80 Woodside Petroleum Ltd|Annual Report 2018
New Executive Incentive Scheme introduced in 2018
Following a comprehensive review of Woodside’s incentive structure, the Executive Incentive Scheme (EIS) was introduced for the
2018 performance year. All executives have transitioned into the scheme and the terms of the CEO's contract have been updated
to facilitate the new structure. The new scheme remunerates our executives for delivering outstanding results, whilst avoiding
inappropriate remuneration outcomes for under-performance. The EIS has been designed to deliver three key objectives:
The scheme delivers a single combined award to executives which is linked to annual individual and corporate performance,
designed to be simple and transparent. We have considerably reduced the variable cash opportunity for executives with a significant
proportion of the award allocated in equity whilst introducing extended deferral periods which align to our strategic horizons of
delivery. Awards under the EIS will be granted for the first time in 2019 based on performance against the corporate scorecard and
individual KPIs set for the 2018 performance year.
The Board has strong oversight and governance to ensure that appropriate, challenging and stretch targets are set to ensure
the clear link between performance and reward. The Board has overriding discretion to adjust outcomes in line with shareholder
experience and company or management performance.
VARIABLE ANNUAL REWARD
Performance
Rights
12 month
performance
period
30%
30%
27.5 %
12.5%
Restricted
Shares
Restricted
Shares
Cash
The entire EIS award (cash, Restricted Shares and Performance Rights)
is subject to performance in the initial 12 month performance period.
Allocated using a
face value methodology
Performance tested
Subject to a relative total shareholder return (RTSR) test five years after
the date of allocation; divided into two separate tranches with one third
tested against the ASX 50 companies and the remainder against a group of
international oil & gas companies
Time tested
Subject to a five-year deferral period
Time tested
Subject to a three-year
deferral period
Payable following
the end of the
performance year
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
EXECUTIVE ENGAGEMENT
+Enable Woodside to attract and
retain executive capability in a
globally competitive environment
by providing executives with a
simple remuneration structure
and clear line of sight to how
performance is reflected in
remuneration outcomes.
ALIGNMENT WITH THE
SHAREHOLDER EXPERIENCE
+87.5% of the award will be
delivered as equity in the form
of Restricted Shares or
Performance Rights. The
Performance Rights are RTSR-
tested after five years against
comparator groups.
STRATEGIC FIT
+60% of the award will have a
five-year vesting period, which
reflects Woodside’s strategic
time horizons to drive executives
to deliver our strategic objectives
with discipline and collaboration
and in turn create shareholder
value.