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If a participant ceases employment before the expiry of the vesting period in other circumstances, any positive balance is forfeited or any negative balance is eliminated. 

All SPRs will vest in the event that a change in control of AGL occurs, subject to the performance conditions applicable to those SPRs being satisfied at that time unless the Board, in its absolute discretion, determines that it is appropriate to waive the satisfaction of the performance conditions. 

AGL may issue shares or purchase shares in the ordinary course of trading on the ASX to satisfy SPRs which have vested. 

## Managing Director and Senior Executives 

Grants of SPRs to eligible participants are made on an annual basis or such other times as the Board in its discretion may determine. Eligible participants are employees of any entity in the consolidated entity who are determined by the Board in its discretion to be eligible to participate in the LTIP. 

The Board has an absolute discretion to determine the number of SPRs issued to an LTIP participant, and the performance conditions which must be satisfied before SPRs can vest and the period over which SPRs vest. 

At the 2011 Annual General Meeting, shareholder approval was obtained for the grant of SPRs under the LTIP to Mr Fraser (Managing Director and Chief Executive Officer) in respect of the financial years ending 30 June 2012, 30 June 2013 and 30 June 2014. 

On 22 June 2012, Mr Fraser received an initial notional grant of 146,171 SPRs in respect of the year ended 30 June 2012. The number of SPRs notionally granted was determined by dividing Mr Fraser’s Total Fixed Remuneration (TFR) as at 1 September 2011 of $2,080,000 by $14.23 (being the volume weighted average price (VWAP) at which AGL’s shares traded on the ASX during the 30 calendar days up to and including 30 June 2011). 

On 22 June 2012, 21 executives received an initial notional grant of 217,395 SPRs in respect of the year ended 30 June 2012. The number of SPRs notionally granted was determined by taking the participant’s TFR as at 1 September 2011 multiplied by their pre-agreed percentage LTI component, and divided by $14.23 (being the volume weighted average price (VWAP) at which AGL’s shares traded on the ASX during the 30 calendar days up to and including 30 June 2011). 

The SPRs notionally granted are subject to two performance hurdles based on annual: 

> Total Shareholder Return (TSR); and 

> Growth in Earnings before interest and tax (EBIT)/Funds Employed 

TSR measures the total change in the value of AGL shares over the measurement period including dividends and other distributions. TSR calculates what a dollar investment in AGL would return in percentage terms at the end of a specified period. TSR rewards consistent performance in the generation of sustained shareholder value over the long term. 

EBIT/Funds Employed measures the return AGL is getting from its funds invested. EBIT/Funds Employed encourages the efficient use of capital in a capital intensive industry. 

Participants will be awarded a number of SPRs in respect of each performance condition, determined by multiplying 50% of the number of their initial grant of SPRs by the multiplier indicated in the tables below which corresponds with the TSR outcome and the growth in EBIT/ Funds Employed outcome for the financial year ending 30 June 2012. 

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In the event the TSR outcome is greater than 14%, the opening share price for measuring the following year’s TSR is set at a level that would have achieved 14%. In the event the TSR outcome is less than minus 14%, the opening share price for measuring the following year’s TSR is set at a level that would have achieved minus 14%. 

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