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## Note 49 – Share-based payment plans (continued) 

In the event the growth in EBIT/Funds Employed outcome is greater than 13%, the EBIT/Funds Employed for measuring the following year’s EBIT/Funds Employed is set at a level that would have achieved 13%. In the event the growth in EBIT/Funds Employed outcome is less than minus 13%, the opening EBIT/Funds Employed for measuring the following year’s EBIT/Funds Employed is set at a level that would have achieved minus 13%. 

SPRs awarded can be positive and negative. This means shares can only be awarded if there is a predetermined improvement on the prior year. Importantly however, if performance falls below a predetermined level in any year, then previously awarded SPRs will be clawed back to the extent calculated under the performance hurdles. 

Each participant has two notional share bank accounts (one for TSR, the other for EBIT/Funds Employed) and these operate independently of each other in determining whether a distribution is made. 

The SPRs awarded are deposited into a notional share bank account. An annual calculation is made as soon as practicable for the year ended 30 June to determine the number of SPRs to be added or deducted from the notional share bank accounts. 

If there is a positive notional share bank balance in a bank account following the calculation, 40% of that balance is distributed to participants during the next AGL share trading window. 

There is no distribution from a bank account if there is a negative notional share bank balance in that account following the calculation and any negative balance is carried forward to the following year. 

Under the old LTIP, SPRs granted on 27 October 2008 are subject to a performance condition based on TSR with the level of vesting being dependent upon AGL’s TSR performance measured against a comparable group of the ASX100 listed companies as at 1 October 2008. 

The performance condition was tested initially on 1 October 2011 and the number of SPRs that vested at that time was determined in accordance with the table below. To the extent that full vesting did not occur at that point, the performance condition will be retested on 1 October 2012. 

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The following table sets out details of SPRs notionally granted to executives during the year: 

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Details of SPRs movements in the AGL Long-Term Incentive Plan during the year are set out below: 

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(a) After testing the SPRs notionally granted on 20 June 2011 against the relevant performance hurdle, the SPRs are deposited into (or deducted from) the relevant share bank account for each participant. 

(b) Adjustment grants were made to adjust for dilution to the number of SPRs notionally granted on 22 June 2012 and to unvested SPRs for prior years as a result of the rights issue allotment in June 2012. 

There were nil SPRs vested but not exercisable at 30 June 2012. 

