Directors’  Report 2011 As Australia’s leading integrated renewable energy company,  AGL seeks to maintain and grow its business by attracting  and retaining the best possible people to align with driving  increased shareholder value. It is important to be able to  promote and recognise the excellence we demand by  rewarding our Senior Executives appropriately. The Directors present the Remuneration Report for AGL Energy  Limited and its consolidated entities for the year ended 30 June  2011 in line with Section 300A of the Corporations Act. This report covers the remuneration and benefits of AGL’s Key  Management Personnel (KMP), which includes the five highest paid  Senior Executives (the Top 5). We have structured the report into eight sections: 1  Our remuneration policy 2  Our remuneration framework 3  Linking remuneration to performance 4  Remuneration mix 5  Key Management Personnel 6  Remuneration disclosures: KMP 7  Terms of Senior Executive contracts 8  Non-executive Directors 48 Key points for the year ended 30 June 2011 Remuneration Report Total Remuneration Package CEO’s total  remuneration down by  40% The CEOs total remuneration for the year decreased from $5.8m to $3.4m, which primarily reflects reductions in both  short and long-term incentives as a consequence of the financial results for the year. Total Fixed Remuneration (TFR) CEO’s TFR increased  by 4% The increase was informed by an independent review of external remuneration market data.  Short-term incentives (STI) STI payout for CEO was  48.75% of maximum  The STI payment balances good progress in achieving a number of AGLs’ strategic targets, including improved customer  satisfaction. On the other hand AGL did not achieve a NPAT outcome for 2010/11 within our original market guidance,  there was some deterioration in the safety lagging indicators.  Average STI payout for  direct reports to the  CEO was 55% of  maximum These payouts on average are lower than FY2010 and primarily reflect the financial results for the year. It should be noted,  however, good progress was made on the development of AGL’s integrated strategy. Long-term incentives (LTI) Negative amount  charged to LTI bank  account in 2011 AGL’s performance against the relevant performance hurdles resulted in the following outcomes for the year: > no Share Performance Rights being deposited into the Total Shareholder Return bank account; and > Share Performance Rights being deducted (or clawed back) from the EBIT/Funds Employed bank account, resulting in  this account having a negative balance. Non-executive Directors  Non-executive Directors  remuneration  Total fees paid to non-executive Directors in the year was $1.481m, $0.519m below the approved maximum aggregate to  non-executive Directors’ remuneration. The total fees paid represent a 3.2% increase over the previous year. EBIT earnings before interest and tax KMP key management personnel (those Senior Executives who have authority and responsibility for planning, directing and controlling the  activities of AGL, either directly or indirectly) LTI long-term incentive NPAT underlying net profit after tax Senior Executive those executives other than the CEO who are KMP Service Agreement a Senior Executive’s contract of employment SGC superannuation guarantee charge SPR share performance right STI short-term incentive TFR total fixed remuneration TSR total shareholder return Abbreviations used in this report