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## Long-Term Incentive 

AGL has obtained shareholder approval to issue the maximum number of Share Performance Rights available to Mr Fraser in respect of each of the financial years ending 30 June 2009, 30 June 2010 and 30 June 2011. 

The CEO’s LTI allocation was 100% of his TFR in accordance with contractual rights within the shareholder approved maximum allocation number of Share Performance Rights. 

The Share Performance Rights granted to Mr Fraser under the LTI Plan will vest, subject to meeting the associated performance hurdles, at no cost to Mr Fraser. 

## Restraint 

Mr Fraser must not, for a period of six months following termination of his appointment: 

> be engaged or concerned in any capacity whatsoever, in any business which is similar to, or competitive with, AGL’s business; 

> solicit or entice, or attempt to solicit or entice, any Director, employee or client of AGL to leave AGL; or 

> attempt to persuade any Director, employee or client of AGL with whom Mr Fraser had dealings with in the year preceding the termination of his appointment to discontinue their relationship with AGL or reduce the amount of business they do with AGL. 

## 8. Non-executive Directors 

Non-executive Directors do not receive performance- related payments. 

Non-executive Directors receive a base fee. In addition, in recognition of the higher workloads and extra responsibilities of participating in a Board Committee, if applicable they also receive a Committee fee. Chairing a Committee attracts a higher fee rate, but the Chairman of the Board receives no extra remuneration for participating in or chairing Committees. 

The maximum aggregate remuneration payable to non-executive Directors is $2.0 million a year or such other amount as approved at a general meeting of shareholders. 

Non-executive Directors’ fees are determined by the Board based on advice from independent remuneration advisers, which includes market comparison of remuneration paid to non-executive Directors in a comparator group of similar sized companies as well as the ASX100. 

Any changes to non-executive Directors’ fees take effect from 1 January in the following year. 

The market peer group used as a comparator group for the non-executive Directors is made up of companies who have a market capitalisation ranging from 20 companies below, to 20 companies above, the market capitalisation of AGL. 

As the focus of the Board is the governance of and long-term strategic direction of AGL, there is no direct link between non- executive Director remuneration and AGL’s short-term results. 

Non-executive Directors may choose to receive fees as a combination of one or more of: 

> Directed superannuation contributions.  Subject to minimum contributions as required under SGC legislation, and maximum tax deductible contributions under the Income Tax Assessment Act, non-executive Directors may direct that some or all of their fees be paid as contributions to a complying superannuation fund of their choice. 

> AGL shares acquired under the AGL Share Purchase Plan.  The Plan Trustee acquires AGL shares on-market at market price during permitted trading periods. Details of the trading periods are included in the AGL Securities Dealing Policy which is available on AGL’s website. 

> Cash. The balance of fee entitlements is paid in cash to the non-executive director in equal monthly amounts over the year. 

Non-executive Directors are permitted to vary the components of their fee entitlements at any time. 

No options have been granted to non-executive Directors over any securities or interests of AGL or the consolidated entity. 

The Board conducted a review of its own performance, the performance of individual Directors, and the performance of the Board Committees during the last year. 

The fee structure for non-executive Directors, effective 1 January 2011, is as follows: 

<img src='content_image/178610.jpg'>

## Five year fi nancial performance 

The following table shows AGL’s annual performance over the last fi v e y e a r s . 

<img src='content_image/178611.jpg'>

Notes: 

1. EPS is calculated on the Underlying Profi t. 

2. Dividends per share (DPS) relate to financial years, not when they were paid. 

## Approval of Director’s Report 

This Directors’ Report is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Board this 25th day of August 2011: 

<img src='content_image/178613.jpg'>

