Woodside Petroleum Ltd| Remuneration Report 87
Other equity plans
Woodside has a history of providing employees with the opportunity to participate in ownership of shares in the company and
using equity to support a competitive base remuneration position, including the legacy Executive Incentive Plan.
Details of prior year allocations are provided in Table 13 on pages 92-94. The terms applying to prior year grants are described
in past Woodside Annual Reports.
Executive Incentive Plan (EIP)
The EIP operated as Woodside’s executive incentive framework until the end of 2017 when the Board introduced the EIS. The EIP
was used to deliver STA and LTA to executive KMP.
Eligible executives could only receive an STA award if their individual annual performance was assessed as acceptable. Participants
were then divided into “Pool Groups”, with the size of the pool determined by each participant's target STA, and then adjusted based
on the corporate scorecard result.
STA made up 30-33% of total target remuneration for executive KMP with no individual maximum STA opportunity because the size
of the STA pool varied from year to year depending on performance and other factors.
LTA was granted in the form of Variable Pay Rights (VPRs) making up 20-22% of total target remuneration for executive KMP.
The award was divided into two portions with each portion subject to a separate RTSR performance hurdle tested over a four-year
period. One-third of the LTA will be tested against a comparator group that comprises of the entities within the ASX 50 index.
The remaining two-thirds will be tested against an international group of oil and gas companies.
RTSR outcomes are calculated by an external adviser on the fourth anniversary of the allocation. For 2017 awards, any VPRs that
do not vest, will lapse and are not retested. Prior awards of VPRs allowed for a retest at the end of a five-year period.
Table 7 illustrates how EIP awards for executive KMP were allocated, as well as their lifecycle in future years.
Table 7 – Overview of EIP
ELIGIBLE EXECUTIVES RECEIVE
A VAR UNDER THE EIP
VAR for a Performance Year was
calculated as a percentage of FAR, which
was determined by the Board taking into
account relevant data on levels of variable
reward being oered in the market.
40% LTA
Awarded as VPRs.
VAR CONSISTS OF
PERFORMANCE YEAR
Executives must have been employed for at least part of
the Performance Year and achieve at least an acceptable
level of performance in their individual performance
assessments to be eligible for an EIP award.
RESTRICTED SHARES
Subject to a three-year
deferral period.
Performance Year Year 1 Year 2 Year 3 Year 4 Year 5
VPRS
Subject to RTSR performance
over a four-year period up to
the vesting date with no retest.
60% STA
Adjusted in accordance with the STA
pooling and performance assessment
process. Two-thirds of the STA was
paid as cash while the other third was
awarded as Restricted Shares.
Details of prior year allocations are provided in Table 13 on pages 92-94.
CEO STA & LTA
The CEO’s incentive arrangements are governed by his contract of employment. For previous years the CEO’s STA award was
determined by multiplying the CEO’s FAR by the corporate scorecard result and the CEO’s individual performance factor as
determined by the Board. Two-thirds of the award was paid in cash with the remaining third delivered as a deferred equity award
of Restricted Shares, subject to an overall cap of two times FAR.
For 2017, the LTA opportunity was set at 133% of his FAR. The entitlement was allocated at face value and in the form of VPRs and
divided into two portions with each subject to a separate RTSR performance hurdle tested over a four year period with no retest.
One- third of the LTA will be tested against a comparator group that comprises the entities within the ASX 50 index. The remaining
two-thirds will be tested against an international group of oil and gas companies.
Details of prior year allocations are provided in Table 13 on pages 92-94.