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As the focus of the Board is the governance of and long-term strategic direction of AGL, there is no direct link between non- executive Director remuneration and AGL’s short-term results. 

Non-executive Directors may choose to receive fees as a combination of one or more of: 

> Directed superannuation contributions.  Subject to minimum contributions as required under SGC legislation, and maximum tax deductible contributions under the Income Tax Assessment Act, non-executive Directors may direct that some or all of their fees be paid as contributions to a complying superannuation fund of their choice. 

> AGL shares acquired under the AGL Share Purchase Plan. The Plan Trustee acquires AGL shares on-market at market price during permitted trading periods. Details of the trading periods are included in the AGL Securities Dealing Policy which is available on AGL’s website. 

> Cash.  The balance of fee entitlements is paid in cash to the non- executive Directors in equal monthly amounts over the year. 

Non-executive Directors are permitted to vary the components of their fee entitlements at any time. 

No options have been granted to non-executive Directors over any securities or interests of AGL or the consolidated entity. 

The Board conducted a review of its own performance, the performance of individual Directors, and the performance of the Board Committees during the last year. 

The fee structure for non-executive Directors, effective 1 January 2012, is as follows: 

<img src='content_image/292784.jpg'>

## Five year financial performance 

The following table shows AGL’s annual performance over the last five years. 

<img src='content_image/292778.jpg'>

Notes: 

1. Restated for the bonus element of the one-for-six share rights issue completed in June 2012. 

2. Used since FY2010 to calculate Executives’ long-term incentives. See page 53 for details for calculation. 

3. Based on June VWAP in each financial year. 

## Approval of Directors’ Report 

This Directors’ Report is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Board this 22nd day of August 2012. 

<img src='content_image/292786.jpg'>

