy
IAG’s approach to executive remuneration is to ensure that IAG can attract and retain the best people and reward performance in line with returns delivered to shareholders. Building and retaining a high quality management team has enabled IAG to achieve superior performance.
The principles that underpin IAG’s approach to executive remuneration are that:
- the quantum and mix of remuneration is sufficiently competitive to attract and retain a high calibre executive team;
- remuneration practices are consistent with IAG’s values;
- the mix of fixed and variable remuneration reflects the impact of each executive position on IAG’s short term and long term results;
- remuneration levels take account of both external market practice and internal relativities; and
- measures of performance are based on a balanced scorecard with a focus on the delivery of sustainable value to shareholders.
In determining the market positioning against the external comparator group of the largest 50 companies in the S&P/ASX 100 index, IAG aim to set base pay around the market median and total reward opportunity (which includes short and long term incentives) between the median and the 75th percentile depending on individual performance and contribution to the Group’s results.
2.2 Executive Remuneration Structure
Executive remuneration consists of four components:
- base salary
- superannuation
- short term incentives
- long term incentives
(a) Base salary
Base salary is defined as the total value of components that make up an executive’s salary. Components are cash, salary sacrifice items such as superannuation, cars or parking and any related taxes. Base salary is determined by a review of job size, internal relativities and market benchmarking. Mercer Human Resources Consulting provides advice on job responsibility and market benchmarking. The comparator group for market benchmarking is the largest 50 companies in the S&P/ASX 100 index. Base salary is targeted at the median of the market. Unless there has been a significant change in job size, increases in base salary generally do not exceed external market movements.
(b) Superannuation
Executives are defined contribution members of the IAG & NRMA Superannuation Plan. Employer superannuation contributions are 13% of base salary. This contribution rate is consistent with the contribution provided to other employees of IAG.
(c) Short term incentives
Executives have the opportunity to earn a short term incentive payment based on both IAG’s performance and achievement of individual goals.
IAG uses a balanced scorecard for setting goals and measuring performance. This ensures that assessment of performance is viewed holistically and assists the development of a sustainable business that meets the performance expectations of IAG’s shareholders, stakeholders and the communities in which it conducts its business.
The balanced scorecard sets goals under the following broad categories:
- financial
- customer
- people
- risk
- community/environment
At the commencement of each financial year, IAG and individual goals are set for each executive. The goals set are stretch goals and are designed to encourage executives to strive for exceptional performance. At the end of the financial year the amount of any incentive payment is determined based on measured achievement against those goals and a review of the executive’s overall performance by the CEO and NRSC. The NRSC reviews the performance of the CEO and makes a recommendation to the Board in relation to any incentive payment for the CEO.
The following table is a summary of IAG’s key goals for the current year:
| CATEGORY | GOAL | REASON CHOSEN | METHOD OF ASSESSMENT | ||||
|---|---|---|---|---|---|---|---|
| Financial | Group Insurance Margin target | Measures the profitability of the core business of IAG | Comparison of achievement against target | ||||
| Customer | Improvement across customer satisfaction measures in Intermediary, Direct Sales and Claims | Meeting or exceeding customer expectations is a key part of establishing and maintaining competitive advantage | Outcome of customer satisfaction surveys and measurement of customer retention rates compared to outcomes from previous years | ||||
| Risk | Improvement in risk management behaviours | Positive risk management behaviour in relation to prevention, detection and recovery from operational risks and issues is critical for a sustainable business | Outcome of annual employee survey compared to target set at the start of the year | ||||
| People management | Employee engagement score target | Measures how engaged employees are with IAG’s purpose, strategy and goals | Outcome of annual employee survey compared to target set at the start of the year | ||||
| Community/Environment | Reduction in workers’ compensation claims per million hours worked | A safe work environment and the well being of employees is vital for growing IAG’s business for the benefit of customers, shareholders and the wider community | Comparison of reduction achieved against target set at the start of the year | ||||
The methods of assessment have been selected as they can be objectively measured and verified.
The aggregate achievement level against IAG’s key goals was 73%.
(d) Long term incentives
(i) Equity based remuneration
IAG utilises long term incentives to create a link between the delivery of value to shareholders, financial performance and rewarding and retaining employees. IAG’s programme for delivering long term incentives is its Performance Award Rights (“PARs”) Plan. Note 30(d)(i) of the full financial statements sets out further details of the PARs Plan.
PARs are rights over issued shares held by a trustee. The rights are granted at no cost to executives and may be exercised for a nominal price if a performance hurdle related to IAG’s Total Shareholder Return (“TSR”) is met or if some specified events occur, such as a takeover bid for the Company. During the year PARs were issued to executives. Previously IAG delivered long term incentives using its Performance Share Rights (“PSRs”) Plan. Note 30(d)(ii) of the full financial statements sets out further details of the PSRs Plan.
Details of the terms of allocations made to executives under IAG’s long term incentive plans, including those allocations that at the date of this report are not exercisable, are summarised below:
| PLAN(i) | PSRs PLAN - SERIES 5 | PSRs PLAN - SERIES 6 | PARs PLAN 2002/2003 - SERIES 1 | PARs PLAN 2003/2004 - SERIES 2 | PARs PLAN 2004/2005 - SERIES 3 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Grant Date | 13/12/2001 | 05/03/2002 | 24/12/2002 | 22/09/2003 10/12/2003 17/09/2004 | 17/09/2004 30/11/2004 | |||||
| Performance Period Definition(ii) | 3 - 5 years from Grant Date | 3 - 5 years from Grant Date | 3 - 5 years from Grant Date | 3 - 5 years from Base Date(iii) | 3 - 5 years from Base Date(iii) | |||||
| TSR Performance Condition | IAG TSR compared to a Peer Group of companies. The Peer Group comprises the companies in the S&P/ASX 100 index with such inclusions and exclusions as the Board may determine. | |||||||||
| Vesting Schedule | <50th percentile - 0% vesting ="50th" percentile - 50% vesting >=75th percentile - 100% vesting The percentage of PSRs or PARs which vest and become exercisable increases proportionately where IAG’s performance ranks between the 50th and 75th percentile |
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| Performance Hurdle Test Schedule | Last trading day each month in Performance Period | Last trading day each month in Performance Period | Last trading day each month in Performance Period | Quarterly - Last trading day of each calendar quarter in Performance Period | Quarterly - Last trading day of each calendar quarter in Performance Period | |||||
| 1st Test Day | 31/12/2004 | 31/03/2005 | 30/12/2005 | 29/09/2006 | 28/09/2007 | |||||
| Last Test Day | 30/11/2006 | 28/02/2007 | 30/11/2007 | 30/06/2008 | 30/06/2009 | |||||
| Last Exercise Date (continuing employees only) | 13/12/2011 | 05/03/2012 | 24/12/2012 | 22/09/2013 10/12/2013 26/03/2014 | 17/09/2014 30/11/2014 | |||||
| Plan Exercise Status | Fully exercisable | Fully exercisable | Not exercisable | Not exercisable | Not exercisable | |||||
Notes:
(i) PSR Plan Series 1 to 4 are fully vested and exercisable.
(ii) The performance period will be shortened if the employee ceases employment with the Group due to redundancy or in other special circumstances.
(iii) The Base Date is the date which is the second trading day after the date on which IAG’s financial results for the twelve month period ending on the 30 June that immediately precedes the Grant Date are announced to the ASX.
(ii) Insurance Manufacturers of Australia Pty Limited (“IMA”) - Long Term Incentive Plans
IMA is a 70% owned subsidiary of IAG.
During the year no executive received a grant under any IMA Long Term Incentive Plan. Mr RJ Jackson was granted awards under an IMA Long Term Incentive Plan during the 2002/2003 financial year. This plan is a cash based plan with performance hurdles related to IMA’s operating results and IAG TSR over three consecutive financial years. At the date of this report, awards under this plan are not payable.
2.3 Relationship between Executive Reward and IAG’s Performance
A significant component of executive remuneration is “at risk” which ensures a direct link between IAG’s performance and reward for executives. For further details of the percentage of “at risk” remuneration, refer to the table in section 2.6.
The payment of short term incentives is directly linked to IAG’s performance over the previous year based on a balanced scorecard of measures, which includes a measure of the profitability of IAG’s core business. Non-financial measures are also used as they are lead indicators of delivering future value for shareholders. For the 2004/2005 year the aggregate achievement level against IAG’s key goals was 73%. This will determine the portion of an executive’s short term incentive payment that is linked to IAG’s goals.
The use of the balanced scorecard to assess and reward executive performance has assisted IAG to deliver superior returns for shareholders:
| 8 AUGUST 2000(i) | YEAR ENDED 30 JUNE 2001 | YEAR ENDED 30 JUNE 2002 | YEAR ENDED 30 JUNE 2003 | YEAR ENDED 30 JUNE 2004 | YEAR ENDED 30 JUNE 2005 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Closing share price ($) | 2.75 | 3.40 | 3.15 | 3.40 | 5.00 | 6.01 | ||||||
| Dividends paid (cents) | n/a | 10.00 | 10.50 | 11.50 | 22.00 | 26.50 | ||||||
| Earnings per share (cents) | n/a | 9.40 | (1.78) | 8.65 | 37.87 | 45.89 | ||||||
| Normalised net profit after tax ($ million) | n/a | 178 | 294 | 333 | 455 | 547 | ||||||
(i) IAG listed on the Australian Stock Exchange on 8 August 2000. The pre-listing facility price was $2.75.:
IAG’s long term incentive plans provide a direct link between return to shareholders over a 3 to 5 year period and executive reward.
IAG’s share price compared to the S&P/ASX 200 index from the period since IAG’s listing in August 2000 to 30 June 2005 is shown in the following graph:
From listing until 30 June 2005, IAG has exceeded its objective of delivering top quartile shareholder return. Measured from 8 August 2000 until 30 June 2005, IAG’s TSR is at the 82nd percentile of entities in the S&P/ASX 100 index.
In line with IAG’s strong TSR performance, the portion of PSRs (for PSRs Plan Series 1 to 6) that have met the performance hurdle and become exercisable has been 100% of the number of PSRs awarded.
Grants of PARs to executives are based on an assessment of each executive against a range of factors including the executive’s performance, their strategic impact and leadership capability. This process strengthens the link between individual executive reward outcomes and the creation of value for shareholders.
During the year the following persons were the executives with the greatest authority for the strategic direction and management of the Group:
| CURRENT TITLE | |
|---|---|
| Mr MJ Hawker | Chief Executive Officer and Managing Director |
| Mr IF Brown | Deputy Chief Executive Officer |
| Mr AM Coleman | Chief Risk Officer and Group Actuary |
| Mr DA Issa | Chief Information Officer |
| Mr RJ Jackson(i) | Chief Executive Officer - Personal Insurance |
| Ms SJ Mostyn | Group Executive - Culture & Reputation |
| Mr DRA Pearce(i) | Group Executive - Insurance Strategy |
| Mr MJ Pirone(i) | Chief Executive Officer - CGU Insurance |
| Mr DJP Smith | Chief Executive Officer - IAG New Zealand |
| Mr G Venardos | Chief Financial Officer |
(i) On 20 July 2004, IAG announced a new structure for its Australian operations. This led to a change in the executive team structure. Mr RJ Jackson, Mr DRA Pearce and Mr MJ Pirone have held their current positions since this time. Their former roles respectively, were Group Executive - Personal Insurance, Group Executive - Personal Injury and Group Executive - Asset Management and Retirement Services.
Ms KL Baylis left IAG on 1 October 2004, Mr LF Power and Mr RJ Wagstaffe left IAG on 1 September 2004. Their respective positions were Group Executive - Sales and Marketing, Group Executive - Business Partners and Group Executive - Intermediary Business.
On 28 July 2005, IAG announced Mr IF Brown will retire in December 2005 and Mr DRA Pearce will leave IAG on 31 August 2005.
2.4 Service Agreements
All service agreements for executives are unlimited in term but may be terminated by written notice from either party or by IAG making a payment in lieu of notice. The service agreements outline the components of remuneration paid to executives and require the remuneration of executives to be reviewed annually. The service agreements do not require IAG to increase base salary, pay a short term incentive or offer a long term incentive in any given year.
| NOTICE PERIOD, COMPANY | COMPANY NOTICE PERIOD, EMPLOYEE | TERMINATION PROVISIONS | ADDITIONAL PAYMENT IF IAG INVOKES A RESTRAINT CLAUSE | |
|---|---|---|---|---|
| Mr MJ Hawker | 12 months | 6 months | 12 months base salary, plus payment for annual leave, long service leave and short term incentive that would have accrued had termination not occurred. | 6 months base salary |
| Mr IF Brown | 12 months | 3 months | 12 months base salary | 6 months base salary |
| Mr AM Coleman | 12 months | 3 months | 12 months base salary | 6 months base salary |
| Mr DA Issa | 12 months | 3 months | 12 months base salary | - |
| Mr RJ Jackson | 12 months | 6 months | 12 months base salary | - |
| Ms SJ Mostyn | 12 months | 3 months | 12 months base salary | - |
| Mr DRA Pearce | 6 months | 3 months | 75 weeks base salary | 6 months base salary |
| Mr MJ Pirone | 12 months | 3 months | 12 months base salary | 6 months base salary |
| Mr DJP Smith | 12 months | 3 months | 12 months base salary | 6 months base salary |
| Mr G Venardos | 12 months | 3 months | 12 months base salary | 6 months base salary |
Executives are employed by Insurance Australia Group Services Pty Limited, except for Mr DJP Smith who is employed by IAG New Zealand Limited.
Retrenchment
In the event of retrenchment, the executives listed above (except for Mr MJ Hawker and Mr DJP Smith) are entitled to the greater of:
(a) the written notice or payment in lieu of notice as provided in their service agreement; or
(b) the retrenchment benefits due under the relevant company retrenchment policy.
For Mr MJ Hawker and Mr DJP Smith, the retrenchment payment is in accordance with the termination provisions set out in the table above.
Company retrenchment policy
On retrenchment, employees with less than 25 years service will receive:
(a) at least eight weeks notice or payment in lieu of notice (calculated on the employee’s base salary); and
(b) three weeks base salary for each year of continuous service to a maximum of 75 weeks base salary.
The minimum benefit that can be received is 11 weeks base salary and the maximum benefit that can be received is 83 weeks base salary.
On retrenchment, employees with 25 or more years of service or who are over 45 years of age will receive:
(a) at least twelve weeks notice or payment in lieu of notice (calculated on the employee’s base salary); and
(b) three weeks base salary for each year of continuous service to a maximum of 75 weeks base salary.
The minimum benefit that can be received is 15 weeks base salary and the maximum benefit that can be received is 87 weeks base salary.
Termination of employment without notice and without payment in lieu of notice
The employment of the executives may be terminated without notice or payment in lieu of notice in some circumstances. Generally, this could occur where the executive: is charged with a criminal offence that is capable of bringing the organisation into disrepute; is declared bankrupt; breaches a provision of their employment agreement; is guilty of serious and wilful misconduct; or unreasonably fails to comply with any material and lawful direction given by the Company.
Termination of employment with notice or payment in lieu of notice
The employment of the executives may be terminated at any time by the Company with notice or payment in lieu of notice (which also includes a pro rata short term incentive earned but not paid). The amount of notice the Company must provide or the payment in lieu of notice is specified above.
2.5 Remuneration Details
(a) Remuneration of executives for the IAG Group for the financial year ended 30 June 2005 was:
Refer to section (c) below for details of notes (1) to (10) referencing in the above table 2.5(a).
(b) Remuneration of executives for the IAG Group for the prior financial year ended 30 June 2004 was:
Refer to section (c) below for details of notes (1) to (9) referencing in the above table 2.5(b).
(c) Details of notes (1) to (10) used in tables in sections 2.5 (a) and (b)
(1) Salary represents amounts paid in cash during the financial year.
(2) Non-monetary benefits are valued in accordance with the cost to IAG for provision of cars, parking and related fringe benefits tax on a salary sacrifice basis.
(3) Leave accruals includes annual leave and long service leave accruals as determined in accordance with AASB 1028 Employee Benefits. $627,000. An allocated portion of unvested PSRs and PARs is included.
(4) Short term incentive to be settled in cash for the current performance period accrual and prior performance periods over or under accruals.
(5) Long term incentive to be settled in cash from the IMA long term incentive plan. The amount reflects a prorata accrual made during the period, based on expected satisfaction of performance hurdles.
(6) Superannuation includes the employer’s contributions which are recognised on a deemed basis, as for 11 months of 2005 (full year of 2004) the employer was on a contribution holiday.
(7) Executives may elect to receive some of their short term incentive in the form of IAG shares rather than cash through participation in the Bonus Equity Share Plan, which vests immediately and is valued in accordance with the market value of IAG shares at grant date. Refer to note 30(c)(i) of full financial statements for details.
(8) The value of Performance Share Rights (“PSRs” - related to unissued shares) and Performance Award Rights (“PARs” - related to issued shares) granted in the above table is different to the amount reported in the 2004 financial report. This is due to the change in valuation method applied in line with the introduction of AASB 1046 Amendment to Accounting Standards AASB 1046A. This results in a total reduction of $627,000. An allocated portion of unvested PSRs and PARs is included in the total remuneration disclosure above. To determine these values the Monte Carlo model has been applied. The valuation takes into account the exercise price of the PSRs/PARs, life of the PSRs/PARs, current price of IAG shares, expected volatility of the IAG share price, expected dividends, risk free interest rate, the performance of the shares in the Peer Group of companies, early exercise and non transferability, and turnover.
(9) Represents an accommodation allowance on relocation to Auckland in New Zealand.
(10) Represents termination payments made.
2.6 At Risk Remuneration
(a) Total remuneration for executives is comprised of “at risk” and “not at risk” remuneration. Base salary and superannuation is “not at risk”, while short term incentives and long term incentives are “at risk”. The percentage of total remuneration that is “at risk” for the executives is set out below:
| TOTAL REMUNERATION $000 | SHORT TERM INCENTIVES $000 | LONG TERM INCENTIVES (IMA LTI/PSRs/PARs) $000 | PERCENTAGE OF REMUNERATION AT RISK% | |
|---|---|---|---|---|
| Mr MJ Hawker | 3,264 | 1,270 | 614 | 58 |
| Mr IF Brown | 1,298 | 342 | 127 | 36 |
| Mr AM Coleman | 1,227 | 434 | 145 | 47 |
| Mr DA Issa | 1,191 | 476 | 125 | 50 |
| Mr RJ Jackson | 1,529 | 402 | 384 | 51 |
| Ms SJ Mostyn | 1,119 | 366 | 167 | 48 |
| Mr DRA Pearce | 895 | 230 | 110 | 38 |
| Mr MJ Pirone | 1,388 | 520 | 135 | 49 |
| Mr DJP Smith | 1,177 | 202 | 135 | 29 |
| Mr G Venardos | 1,444 | 451 | 171 | 43 |
(b) Short term incentives
The portion of the short term incentives that either vested or were forfeited during the year cannot be determined as no maximum or target amount is set. Executives may be paid a short term incentive based on IAG’s performance and their own performance. The amount of short term incentive paid to an executive is recommended by the CEO and approved by the NRSC. The amount of short term incentive paid to the CEO is recommended by the NRSC and approved by the Board.
(c) Long term incentives
For each grant of PSRs/PARs included in the table as listed in section 2.2(d), the percentage of the PSRs/PARs that vested in the financial year and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below. No part of the forfeited rights are payable in future years.
It is not practical to provide an estimate of the maximum possible total value of long term incentives that may vest in future years because the value is directly linked to the IAG share price at the time of vesting. The minimum possible total value of long term incentives is zero.
2.7 Long Term Incentives - PARs and PSRs
Rights under the PARs Plan and PSRs Plan were issued by the Group and used as long term incentives. Refer to section 2.2(d)(i) for further details.
The following sections provide details of movements in PARs and PSRs for each executive during the financial year ended 30 June 2005.
(a) PARs
(i) The Group has issued PARs to the executives during the financial year for nil consideration. Each executive who participates in the plan becomes eligible to receive an ordinary share per PAR, by paying the exercise price of $1 per tranche of PARs exercised, subject to a specific performance hurdle being met. Refer to section 2.2(d)(i) for details of the performance hurdle.
Following are details of the number of PARs granted to each executive during the financial year ended 30 June 2005:
| GRANT DATE | DATE FIRST EXERCISABLE | LAST EXPIRY DATE | VALUE PER PAR AT GRANT DATE $ | NUMBER OF PARs GRANTED DURING THE YEAR NUMBER | |||||
|---|---|---|---|---|---|---|---|---|---|
| CEO and Managing Director: | |||||||||
| Mr MJ Hawker | 30/11/2004 | 28/09/2007 | 30/11/2014 | 2.718 | 500,000 | ||||
| Current executives: | |||||||||
| Mr IF Brown | 17/09/2004 | 28/09/2007 | 17/09/2014 | 2.715 | 60,000 | ||||
| Mr AM Coleman | 17/09/2004 | 28/09/2007 | 17/09/2014 | 2.715 | 81,000 | ||||
| Mr DA Issa | 17/09/2004 | 28/09/2007 | 17/09/2014 | 2.715 | 71,000 | ||||
| Mr RJ Jackson | 17/09/2004 | 28/09/2007 | 17/09/2014 | 2.715 | 81,000 | ||||
| Ms SJ Mostyn | 17/09/2004 | 28/09/2007 | 17/09/2014 | 2.715 | 66,000 | ||||
| Mr DRA Pearce | 17/09/2004 | 28/09/2007 | 17/09/2014 | 2.715 | 47,000 | ||||
| Mr MJ Pirone | 17/09/2004 | 28/09/2007 | 17/09/2014 | 2.715 | 81,000 | ||||
| Mr DJP Smith | 17/09/2004 | 28/09/2007 | 17/09/2014 | 2.715 | 71,000 | ||||
| Mr G Venardos | 17/09/2004 | 28/09/2007 | 17/09/2014 | 2.715 | 92,000 | ||||
| 1,150,000 | |||||||||
Ms Baylis, Mr Power and Mr Wagstaffe who ceased employment during the year did not receive any grant of PARs.
(ii) Following is a summary of the movements in total number of PARs on issue by each executive:
| PARs ON ISSUE 1 JULY 2004 NUMBER | PARs GRANTED DURING THE YEAR NUMBER | PARs EXERCISED DURING THE YEAR(1)NUMBER | PARs LAPSED DURING THE YEAR NUMBER | PARs ON ISSUE 30 JUNE 2005 NUMBER | |||||
|---|---|---|---|---|---|---|---|---|---|
| CEO and Managing Director: | |||||||||
| Mr MJ Hawker | 700,000 | 500,000 | - | - | 1,200,000 | ||||
| Current executives: | |||||||||
| Mr IF Brown | 161,716 | 60,000 | - | - | 221,716 | ||||
| Mr AM Coleman | 177,195 | 81,000 | - | - | 258,195 | ||||
| Mr DA Issa | 152,177 | 71,000 | - | - | 223,177 | ||||
| Mr RJ Jackson | 80,451 | 81,000 | - | - | 161,451 | ||||
| Ms SJ Mostyn | 148,307 | 66,000 | - | - | 214,307 | ||||
| Mr DRA Pearce | 149,232 | 47,000 | - | - | 196,232 | ||||
| Mr MJ Pirone | 158,881 | 81,000 | - | - | 239,881 | ||||
| Mr DJP Smith | 167,167 | 71,000 | - | - | 238,167 | ||||
| Mr G Venardos | 213,048 | 92,000 | - | - | 305,048 | ||||
| Total | 2,108,174 | 1,150,000 | - | - | 3,258,174 | ||||
| Executives who ceased employment during the year: | |||||||||
| Ms KL Baylis | 146,814 | - | - | - | 146,814 | ||||
| Mr LF Power | 53,634 | - | - | - | 53,634 | ||||
| Mr RJ Wagstaffe | 53,634 | - | - | - | 53,634 | ||||
| Total | 254,082 | - | - | - | 254,082 | ||||
(1) $1 per tranche of PARs is payable to exercise.
(iii) No PARs vested during the financial year ended 30 June 2005 or in prior years.
(b) PSRs
(i) The PSRs Plan was closed for issuing further PSRs from the financial year ended 30 June 2003.
Following is a summary of the movements in total number of PSRs on issue by each executive:
| PARs ON ISSUE 1 JULY 2004 NUMBER | PSRs EXERCISED DURING THE YEAR(1) NUMBER | PSRs LAPSED DURING THE YEAR NUMBER | PSRs ON ISSUE 30 JUNE 2005 NUMBER | PSRs VESTED AND EXERCISABLE 30 JUNE 2005 NUMBER | |||||
|---|---|---|---|---|---|---|---|---|---|
| CEO and Managing Director: | |||||||||
| Mr MJ Hawker | 1,000,000 | 940,000 | - | 60,000 | 60,000 | ||||
| Current executives: | |||||||||
| Mr IF Brown | - | - | - | - | - | ||||
| Mr AM Coleman | - | - | - | - | - | ||||
| Mr DA Issa | - | - | - | - | - | ||||
| Mr RJ Jackson | - | - | - | - | - | ||||
| Ms SJ Mostyn | 68,670 | - | - | 68,670 | 68,670 | ||||
| Mr DRA Pearce | - | - | - | - | - | ||||
| Mr MJ Pirone | 28,640 | 28,640 | - | - | - | ||||
| Mr DJP Smith | - | - | - | - | - | ||||
| Mr G Venardos | - | - | - | - | - | ||||
| Total | 1,097,310 | 968,640 | - | 128,670 | 128,670 | ||||
| Executives who ceased employment during the year: | |||||||||
| Ms KL Baylis | 85,837 | 85,837 | - | - | - | ||||
| Mr LF Power | - | - | - | - | - | ||||
| Mr RJ Wagstaffe | - | - | - | - | - | ||||
| Total | 85,837 | 85,837 | - | - | - | ||||
(1) The exercise price was $1 per tranche of PSRs. Nil remains unpaid per issued share acquired. For each PSR exercised, one ordinary IAG share was issued.
(c) Analysis of movements in PARs and PSRs
Following is a summary of the movement during the financial year, by value, of PARs and PSRs by each executive:
| TOTAL VALUE OF PARs GRANTED DURING THE YEAR (1) $000 | TOTAL VALUE OF PSRs EXERCISED DURING THE YEAR (2) $000 | TOTAL VALUE OF PARs AND PSRs THAT LAPSED DURING THE YEAR (3) $000 | TOTAL OF (1) TO (3) $000 | ||||
|---|---|---|---|---|---|---|---|
| CEO and Managing Director: | |||||||
| Mr MJ Hawker | 1,359 | 6,026 | - | 7,385 | |||
| Current executives: | |||||||
| Mr IF Brown | 163 | - | - | 163 | |||
| Mr AM Coleman | 220 | - | - | 220 | |||
| Mr DA Issa | 193 | - | - | 193 | |||
| Mr RJ Jackson | 220 | - | - | 220 | |||
| Ms SJ Mostyn | 179 | - | - | 179 | |||
| Mr DRA Pearce | 128 | - | - | 128 | |||
| Mr MJ Pirone | 220 | 144 | - | 220 | |||
| Mr DJP Smith | 193 | - | - | 193 | |||
| Mr G Venardos | 250 | - | - | 250 | |||
| Total | 3,125 | 6,170 | - | 9,295 | |||
| Executives who ceased employment during the year: | |||||||
| Ms KL Baylis | - | 517 | - | 517 | |||
| Mr LF Power | - | - | - | - | |||
| Mr RJ Wagstaffe | - | 517 | - | 517 | |||
| Total | - | 517 | - | 517 | |||
Notes:
(1) The value of PARs granted in the year is the fair value of the PARs calculated at grant date using a Monte Carlo model. The total value of the PARs granted is included in the table above. This amount is allocated to remuneration over the vesting period (ie in years 30 June 2005 to 30 June 2009).
(2) The PSRs exercised during the year by Mr Hawker, Mr Pirone and Ms Baylis were issued to them on 13 December 2001, 21 December 2000 and 5 March 2002, respectively. The respective values at grant date were allocated to their remuneration during the three years vesting period between 30 June 2001 to 30 June 2004. PSRs are exercisable only if a performance hurdle is reached in relation to IAG’s TSR. IAG’s TSR measured from December 2001 to June 2005 was at the 75th percentile compared to the TSR of companies in the S&P/ASX 100 index.
The value of PSRs exercised during the year is calculated as the weighted average of the prices at which IAG shares were traded over 5 days before and including date of exercise after deducting the $1 exercise price per tranche of PSRs exercised.
(3) No PARs or PSRs lapsed during the year.
