QANTAS AIRWAYS LIMITED SHORT TERM INCENTIVE PLAN TERMS AND CONDITIONS 1 Objective and overview The Short Term Incentive Plan (STIP) is designed to reward selected Qantas Group employees for achieving annual performance measures through such means as the Board determines from time to time, including any or a combination of: a cash bonus (Cash Bonus); and/or restricted Shares (STIP Shares); and/or a deferred cash payment (Deferred Cash Award). PART A STIP AWARDS 2 Eligibility The Board may determine from time to time which Qantas Group employees are eligible to participate in the STIP (each an Eligible Employee). 3 Invitation The Board will issue a written invitation to all Eligible Employees at or shortly after the beginning of each financial year in relation to performance for that year (the Performance Period) which, without in any way limiting the Board s discretion, will provide the following information: (iv) (v) the value of, or the method for determining the value of, the award opportunity available, including the minimum and maximum amounts being offered (Award); the relevant performance measures applicable to Awards as determined under clause 4; the manner in which it is intended that the Award will be delivered, which may be in the form of Cash Bonus, STIP Shares or a Deferred Cash Award (or any combination of those); any restrictions which attach to any STIP Shares as determined under clause 7.1; and any other terms and conditions which apply to the Award and/or STIP Shares. Additional Eligible Employees may be invited to participate in the STIP during the course of a Performance Period. Unless the Board determines otherwise, any such Eligible Employee will participate in the STIP on a pro rata basis for that Performance Period. SHORT TERM INCENTIVE PLAN TERMS & CONDITIONS Page 1 of 5
4 STIP Performance Measures Awards under the STIP will vest in whole or in part upon achievement against predetermined objectives linked to both Company and individual performance (Performance Measures) set by the Board at the beginning of each Performance Period. The Performance Measures set by the Board may include a gateway hurdle which must be achieved before any benefits accrue under the STIP. The Board will test the extent to which the applicable Performance Measures have been achieved following the end of the Performance Period and determine the extent to which a participating employee s (Participant) Award will vest (Vested Award). 5 Vested Awards In accordance with the terms set out in an invitation issued pursuant to clause 3 or as otherwise determined by the Board, Vested Awards will be provided to Participants in any combination of the following: Cash Bonus - any Cash Bonus will be paid to a Participant net of any applicable taxes at such time and on such other terms determined by the Board; STIP Shares - any STIP Shares will be granted to a Participant as fully vested but will be subject to any restriction on dealing determined pursuant to clause 7.1 and the subsequent forfeiture condition in clause 9; and Deferred Cash Award - any Deferred Cash Award will be granted as fully vested and will be payable net of any applicable taxes and at such time and on other such terms as the Board determines. 6 Ceasing employment prior to Award vesting Subject to clause 6 below, a Participant must continue to be employed by the Qantas Group on the date on which the Board determines the extent to which a Participant s Award vests pursuant to clause 4 (or such other date determined by the Board) to be eligible for payment under the STIP. A Participant, who has been employed for at least six months of the Performance Period, and who ceases employment with the Group before the date on which the Board determines the extent to which a Participant s Award vests pursuant to clause 4 (or such other date determined by the Board) by reason of death, disability or other reason with approval of the Board, will be entitled to a pro-rated amount of the Award: based on actual performance against the Performance Measures (as determined by the Board following the end of the Performance Period); and having regard to the part of the Performance Period for which the Participant was employed. Any Vested Award earned or accruing pursuant to this clause 6 will, notwithstanding clause 5, be paid as a Cash Bonus at such time and subject to such conditions as the Board determines. SHORT TERM INCENTIVE PLAN TERMS & CONDITIONS Page 2 of 5
PART B STIP SHARES 7 STIP Shares 7.1 Restrictions attaching to STIP Shares Where the Board determines that a specified proportion of any Vested Award be provided in the form of STIP Shares, Shares will be allocated to Participants as fully vested but will be held by or on behalf of each Participant until the expiration of the restriction period determined by the Board (Restriction Period). The Board may implement any procedure it considers appropriate to restrict a Participant from dealing in their STIP Shares during the Restriction Period (including determining that the legal title to the STIP Shares will be held on behalf of Participants by a trustee nominated for the purposes of the STIP). At the end of the Restriction Period, Participants may deal with their STIP Shares. 7.2 Entitlements Unless the Board determines otherwise and subject to clause 7.1, Participants will, in relation to their STIP Shares, be entitled to all of the rights and benefits of ownership of the STIP Shares including the right to: any dividends paid on, or other distributions made in relation to, the Shares; and exercise the voting rights attaching to those Shares. 8 Allocation of STIP Shares STIP Shares may, at the discretion of the Board, either be acquired or issued to satisfy the requirements of the STIP and Qantas will take all steps necessary to facilitate the allocation of shares for the purposes of STIP. The number of STIP Shares to be acquired will be, unless the Board determines otherwise, determined by dividing the relevant proportion of the Vested Award by the weighted average of the prices at which Shares were traded on ASX during the 7 days up to and including the day of allocation. Any amount of a Vested Award remaining after acquiring the maximum number of whole Shares possible will be disregarded. 9 Forfeiture Any STIP Shares which are subject to the Restriction Period will be forfeited if a Participant resigns in circumstances not approved by the Board, is terminated for cause or terminated in other circumstances determined by the Board as involving unacceptable performance or conduct. When a STIP Share is forfeited, all rights and interest of a Participant in respect of that STIP Share immediately ceases. SHORT TERM INCENTIVE PLAN TERMS & CONDITIONS Page 3 of 5
10 Corporate actions If: a Takeover Bid for Qantas is recommended by the Board or becomes unconditional and, in either event, a person has become entitled to at least 50% of the shares in Qantas, Qantas proposes to merge with another company (whether by scheme of arrangement of otherwise), a notice that the Restriction Period applicable to STIP Shares will cease, must immediately be given to the Board, and unless the Board determines otherwise within 14 days of such notice being given, the Restriction Period applicable to STIP Shares will cease on the 15 th day after the notice is given. 11 Administration of the STIP 11.1 Board powers The Board has absolute and unfettered discretion in exercising any power or discretion concerning the STIP and may: (iv) delegate to any person, for the period and on the terms it decides, the exercise of any of its powers or discretions under the STIP; decide on appropriate procedures for administering the STIP; resolve conclusively all questions of fact or interpretation concerning the STIP; and determine to cease operation of the STIP at any time. Except as otherwise expressly provided in these Terms, the Board has absolute and unfettered discretion to act or refrain from acting under or in connection with the terms of the STIP and in the exercise of any power or discretion under these Terms (including as to any STIP Shares). 11.2 Amendment of STIP Terms The Board may, at any time, amend, add to, vary, omit from or substitute any of these Terms, by notice in writing to each affected Participant. Such an amendment may not materially reduce or otherwise prejudicially affect a Participant s rights in respect of STIP Shares, other than an amendment introduced primarily: for the purpose of complying with or conforming to present or future State or Commonwealth legislation; to correct any manifest error or mistake; or to take into consideration possible adverse tax implications arising from adverse rulings from the Commissioner of Taxation, changes to tax legislation (including an official announcement by the Commonwealth of Australia) and/or changes in the interpretation of tax legislation by a court or tribunal of competent jurisdiction. Qantas must provide written notification to a Participant after any amendment has been made to these Terms. SHORT TERM INCENTIVE PLAN TERMS & CONDITIONS Page 4 of 5
11.3 Non-residents of Australia The Board may at any time, amend, add to, vary, omit from or substitute any of these Terms to ensure compliance with the requirements of, or impact of, any law or regulation in any jurisdiction in which a Participant resides (from time to time) that is outside of Australia. This clause applies notwithstanding anything in the STIP. Any clauses amended, added, varied, omitted or substituted under clause 11.3 must be notified in writing to each affected Participant. Any different clauses that are adopted under clause 11.3 may have an adverse impact upon the Participant. However, any different terms that may apply must comply, to the extent legal and practicable, with the basic principles of the STIP. 11.4 Terms of employment not affected These Terms do not form part of, and will not be incorporated into any contract of employment of a Participant and the fact that a Participant receives one invitation to participate in the STIP does not entitle them to any future invitation. A Participant does not have any rights under the STIP to compensation or damages in consequence of the exercise by Qantas or the Board of any right, power or discretion. 11.5 Notices A notice or other communication is validly given: 11.6 Governing law by Qantas to a Participant, if delivered personally to the addressee or sent by prepaid post to his or her last known residential address, or sent to him or her by facsimile or email at his or her place of work or posted on an electronic noticeboard maintained by Qantas and accessible by the Participant; and by a Participant to Qantas, if delivered or sent by prepaid post addressed to the company secretary at Qantas registered office. The STIP is governed by the laws of New South Wales and the Commonwealth of Australia. 12 Definitions In the STIP: Board means the board of directors of Qantas. Participant means an employee who participates in the STIP. Qantas means Qantas Airways Limited ACN 009 661 901. Qantas Group means Qantas, its related bodies corporate (as defined in the Corporations Act) and any other entity determined by the Board to be a member of the group for the purposes of the STIP. Share means a fully paid ordinary share in Qantas. SHORT TERM INCENTIVE PLAN TERMS & CONDITIONS Page 5 of 5