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## Short-Term Incentive (STI) STI varies from year to year, based on performance. 

STI payments are based on the achievement of individual performance targets set at the start of the financial year. STI payments are designed to motivate Executives to achieve AGL’s overall performance objectives. 

STI payments align individual performance with business outcomes in the areas of financial performance, customers, people management and strategic growth and innovation. 

Executives are eligible to be considered for an STI payment when they have performed satisfactorily in their role, met performance objectives and demonstrated AGL’s values, throughout the year. This is assessed annually using the Performance and Development Review (PDR) process (which is used for all employees throughout AGL). 

The PDR is used to measure the actual level of achievement of each objective in the financial year. No STI is payable for any objective where a minimum level of performance has not been reached. This performance management process links the amount of STI paid 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 potential entitlement varies between 50% and 100% of TFR for Executives including the CEO. 

In the year ended 30 June 2012, 165 employees participated in the STI plan. 

## How STI works 

> Varies annually based on individual performance against specified targets. 

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

STI is payable: 

> To 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 Executive is determined at the end of the financial year based on the Executive’s achievement of specified performance objectives in the following categories: 

> Financial 

> Customer 

> People management 

> Strategic growth and innovation. 

The performance objectives are established at the beginning of the financial year. The weighting given to each category varies for each 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 Executives are detailed in the table below. Performance against other objectives specific to each Executive’s key area of responsibility is also included. 

## AGL Executives’ performance objectives for 2011/12 

<img src='content_image/192843.jpg'>

