51 AGL Energy Limited Annual Report 2012 AGL Executives’ performance objectives for 2011/12 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. 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. 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. 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. > To Executives employed at the end of the financial year. > At the discretion of the Board in other exceptional circumstances. STI is payable: 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: How STI was linked to performance this year > 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%. Common objectives What Result Financial  results All Executives had an  objective related to  AGL’s Underlying Profit  for 2011/12 as well as  individual Business Unit  operating expenses.  Underlying Profit was  an 11.8% improvement  over 2010/11 and was  within our market  guidance. Safety  performance Completing specific  plans to continue  improving AGL’s safety  leadership and culture  (including targets with  respect to injury rates). 99% of all specific  safety action plans  for 2011/12 were  completed.  However in terms of  lagging indicators the  Lost Time Injury  Frequency Rate for  2011/12 was 4.2  compared to 2.1 for  2010/11 and the Total  Injury Frequency Rate  (TIFR) for 2011/12 was  6.6 compared to 5.0 for  2010/11. These results were not  in line with our safety  targets of 100%  completion of our  safety action plans and  TIFR target of 4.0. STI  payments were  adjusted downwards  accordingly. Customer  satisfaction All Executives had an  objective to improve  AGL’s overall customer  satisfaction, as  measured against  our competitors. AGL outperformed key  competitors across a  range of customer  service and satisfaction  measures including  Customer Services  Benchmarking Australia. Employee  engagement Specific initiatives are  developed each year to  build employee  engagement and AGL  invites all employees to  take part in an  engagement survey. All  Executives had targets  with respect to  employee engagement. Numerous initiatives to  promote engagement  were successfully  implemented across  the business.  The overall 2012 survey  result for employee  engagement at AGL  was 64% compared  to a result of 54% for  2010/11. The 10  percentage point  increase in 12 months  is seen as a significant  increase based on  external benchmarks.