content_image/183733.jpg content_image/183735.jpg content_image/183737.jpg content_image/183736.jpg content_image/183734.jpg
As with TSR, there is the same cap and floor mechanism for EBIT/ Funds Employed that assists in controlling excessive reward or penalty to management, in any given year, where the significant increase or significant decrease in EBIT/Funds Employed was only temporary. The cap and floor have been set at different rates to reflect the working capital issue highlighted above. 

Note: SPRs banked under the LTIP can be both positive and negative. SPRs can only vest if there is a pre-determined improvement on the previous year. Importantly however, if performance falls below a pre-determined level in any year, previously banked SPRs will be clawed back to the extent calculated under the performance hurdles. 

This feature provides the opportunity to assess performance over multiple years and therefore supports the intent of the LTIP to align shareholder and Executive interests over the long term. 

4. After testing any notionally granted SPRs against the relevant performance hurdle the SPRs are deposited into (or deducted from) the relevant share bank account for each participant. At the end of every financial year 40% of any positive bank account balance is distributed to participants as AGL shares. The balance (if any) of each bank account is carried forward and may vest or be clawed back in future years. Any negative balance is also carried forward. 

The below example shows how the LTIP worked in July 2012 for the CEO (using actual figures). 

<img src='content_image/183733.jpg'>

<img src='content_image/183735.jpg'>

<img src='content_image/183737.jpg'>

<img src='content_image/183736.jpg'>

<img src='content_image/183734.jpg'>

