Lead Manager

SECTION 8
ADDITIONAL INFORMATION
8.10.5 Vesting and performance conditions of Options
It is envisaged that following the initial grant of Options to the Trustees and Executives as described above, any
future grant of Options will be subject to a performance condition based on Babcock & Brown’s Total
Shareholder Return (TSR) performance (although the Board may impose a different performance condition if it
is determined to be appropriate at the relevant time).TSR is the return to shareholders measured by Share price
change plus reinvested dividends, expressed as a percentage of investment.
The percentage of Options that vest will be determined by reference to Babcock & Brown’s TSR performance
over three years (and potentially four years) ranked against the TSR performance of companies in the
S&P/ASX 200 (as at the relevant date of grant), as set out below:
Group’s TSR performance ranked against comparator group Percentage of Options that vest
Below 51st percentile
Nil
At 51st percentile 50%
Between 51st and 75th percentiles Pro rata between 50% and 100%
At or above 75th percentile 100%
This performance condition will be first tested for the three-year period commencing on the date the Options
are granted.The Options will then vest to the extent the performance condition has been satisfied.Where 100%
vesting is not achieved based on Babcock & Brown’s three-year performance, the performance condition will be
tested again for the four-year period commencing on the date the Options were granted.To the extent Options
do not vest following this second test, the Options will lapse.
Once vested, Options can be exercised by the participant at any time during the two-year period that
commences on vesting. If at the end of this two-year period, the vested Options have not been exercised, they
will lapse.
If a participant ceases to be employed by Babcock & Brown or any of its subsidiaries before Options have vested
for any reason, those Options will lapse, unless the Board determines otherwise.
Similar vesting and performance criteria are likely to apply to any award of performance rights or cash awards.
8.10.6 Restriction on dealing
Shares acquired through exercise of Awards will, subject to the terms of the Plan, rank equally with all existing
Shares and participants will be entitled to rights attaching to Shares, other than the restrictions noted below that
apply to certain participants.
Employees based in Australia will not be entitled to trade in Shares acquired on the exercise of Awards until the
earliest to occur of:
• Ten years after the date of grant of the relevant Awards
• The date of cessation of employment with Babcock & Brown or any of its subsidiaries, or
• The participant makes an application to the Board to sell the Shares and the application is approved
This restriction on dealing does not apply to participants based outside Australia.
8.10.7 Other terms of the Plan
The Plan provides that, at the Board’s discretion, the exercise of Awards can be satisfied through either the issue of
new Shares or the delivery of existing issued Shares, or payment of a cash amount to the participant rather than
delivery of Shares. If the Board decides to exercise this latter discretion, the appropriate cash amount will be paid
to the participant (net of any tax required to be withheld) at the time of exercise and will take into account the
Share price at that time and the terms and conditions of the relevant Awards (including what exercise price, if
any, the participant would have been required to pay on exercise of the Award).
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