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with AGL’s overall performance, as well as an individual’s performance during the year, and gives superior rewards for outstanding performance. 

The maximum STI payment varies between approximately 45% and 100% of TFR for Senior Executives including the CEO. 

In the year ended 30 June 2011, 162 employees participated in the STI plan. 

## How STI works 

> Varies annually based on individual performance against specifi ed targets. 

> Can be paid in cash or as a contribution to a complying superannuation fund. 

STI are payable: 

> To Senior Executives employed at the end of the financial year. 

> At the discretion of the Board in other exceptional circumstances. 

## How STI was linked to performance this year 

The actual level of STI paid to each Senior Executive is determined at the end of the financial year based on the Senior Executive’s achievement of specified performance objectives in the following categories: 

>Financial 

>Customers 

> People management 

>Strategic 

The performance objectives are established at the beginning of the financial year. The weighting given to each category varies for each Senior Executive, depending on their role. Typically, the weightings for KMP might be: 

>Financial 40% 

> Customers and Strategic 40% 

> People management 20% 

Results against objectives common to all Senior Executives are detailed in the table opposite. Performance against other objectives specific to each Senior Executive’s key area of responsibility is also included below. 

## AGL Senior Executives’ performance objectives for 2010/11 

<img src='content_image/248241.jpg'>

<img src='content_image/248242.jpg'>

The details of actual STI received for the year ended 30 June 2011 for KMP, are set out in the remuneration table in section 6 on page 54. 

## Long-Term Incentive (LTI) 

LTI is designed to drive performance which results in long-term shareholder value. 

LTI consists of Share Performance Rights (SPRs), which vest over time if specific applicable performance hurdles are met. 

A SPR: 

> is an entitlement to one fully-paid ordinary share in AGL; 

> does not carry dividend or voting rights; and 

> is adjusted for the effect of any bonus issues, rights issues, and reconstructions and reorganisations of the capital of AGL. 

Participants are restricted from entering into any derivative or other financial product in relation to the SPRs to protect against an economic exposure to price movements in AGL shares. 

LTI allocations are determined, based on market practice, so that AGL remains competitive in remuneration against its comparator group. 

