Note 5

Director and Executive Disclosures

This note outlines the remuneration arrangements for the Bank's Directors and Specified Executives. In accordance with accounting standard AASB 1046 this note also outlines details of equity holdings, loans and other transactions Directors and Specified Executives have with the Bank and its subsidiaries.

Remuneration Committee

The Bank's remuneration arrangements are overseen by the Remuneration Committee of the Board. The Committee considers changes in remuneration policy likely to have a material impact on the Bank and is informed of leadership performance, legislative compliance in employment issues, industrial agreements and incentive plans operating across the Bank.

The Committee also considers senior appointments and remuneration arrangements for senior management. The remuneration arrangements for the CEO and his direct reports are approved by the full Board.

The policy of the Board is that the Committee shall consist entirely of independent Non-Executive Directors. The Chief Executive Officer attends Committee meetings by invitation but does not attend in relation to matters that can affect him. The Committee engages an external consultant to advise it directly in relation to the remuneration of executives.

Non-Executive Directors

Remuneration for Non-Executive Directors consists of base and committee fees within an aggregate total of $1,500,000 per year as approved by shareholders at the Annual General Meeting held on 28 October 1999. Non-Executive Directors have 20% of their annual fees applied to the mandatory on-market acquisition of shares in the Bank.

The Bank contributes to compulsory superannuation on behalf of Non-Executive Directors.

Under the Directors' Retirement Allowance Scheme, which was approved by shareholders at the 1997 Annual General Meeting, Directors accumulate a retirement benefit on a pro rata basis to a maximum of four years' total emoluments after twelve years' service. No benefit accrues until the Director has served three years on the Board. In 2002 the Board decided to discontinue the Directors' Retirement Allowance Scheme without affecting the entitlements of then existing Non-Executive Directors. After that time new Directors are not entitled to participate in the scheme. As part of a proposed arrangement relating to remuneration, the Board will be seeking shareholder approval at the 2004 Annual General Meeting to terminate accrual of further benefits under the Scheme and freeze the entitlements of current members until their respective retirements. This approach will result in remuneration arrangements being expressed in a more transparent manner which does not include retirement benefits (other than compulsory superannuation).

Executives (including the Chief Executive Officer)

The Bank's remuneration framework aims to reward executives with a mix of remuneration appropriate to their level in the organisation and incorporates a significant weighting towards variable ("at risk") pay linked to performance, both short term and long term. This focus aims to:

• reward executives for bankwide, business unit and individual performance against targets set by reference to appropriate benchmarks;
• align the interests of executives with those of shareholders;
• link executive reward with the strategic goals and performance of the Bank; and
• ensure total remuneration is competitive by market standards.

Remuneration and terms and conditions of employment are specified in an individual contract of employment with each executive which is signed by the executive and the Bank. Remuneration of the Bank's executives consists of three key elements:

• Fixed Remuneration;
• Short Term Incentive ("STI"); and
• Long Term Incentive ("LTI").

The relationship of fixed remuneration and variable pay (potential short term and long term incentives) is established for each level of executive management by the Remuneration Committee.

Currently, the variable component of remuneration is in the general range of around 35% to 80% of an executive's total potential remuneration and increases with their level in the organisation. As a result of the review with the external consultant of developments in the market, and benchmarking against peer organisations, the distribution of total potential remuneration for executives is being modified in the current year so as to increase the percentage for the STI component and decrease the percentage for the LTI component. For senior executives, including the CEO, the maximum STI potential available will generally be an amount equal to fixed remuneration.

The structure for some specialists differs from that which applies generally to executive management. With specialists, a greater proportion of the variable component of remuneration may be in short term rather than long term incentives but the overall mix of remuneration is still heavily weighted towards "at risk" pay.

Fixed remuneration consists of base remuneration (which is calculated on a total cost basis and includes any FBT charges related to employee benefits including motor vehicles) as well as employer contributions to superannuation.

Actual STI payments for executives depend on the extent to which targets set at the beginning of the financial year are met. These targets consist of a number of Key Result Areas ("KRAs") covering both financial and non-financial measures of performance. Included are measures such as contribution to net profit after tax ("NPAT"), customer service, risk management, product management, and leadership/team contribution.

STI Payments to executives are usually delivered in two components:

• Fifty percent made as an immediate cash payment; and
• Fifty percent deferred in the form of shares in the Bank.

The shares acquired vest in two equal instalments after one and two years respectively. Dividends on the deferred shares are not paid to the executive unless and until the shares vest. Generally, to receive the shares, the executive will need to be an employee of the Bank at the relevant vesting date.

LTI grants to executives are delivered in the form of Reward Shares under the Bank's Equity Reward Plan ("ERP").

No value will accrue to the executive unless the Bank's Total Shareholder Return ("TSR") at least meets the median of a peer comparator group of companies which consists of other Australian banks and financial institutions. To receive the full value of the LTI grant, the Bank's performance must be in the top quartile of the peer group. Using a comparative TSR based hurdle ensures that executives only gain where shareholders also benefit.

The Bank's executive contracts generally provide for severance payments of up to six months in the case of retrenchment. The contracts generally provide for a four week notice period. In the case of the Chief Executive Officer, the severance arrangements in Mr Murray's contract, other than for misconduct, provide for a notice period of six months and a pro-rata payment of the average of the previous three years short term incentive payment, payable in the event of termination by the Bank, after 1 May but before 30 June. In such circumstances, Mr Murray may exercise all vested options and obtain vested shares (including those that vest within two years from the Termination Date) within a period of three years from the Termination Date.

The maximum contingent liability for termination benefits in respect of service agreements with the Chief Executive Officer and other executives of the Company and its controlled entities at 30 June 2004 was $8 million (2003: $10.6 million).

On exit from the Bank, executives are entitled to receive their statutory entitlements of accrued annual and long service leave as well as accrued superannuation benefits.

Individual remuneration details of Directors and Specified Executives are set out below.

Remuneration of Directors

Other than for the Managing Director, Directors receive their remuneration in the form of fees, apportioned between cash and amounts sacrificed on a mandatory basis under the Non-Executive Directors Share Plan ("NEDSP"), superannuation and the Director's Retirement Allowance Scheme (see earlier comments regarding discontinuance of the Scheme).

	Primary Benefits			Post Employment Benefits		Equity Benefits				Total Remuneration
Year ended 30 June	Cash	Non Monetary	STI paid in Cash	Superannuation	Retirement Allowance Scheme	Deferred STI	LTI Options	LTI Reward Shares	NEDSP
	(Note 1)			(Note 2)	(Note 3)				(Note 1)
	$	$	$	$	$	$	$	$	$	$
Mr JT Ralph, AC Chairman
2004	245,887	—	—	—(5)	36,479	—	—	—	61,472	343,838
2003	248,000	—	—	5,626	127,635	—	—	—	62,000	443,261
Dr JM Schubert Deputy Chairman
2004	130,545	—	—	11,749	46,981	—	—	—	32,636	221,911
2003	128,000	—	—	11,520	102,537	—	—	—	32,000	274,057
Mr DV Murray Managing Director (see notes to table of remuneration for Specified Executives for details of individual items)
2004	1,680,000	—	450,000	136,080	—	365,000	431,666	1,363,362	—	4,426,108
2003	1,625,000	—	375,000	131,625	—	326,250	751,258	868,892	—	4,078,025
Mr NR Adler, AO Non-Executive Director
2004	90,435	—	—	8,318	23,717	—	—	—	22,609	145,079
2003	88,000	—	—	7,920	34,867	—	—	—	22,000	152,787
Mr RJ Clairs, AO Non-Executive Director
2004	86,424	—	—	7,778	38,988	—	—	—	21,606	154,796
2003	84,000	—	—	7,560	44,194	—	—	—	21,000	156,754
Mr AB Daniels, OAM Non-Executive Director
2004	86,424	—	—	7,778	41,663	—	—	—	21,606	157,471
2003	84,000	—	—	7,560	103,796	—	—	—	21,000	216,356
Mr CR Galbraith, AM Non-Executive Director
2004	89,460	—	—	8,051	46,418	—	—	—	22,365	166,294
2003	92,000	—	—	8,280	104,132	—	—	—	23,000	227,412
Ms SC Kay Non-Executive Director (appointed a Director on 5 March 2003)
2004	97,482	—	—	8,773	—	—	—	—	24,370	130,625
2003	32,328	—	—	2,910	—	—	—	—	8,082	43,320
Mr WG Kent, AO Non-Executive Director
2004	89,460	—	—	8,051	46,418	—	—	—	22,365	166,294
2003	92,000	—	—	8,280	104,132	—	—	—	23,000	227,412
Mr FD Ryan Non-Executive Director
2004	90,435	—	—	8,139	46,466	—	—	—	22,609	167,649
2003	88,000	—	—	7,920	109,074	—	—	—	22,000	226,994
Mr FJ Swan Non-Executive Director
2004	89,460	—	—	8,051	44,429	—	—	—	22,365	164,305
2003	92,000	—	—	8,280	46,924	—	—	—	23,000	170,204
Ms BK Ward Non-Executive Director
2004	90,435	—	—	8,139	51,566	—	—	—	22,609	172,749
2003	88,000	—	—	7,920	53,672	—	—	—	22,000	171,592
Total Remuneration for Directors
2004	2,866,447	—	450,000	220,907	423,125	365,000	431,666	1,363,362	296,612	6,417,119
2003(4)	2,741,328	—	375,000	215,401	830,963	326,250	751,258	868,892	279,082	6,388,174

Remuneration of Specified Executives

	Primary Benefits			Post Employment Benefits	Equity Benefits			Other Benefits		Total Remuneration
Year ended 30 June	Cash	Non Monetary	STI paid in cash	Superannuation	Deferred STI	LTI Options	LTI Reward Shares	Termination benefits	All other benefits
	(Note 1)	(Note 2)	(Note 3)	(Note 4)	(Note 5)	(Note 6)	(Note 6)	(Note 7)	(Note 8)
	$	$	$	$	$	$	$	$	$	$
Mr MA Cameron Group Executive, Financial & Risk Management (commenced in role on 1 April 2003)
2004	600,000	13,000	170,000	243,200	99,375	—	150,325	—	—	1,275,900
2003	149,589	3,241	33,034	10,770	—	—	10,586	—	150,000	357,220
Mr AR Cosenza Group Executive, Group Strategic Development (ceased in role on 16 June 2004 and proceeded on Long Service Leave)
2004	575,410	12,503	144,262	45,530	145,464	98,214	365,062	—	—	1,386,445
2003	560,000	13,000	160,000	40,320	118,750	154,873	315,056	—	—	1,361,999
Mr LG Cupper Group Executive, Human Resources
2004	580,000	13,000	156,000	115,200	156,875	118,642	415,022	—	—	1,554,739
2003	560,000	13,000	157,500	60,100	146,250	181,946	342,553	—	—	1,461,349
Mr SI Grimshaw Group Executive, Investment & Insurance Services
2004	891,000	13,000	280,000	89,880	196,875	130,054	498,873	—	—	2,099,682
2003	774,836	13,000	262,500	399,505	—	130,054	299,538	—	—	1,879,433
Mr HD Harley Group Executive, Retail Banking Services (commenced in role on 16 October 2002)
2004	700,000	13,000	230,000	101,500	130,000	75,578	321,078	—	—	1,571,156
2003	381,699	9,189	98,959	57,582	68,675	75,795	153,287	—	—	845,186
Mr MA Katz Group Executive, Premium Business Services
2004	910,000	13,000	290,000	132,100	237,500	197,736	677,520	—	—	2,457,856
2003	870,000	13,000	240,000	67,500	228,500	303,243	563,376	—	—	2,285,619
Mr RV McKinnon Group Executive, Technology
2004	540,000	13,000	142,500	38,880	122,688	55,804	253,061	—	—	1,165,933
2003	520,000	13,000	127,500	37,440	105,188	76,905	175,191	—	—	1,055,224
Mr GL Mackrell Group Executive, International Financial Services
2004	600,000	13,000	202,500	80,500	166,250	113,718	391,143	—	—	1,567,111
2003	540,000	13,000	185,000	66,802	103,500	162,251	316,556	—	—	1,387,109
Mr JK O'Sullivan Chief Solicitor and General Counsel (commenced in role on 17 October 2003)
2004	493,443	9,164	140,984	35,528	—	—	105,232	—	—	784,351
2003	—	—	—	—	—	—	—	—	—	—
Mr GA Peterson Group Executive, Group Strategic Development (commenced in role 17 June 2004)
2004	16,716	497	4,208	2,762	2,960	—	2,559	—	—	29,702
2003	—	—	—	—	—	—	—	—	—	—
Mr MJ Ullmer Group Executive, Institutional & Business Services (ceased in role 23 May 2004)
2004	754,959	6,536	250,000	118,202	244,208	177,206	607,176	845,000	332,848	3,336,135
2003	820,000	13,000	217,500	132,300	211,000	303,243	563,376	—	—	2,260,419
Total Remuneration for Specified Executives
2004	6,661,528	119,700	2,010,454	1,003,282	1,502,195	966,952	3,787,051	845,000	332,848	17,229,010
2003(9)	5,176,124	103,430	1,481,993	872,319	981,863	1,388,310	2,739,519	—	150,000	12,893,558

Employee Equity Plans — Shares and Options Vested and Exercised During the Year

	Shares Granted on Exercise of Options
	Deferred STI Vested	Reward Shares Vested	Options Vested	No.	Exercise Price	Value in excess of Exercise Price(1)
Directors
Mr DV Murray	10,853	—	1,000,000	—	—	—
Specified Executives
Mr MA Cameron	—	—	—	—	—	—
Mr AR Cosenza	3,851	10,500	162,500	100,000	$23.84	$8.81
Mr LG Cupper	4,708	12,500	225,000	150,000	$23.84	$8.91
Mr SI Grimshaw	—	—	—	—	—	—
Mr HD Harley	3,224	6,300	87,500	50,000	$23.84	$9.46
Mr MA Katz	7,752	20,900	375,000	250,000	$23.84	$8.29
Mr RV McKinnon	3,491	4,200	25,000	—	—	—
Mr GL Mackrell	3,322	9,600	157,500	—	—	—
Mr JK O'Sullivan	—	—	—	—	—	—
Mr GA Petersen	1,133	—	—	—	—	—
Mr MJ Ullmer	6,910	20,900	325,000	200,000	$23.84	$8.91
Total Specified Executives	34,391	84,900	1,357,500	750,000	N/A	N/A

Options

Mr Murray is the only Director holding options in the Bank and he did not exercise any during the year ended 30 June 2004. The Bank's Non-Executive Directors do not hold any options.

	Vested and exercisable at 30 June 2004
Name	Balance 1 Jul 2003	Granted as Remuneration	Options Exercised	Balance 30 Jun 2004	No.	Exercise Price
Directors
Mr DV Murray	1,250,000	—	—	1,250,000	1,000,000	$23.84(1)
Total for Directors	1,250,000	—	—	1,250,000	1,000,000	$23.84(1)
Specified Executives
Mr MA Cameron	—	—	—	—	—	—
Mr AR Cosenza	227,500	—	(100,000)	127,500	62,500	$26.97
Mr LG Cupper	300,000	—	(150,000)	150,000	75,000	$26.97
Mr SI Grimshaw	100,000	—	—	100,000	—	—
Mr HD Harley	137,500	—	(50,000)	87,500	37,500	$26.97
Mr MA Katz	500,000	—	(250,000)	250,000	125,000	$26.97
Mr RV McKinnon	62,500	—	—	62,500	25,000	$26.97
Mr GL Mackrell	232,500	—	—	232,500	100,000	$23.84(1)
					57,500	$26.97
Mr JK O'Sullivan	—	—	—	—	—	—
Mr GA Petersen	—	—	—	—	—	—
Mr MJ Ullmer	450,000	—	(200,000)	250,000	125,000	$26.97
Total for Specified Executives	2,010,000	—	(750,000)	1,260,000	100,000	$23.84(1)
					507,500	$26.97

Shares

Details of shareholdings of Directors and Specified Executives (or relatives or entities controlled or significantly influenced by them) are as follows:

Name	Class	Balance 1 Jul 2003	Acquired/Granted as Remuneration(1)	Net Change Other(2)	Balance 30 Jun 2004
Directors
Mr JT Ralph, AC	Ordinary	21,339	2,007	515	23,861
Dr JM Schubert	Ordinary	14,428	1,064	776	16,268
Mr DV Murray	Ordinary	214,242	—	61,287	275,529
	Deferred STI	16,704	13,576	(10,853)	19,427
	Reward Shares	152,000	90,000	—	242,000
Mr NR Adler, AO	Ordinary	8,636	736	118	9,490
Mr RJ Clairs, AO	Ordinary	11,927	704	—	12,631
Mr AB Daniels, OAM	Ordinary	15,135	704	553	16,392
Mr CR Galbraith, AM	Ordinary	6,579	731	379	7,689
Ms SC Kay	Ordinary	2,184	796	—	2,980
Mr WG Kent, AO	Ordinary	9,708	731	4,083	14,522
Mr FD Ryan	Ordinary	5,935	736	—	6,671
Mr F J Swan	Ordinary	4,038	731	227	4,996
Ms BK Ward(3)	Ordinary	4,059	736	119	4,914
Total for Directors	Ordinary	318,210	9,676	68,057	395,943
	Deferred STI	16,704	13,576	(10,853)	19,427
	Reward Shares	152,000	90,000	—	242,000

Name	Class	Balance 1 Jul 2003	Acquired/Granted as Remuneration(1)	On Exercise of Options	Net Change Other(2)	Balance 30 Jun 2004
Specified Executives
Mr MA Cameron	Ordinary	—	—	—	—	—
	Deferred STI	—	4,797	—	—	4,797
	Reward Shares	10,000	22,300	—	—	32,300
Mr AR Cosenza	Ordinary	20,000	—	100,000	(89,500)	30,500
	Deferred STI	6,034	5,793	—	(3,851)	7,976
	Reward Shares	50,000	24,700	—	(10,500)	64,200
Mr LG Cupper	Ordinary	9,365	—	150,000	(132,159)	27,206
	Deferred STI	7,415	5,702	—	(4,708)	8,409
	Reward Shares	53,000	29,500	—	(12,500)	70,000
Mr SI Grimshaw	Ordinary	1,000	—	—	(744)	256
	Deferred STI	—	9,503	—	—	9,503
	Reward Shares	53,000	37,300	—	—	90,300
Mr HD Harley	Ordinary	3,792	—	50,000	(40,081)	13,711
	Deferred STI	4,971	5,069	—	(3,224)	6,816
	Reward Shares	35,300	28,700	—	(6,300)	57,700
Mr MA Katz(3)	Ordinary	473,734	—	250,000	(316,348)	407,386
	Deferred STI	11,769	8,689	—	(7,752)	12,706
	Reward Shares	86,900	48,000	—	(20,900)	114,000
Mr RV McKinnon	Ordinary	1,601	—	—	7,691	9,292
	Deferred STI	5,382	4,616	—	(3,491)	6,507
	Reward Shares	29,700	20,000	—	(4,200)	45,500
Mr GL Mackrell	Ordinary	7,414	—	—	13,674	21,088
	Deferred STI	5,243	6,698	—	(3,322)	8,619
	Reward Shares	50,100	25,600	—	(9,600)	66,100
Mr JK O'Sullivan	Ordinary	5,401	—	—	164	5,565
	Deferred STI	—	—	—	—	—
	Reward Shares	—	33,500	—	—	33,500
Mr GA Petersen	Ordinary	1,623	—	—	1,133	2,756
	Deferred STI	2,266	2,953	—	(1,133)	4,086
	Reward Shares	11,000	8,000	—	—	19,000
Mr MJ Ullmer	Ordinary	—	—	200,000	(179,100)	20,900
	Deferred STI	10,753	7,874	—	(6,910)	11,717
	Reward Shares	86,900	48,000	—	(20,900)	114,000
Total for Specified Executives	Ordinary	523,930	—	750,000	(735,270)	538,660
	Deferred STI	53,833	61,694	—	(34,391)	81,136
	Reward Shares	465,900	325,600	-	(84,900)	706,600

ASIC Class Order

Australian banks, parent entities of Australian banks and controlled entities of Australian banks have been exempted, subject to certain conditions, under an ASIC Class Order No. 98/110 (as amended by ASIC Class Order No. 04/667), from making disclosures of any loan made, guaranteed or secured by a bank to related parties (other than for directors, specified executives and entities controlled or significantly influenced by them) and financial instrument transactions (other than shares and share options) of a bank where a director, or a specified executive, of the relevant entity is not a party and where the loan or financial instrument transaction is lawfully made and occurs in the ordinary course of banking business and either on an arm's length basis or with the approval of a general meeting of the relevant entity and its ultimate parent entity (if any). The exemption does not cover transactions that relate to the supply of goods and services to a bank, other than financial assets or services.

The Class Order does not apply to a loan or financial instrument transaction which any director, or a specified executive, of the relevant entity should reasonably be aware that if not disclosed would have the potential to adversely affect the decisions made by users of the financial statements about the allocation of scarce resources.

A condition of the Class Order is that the Bank must lodge a statutory declaration, signed by two directors, with the Australian Securities and Investments Commission accompanying the annual report. The declaration provides confirmation that the Bank has systems of internal control and procedures to provide assurance that any financial instrument transactions of a bank which are not entered into on an arm's length basis are drawn to the attention of the Directors so that they may be disclosed.

Loans to Directors and Specified Executives

Details of aggregates of loans to Directors and Specified Executives (or entities controlled or significantly influenced by them) are as follows:

	Year Ended 30 June	Balance 1 July	Interest Charged	Interest Not Charged	Write-off	Balance 30 June	Number in group at 30 June
		$000	$000	$000	$000	$000
Directors	2004	36	3	—	—	22	2
	2003	29	3	—	—	36	1
Specified Executives	2004	4,633	377	—	—	8,829	6
	2003	3,845	193	—	—	2,434	3
Total Directors and Specified Executives	2004	4,669	380	—	—	8,851	8
	2003	3,874	196	—	—	2,470	4

Details of individuals with loans above $100,000 in the reporting period are as follows:

	Balance 1 July 2003	Interest Charged	Interest Not Charged	Write-off	Balance 30 June 2004	Highest in Period
Name	$000	$000	$000	$000	$000	$000
Directors
Not Applicable
Specified Executives
Mr SI Grimshaw	—	19	—	—	—	2,639
	—	14	—	—	1,543	1,543
Mr HD Harley	335	26	—	—	335	338
	904	35	—	—	272	931
	208	13	—	—	245	245
	251	15	—	—	250	253
	204	13	—	—	204	205
	55	3	—	—	116	116
	274	22	—	—	321	321
Mr MA Katz	175	11	—	—	175	175
	175	10	—	—	175	175
Mr GL Mackrell	300	20	—	—	295	303
	124	9	—	—	146	150
Mr JK O'Sullivan	1,500	91	—	—	1,500	1,502
	—	<1	—	—	200	200
	—	37	—	—	861	941
	—	8	—	—	208	208
Mr GA Petersen	—	9	—	—	900	900
	—	9	—	—	800	800

Terms and conditions of Loans

All loans with Directors and Specified Executives (or related entities controlled or significantly influenced by them) have been provided on an arms-length commercial basis including the term of the loan, security required and the interest rate (which may be fixed or variable).

Shares of Directors

All shares were acquired by Directors on normal terms and conditions or through the Non-Executive Directors' Share Plan (or in the case of Mr Murray the Equity Reward Plan, the previous Executive Option Plan or the Equity Participation Plan). Mr Murray did not exercise any options during the year; leaving his total holdings of options at 1,250,000 under the Equity Reward Plan and the previous Executive Option Plan. (No further options will be granted under the Equity Reward Plan. The Executive Option Plan was discontinued in 2000). Mr Murray was also awarded rights to 90,000 shares under the Equity Reward Plan and 13,576 shares under the Equity Participation Plan during the year. He has a total holding of 242,000 shares under the Equity Reward Plan and 19,427 shares under the Equity Participation Plan. Shares awarded under the Equity Reward Plan and Equity Participation Plan are registered in the name of the Trustee. The transfer of legal title to Mr Murray is subject to vesting conditions, and, in the case of the Equity Reward Plan, is conditional on the Bank achieving a prescribed performance hurdle over a minimum three year period.

In addition, Mr Ralph holds an investment of $175,780 in Commonwealth Property Securities Fund and an investment of $532,739 in Colonial First State Global Diversified Strategies Fund. Both holdings are held beneficially. Dr Schubert holds an investment of $654,683 in Colonial First State Wholesale Diversified Fund. Mr Daniels beneficially holds an investment of $54,919 in Colonial First State Global Health and Biotech Fund. A related party of Mr Daniels holds an investment of $235,972 in Colonial First State Future Leaders Fund and $221,772 in Colonial First State Imputation Fund.

Other Transactions of Directors, Specified Executives and Other Related Parties

Financial Instrument Transactions

Financial instrument transactions (other than loans and shares disclosed above) of Directors and Specified Executives with the Bank and other banks that are controlled entities occur in the ordinary course of business of the banks on an arm's length basis.

Under the Australian Securities and Investments Commission Class Order referred to above, disclosure of financial instrument transactions regularly made by a bank is limited to disclosure of such transactions with a Director, Specified Executive and entities controlled or significantly influenced by them.

All such financial instrument transactions that have occurred between the banks and their Directors and Specified Executives have been trivial or domestic and were in the nature of normal personal banking and deposit transactions.

Transactions other than Financial Instrument Transactions of Banks

All other transactions with Directors, Specified Executives and their related entities and other related parties are conducted on an arm's length basis in the normal course of business and on commercial terms and conditions. These transactions principally involve the provision of financial and investment services by non bank controlled entities. The interests of Mr Ralph, Dr Schubert and Mr Daniels in investment funds managed by Colonial First State are detailed above. Additionally, Mr Galbraith is a partner in the law firm, Allens Arthur Robinson, which acted for the Bank in the provision of legal services during the financial year. The fees for these services amounted to $4,059,827.

All other such transactions that have occurred with Directors, Specified Executives and their related entities and other related parties have been trivial or domestic and were principally in the nature of lodgement or withdrawal of deposit, unit funds and superannuation monies.

The Directors' Retirement Allowance Scheme

The entitlements of the Non-Executive Directors under the Directors' Retirement Allowance Scheme are:

	Increase in accrued benefit in year	Entitlement as at 30 June 2004
	$	$
Non-Executive Directors
Mr JT Ralph, AC	36,479	1,196,479
Dr JM Schubert	46,981	624,241
Mr NR Adler, AO	23,717	419,059
Mr RJ Clairs, AO	38,988	184,788
Mr AB Daniels, OAM	41,663	145,459
Mr CR Galbraith, AM	46,418	150,550
Ms SC Kay(1)	—	—
Mr WG Kent, AO	46,418	150,550
Mr FD Ryan	46,466	155,540
Mr FJ Swan	44,429	258,086
Ms BK Ward	51,566	352,955

Non-Executive Directors Share Plan (NEDSP)

The NEDSP provides for the acquisition of shares by non-executive directors through the mandatory sacrifice of 20% of their annual fees (paid on a quarterly basis). Shares purchased are restricted for sale for 10 years or when the Director leaves the Board, whichever is earlier. Shares acquired under the plan receive full dividend entitlements and voting rights. There are no forfeiture or vesting conditions attached to shares granted under the NEDSP.

Shares are purchased on-market at the current market price and a total of 34,009 shares have been purchased under the NEDSP since the plan commenced in 2001.

Details of grants under the NEDSP from 1 July 2003 to 30 June 2004 were as follows:

Quarter Ending	Total Fees Sacrificed	Participants	Shares Purchased	Average Purchase Price
30 Sept 2003	$74,636	11	2,678	$27.87
31 Dec 2003	$74,650	11	2,534	$29.46
31 Mar 2004	$73,762	11	2,214	$33.32
30 Jun 2004	$73,616	11	2,250	$32.72

No trading restrictions were lifted on shares during the period 1 July 2003 to the date of this report.

For the current year, $297,000 was expensed to the profit and loss account reflecting shares purchased and allocated under the NEDSP.

Equity Participation Plan (EPP)

The EPP facilitates the voluntary sacrifice of both fixed remuneration and annual short term incentives ("STIs") to be applied in the acquisition of shares. The Plan also facilitates the mandatory sacrifice of STI payments.

All shares acquired by employees under this Plan are purchased on-market at the current market price. A total number of 5,812,425 shares have been acquired under the EPP since the plan commenced in 2001.

Details of purchases under the EPP from 1 July 2003 to 30 June 2004 were as follows:

Allotment Date	Participants	Shares Purchased	Average Purchase Price
30 Sept 2003	62	8,175	$27.89
31 Oct 2003	2,453	2,147,975	$27.62
31 Dec 2003	73	9,915	$29.46
31 Mar 2004	63	7,527	$33.32
30 Jun 2004	71	9,496	$32.72

Under the voluntary component of the EPP, shares purchased are restricted for sale for two years or when a participating employee ceases employment with the Bank, whichever is earlier. Shares purchased under the voluntary component of the EPP carry full dividend entitlements, voting rights and there are no forfeiture or vesting conditions attached to the shares.

Under the mandatory component of the EPP, fully paid ordinary shares are purchased and held in Trust until such time as the vesting conditions have been met. The vesting condition attached to the shares specifies that participants must remain employees of the Bank until the vesting date (generally a period of one and two years after the STI award period).

Each participant of the mandatory component of the EPP for whom shares are held by the Trustee on their behalf, has a right to receive dividends. Once the shares vest, dividends which have accrued during the vesting period are paid to participants. The participant may also direct the Trustee on how the voting rights attached to the shares are to be exercised during the vesting period.

Where participating employees do not satisfy the vesting conditions, shares and dividend rights are forfeited.

The movement in shares purchased under the mandatory component of the EPP has been as follows:

Details of Movements	July 02 - June 03	July 03 - June 04
Shares held under the plan at the beginning of year	1,478,423	2,497,184
Shares allocated during year	1,968,197	2,121,075
Shares vested during year	(836,437)	(1,715,807)
Shares forfeited during year	(112,999)	(112,099)
Shares held under the plan at end of year	2,497,184	2,790,353

Shares acquired under both the voluntary and mandatory components of the EPP have been expensed against the profit and loss account. In the current year, $67 million was expensed against the profit and loss account to reflect the cost of allocations under the Plan.

Equity Reward Plan (ERP)

The Board has envisaged that up to a maximum of 500 employees would participate each year in the ERP.

Previous grants under the ERP were in two parts, comprising grants of options and grants of shares. Since 2001/02, no options have been issued under the ERP. From 2002/03 Reward Shares have only been issued under this plan.

The exercise of previously granted options and the vesting of employee legal title to the shares is conditional on the Bank achieving a prescribed performance hurdle. The ERP performance hurdle is based on relative Total Shareholder Return ("TSR") with the Bank's TSR performance being measured against a comparator group of companies.

The prescribed performance hurdle for options and Reward Shares issued prior to 2002/03 was:

• The Bank's TSR (broadly, growth in share price plus dividends reinvested) over a minimum three year period, must equal or exceed the index of TSR achieved by the comparator group of companies. The comparator group (previously companies represented in the ASX's ‘Banks and Finance Accumulation Index’ excluding the Bank) was widened in 2001/02 to better reflect the Bank's business mix; and
• If the performance hurdle is not reached within that three years the options may nevertheless be exercisable or the shares vest, only where the hurdle is subsequently reached within 5 years from the grant date.

For Reward Shares granted from 2002/03 onwards, a tiered vesting scale was introduced so that 50% of the allocated shares vest if the Bank's TSR is equal to the median return, 75% vest at the 67th percentile and 100% when the Bank's return is in the top quartile.

Where the rating is at least at the 50th percentile on the third anniversary of the grant, the shares will vest at a time nominated by the executive, within the trading windows, over the next two years. The vesting percentage will be at least that achieved on the third anniversary of the grant and the executive will be able to delay vesting until a subsequent half yearly window prior to the fifth anniversary of the grant. The vesting percentage will be calculated by reference to the rating at that time.

Where the rating is below the 50th percentile on the third anniversary of grant, the shares can still vest if the rating reaches the 50th percentile prior to the fifth anniversary, but the maximum vesting will be 50%.

Reward Shares acquired under the share component of the ERP are purchased on-market at the current market price. The cost of shares acquired is expensed against the Profit and Loss Account over a three year period, reflecting the minimum vesting period. In the current year, $8 million has been expensed to the profit and loss account reflecting the cost of Reward Shares purchased and allocated under the plan.

Executive options issued up to September 2001 have not been recorded as an expense by the Bank.

Details of options issued and shares acquired under ERP as well as movements in the options and shares are as follows:

Options

Year of Grant	Commencement Date	Issue Date	Options Issued	Options Outstanding(1)	Participants	Exercise Price	Exercise Period
2000	13 Sep 2000	7 Feb 01	577,500	402,500	16	$26.97(2)	14 Sep 2003 to 13 Sep 2010(4)
	13 Sep 2000	31 Oct 01	12,500	—	1	$26.97(2)	14 Sep 2003 to 13 Sep 2010(4)
2001	3 Sep 2001	31 Oct 01	2,882,000	2,122,700	61	$30.12(3)	4 Sep 2004 to 3 Sep 2011(5)
	3 Sep 2001	31 Jan 02	12,500	12,500	1	$30.12(3)	4 Sep 2004 to 3 Sep 2011(5)
	3 Sep 2001	15 Apr 02	100,000	100,000	1	$30.12(3)	4 Sep 2004 to 3 Sep 2011(5)

Options — Details of Movements

	July 02 to June 03		July 03 to June 04
Year of Grant	2000	2001	2000	2001
Total options
Held by participants at the start of year	572,500	2,863,100	427,500	2,336,400
Granted during year	—	—	—	—
Exercised during year	—	—	—	—
Lapsed during year	145,000	526,700	—	101,200
Outstanding at the end of year	427,500	2,336,400	427,500	2,235,200
Granted from 30 June to date of report	—	—	—	—
Exercised from 30 June to date of report	—	—	25,000	—
Lapsed from 30 June to date of report	—	—	—	—
Outstanding as at the date of report	427,500	2,336,400	402,500	2,235,200

Reward Shares

Year of Grant	Purchase Date	Shares Purchased	Shares Allocated	Participants	Vesting Period	Average Purchase Price
2000	20 Feb 2001	361,100	361,100	61	14 Sept 2003 to 13 Sept 2005(4)	$29.72
	31 Oct 2001	2,000	2,000	1	14 Sept 2003 to 13 Sept 2005(4)	$29.25
2001	31 Oct 2001	652,100	661,500(1)	241	4 Sept 2004 to 3 Sept 2006(5)	$29.25
2002	22 Nov 2002	357,500	545,500(2)	195	3 Sept 2005 to 2 Sept 2007(5)	$28.26
2003	12 Nov 2003	285,531	595,600(3)	255	2 Sept 2006 to 1 Sept 2008(5)	$28.33

Reward Shares — Details of Movements

	July 02 to June 03			July 03 to June 04
Year of Grant	2000	2001	2002	2000	2001	2002	2003
Total Reward Shares
Held by participants at the start of year	337,300	638,800	—	217,100	518,500	515,300	—
Granted during year	—	—	552,000	—	—	—	597,100
Vested during year	—	—	—	195,700	—	—	—
Lapsed during year	120,200	120,300	36,700	21,400	59,000	43,225	10,725
Outstanding at the end of year	217,100	518,500	515,300	—	459,500	472,075	586,375
Granted from 30 June to date of report	—	—	—	—	—	—	—
Vested from 30 June to date of report	—	—	—	—	—	—	—
Lapsed from 30 June to date of report	—	—	—	—	22,500	26,250	28,875
Outstanding as at the date of report	217,100	518,500	515,300	—	437,000	445,825	557,500

During the vesting period, Reward Shares are held in Trust. Each participant on behalf of whom Reward Shares are held by the Trustee, has a right to receive dividends. Once the shares vest dividends are paid in relation to those accrued during the vesting period. The participant may also direct the trustee on how the voting rights attached to the shares are to be exercised during the vesting period.

For a limited number of executives including overseas based staff and those approved by the Chief Executive Officer and ratified by Remuneration Committee and Board, a cash based ‘share replicator’ ERP scheme is operated by way of grants of performance units The performance unit grants are subject to the same vesting conditions as the Reward Share component of the ERP. On meeting the vesting condition, a cash payment is made to executives whereby the value is determined based on the current share price on vesting plus an accrued dividend value. An amount of $5 million has been expensed to the profit and loss in respect of the year ended 30 June 2004 to reflect future payments which may be required under the ‘share replicator’ plan.

Executive Option Plan (EOP)

As previously notified to shareholders, this plan was discontinued in 2000/01.

Under the EOP, the Bank granted options to purchase ordinary shares to those key executives who, being able by virtue of their responsibility, experience and skill to influence the generation of shareholder wealth, were declared by the Board of Directors to be eligible to participate in the Plan. Non-executive directors were not eligible to participate in the Plan.

Options cannot be exercised before each respective exercise period and the ability to exercise is conditional on the Bank achieving a prescribed performance hurdle. The option plan did not grant rights to the option holders to participate in a share issue of any other body corporate.

The performance hurdle is the same TSR comparator hurdle as outlined above for the Equity Reward Plan ("ERP") grants prior to 2002/03.

The last grant under EOP was made in September 2000. The performance hurdles for the August 1999 grant and the September 2000 grant were met in 2004.

Details of issues made under EOP as well as movements for 2002/03 and 2003/04 are as follows:

Executive Option Plan (EOP)

Commencement Date	Issue Date	Options Issued	Options Outstanding	Participants	Exercise Price(1)	Exercise Period
3 Nov 1997	11 Dec 1997	2,875,000	—	27	$15.53(2)	4 Nov 00 to 3 Nov 02
25 Aug 1998	30 Sep 1998	3,275,000	—	32	$19.58(2)	26 Aug 01 to 25 Aug 03
24 Aug 1999	24 Sep 1999	3,855,000	1,875,000	38	$23.84(2)	25 Aug 02 to 24 Aug 09(3)
13 Sep 2000	13 Oct 2000	2,002,500	1,144,600	50	$26.97(2)	14 Sep 03 to 13 Sep 10(4)

Details of Movements

	1 July 2002 to 30 June 2003(1)				1 July 2003 to 30 June 2004(1)
Year of Grant	1997	1998	1999	2000	1998	1999	2000
Total options
Held by participants at the start of year	50,000	1,047,500	3,525,000	1,691,700	312,500	3,221,000	1,336,200
Exercised during year	—	660,000	—	—	312,500	1,271,000	129,100
Lapsed during year	50,000	—	304,000	355,500	—	25,000	12,500
Outstanding at the end of year	—	387,500	3,221,000	1,336,200	—	1,925,000	1,194,600
Exercised from 30 June to date of report	—	—	—	—	—	50,000	50,000
Lapsed from 30 June to date of report	—	75,000	—	—	—	—	—
Outstanding as at the date of report	—	312,500	3,221,000	1,336,200	—	1,875,000	1,144,600

Summary of shares issued during the period 1 July 2003 to the date of the report as a result of options being exercised are:

Option Issue Date	Shares Issued	Price paid per Share	Total Consideration Paid
30 Sep 1998	312,500	$19.58	$6,118,750
24 Sep 1999	1,321,000	$23.84	$31,492,640
13 Oct 2000	179,100	$26.97	$4,830,327
7 Feb 2001	25,000	$26.97	$674,250

No amount is unpaid in respect of the shares issued upon exercise of the options during the above period.

Under the Bank's EOP and ERP an option holder generally has no right to participate in any new issue of securities of the Bank or of a related body corporate as a result of holding the option except that if there is a pro rata issue of shares to the Bank's shareholders by way of bonus issue involving capitalisation (other than in place of dividends or by way of dividend reinvestment) an option holder is entitled to receive additional shares upon exercise of the options being the number of bonus shares that the option holder would have received if the options had been exercised and shares issued prior to the bonus issue.