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									Remuneration Policy
Introduction & Purpose

Origin Energy Limited is committed to ensuring that its remuneration practices enable the
Company to:

o   Appropriately compensate employees for the services they provide to the Company;
o   Attract and retain employees with skills required to effectively manage the operations and
    growth of the business;
o   Motivate employees to perform in the best interests of the Company and its stakeholders;
o   Provide an appropriate level of transparency; and
o   Ensure a level of equity and consistency across the group.


Remuneration Committee

Under the terms of the Remuneration Committee Charter, the role of the Committee is to provide
advice and make recommendations to the Board on the following matters:

o   Remuneration policy and any changes to remuneration policy and practices for all employees
    whose remuneration is not determined through Awards or Enterprise Bargaining Agreements;
o   The remuneration for non-executive Directors;
o   The remuneration for the Managing Director and members of the Executive Management
    Team, being those executives reporting to the Managing Director;
o   Targets for the Company’s financial performance as they relate to incentive plans, and the
    performance-based (at-risk) components of remuneration; and
o   Allocations made under all equity-based remuneration plans.

The Board of Directors has authority to approve remuneration matters brought before it, subject
to any shareholder approvals that may be required by law.

The Remuneration Committee is comprised solely of non-executive Directors, with no fewer than
three members.

General Manager, Human Resources, Health, Safety & Environment

The General Manager, HR & HSE, provides secretarial assistance to the Remuneration Committee
and is accountable for ensuring that appropriate processes and procedures are in place to
effectively implement the performance management and remuneration system. This system

o   A consistent role evaluation methodology to establish appropriate levels of remuneration;
o   A framework for assessing the performance of individual employees relative to objectives and
    providing an ongoing program to train managers, supervisors and employees in the effective
    application of the system;

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o   A remuneration structure designed to deliver fixed and performance-based elements;
o   Appropriate control procedures to ensure the effective operation of the performance
    management and remuneration system;
o   Appropriate disclosure of remuneration information; and
o   The provision of adequate, accurate and timely market information to enable the
    Remuneration Committee to make informed decisions.

Managers and Supervisors

Managers and supervisors are responsible for:

o   Ensuring accurate role descriptions are in place, with sufficient detail on elements required to
    allow consistent assessments and comparison to be undertaken;
o   Conducting effective assessments of employee performance; and
o   Negotiating relevant enterprise agreements, in consultation with the Human Resources group
    to optimise alignment with the Company’s remuneration practices and other employment
    matters. Approval for agreements will be through the General Manager, HR & HSE or the
    Managing Director.

Remuneration Policy and Procedures

Non-Executive Director Remuneration

Non-executive Directors are remunerated by way of fees paid, including fees paid in recognition of
membership on Board sub-committees, superannuation and participation in the shareholder-
approved non-executive Directors share plan. Some non-executive Directors retain entitlements
to retirement allowance benefits under the terms of the arrangements which ceased at 31
December 2002. No new entitlements will arise from this allowance in future.

The overall level of annual non-executive Director fees is approved by shareholders in accordance
with the requirements of Corporations Act. Directors decide on actual fees, set by reference to
the market and within the bounds of the shareholder approval. Attachment 1 is a schedule of non-
executive Director fees currently applicable.

Employee Remuneration


Origin aligns its remuneration with that of comparable organisations for roles at all levels of the
Company. A systematic role evaluation methodology is used to establish each employee’s
appropriate level of remuneration. Remuneration comprises elements of fixed remuneration and
performance-based (at-risk) remuneration.

At a minimum, all full-time and part-time employees have an element of their remuneration at-
risk once they have been with the Company for a one-year qualifying period, after which they are
eligible to participate in the Employee Share Plan described below in Equity-Based Remuneration.
The proportion of an employee’s total remuneration that is at-risk increases with seniority and
with the individual’s ability to impact the performance of the Company. At-risk elements of total
remuneration comprise both short-term incentives as a reward for performance and long-term
incentives that align medium and long-term shareholder interests. The long-term incentive
structure also encourages retention of high performance employees in the organisation.
Attachment 2 provides details of the key features of the terms of employment and remuneration
for the Managing Director. Attachment 3 provides details of the performance-based elements of
remuneration for senior executives reporting to the Managing Director.

An annual performance review process assesses the degree to which each employee is satisfying
the requirements of his/her role and the degree to which established performance objectives have
been achieved.

For positions where pay is primarily controlled by collective bargaining or industrial agreements,
Origin’s strategy is to promote and maximise the implementation of “pay-for-performance” scales
and structures. These may result in base salaries that include elements of market and
performance consideration, but nevertheless reflect the principal strategy of discriminating for
superior performance.

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Fixed Remuneration

Origin’s principal remuneration strategy for fixed remuneration is to align it with the medians of
comparable industry positions. Origin benchmarks its position against broad-banded target market
rates, using role evaluation criteria, market surveys and analysis supported by information
gathered from a number of consulting organisations.

A systematic assessment of roles at all levels of the organisation is done, using techniques that
facilitate comparison with the markets in which Origin competes for employees.

The Performance Management System (PMS) assists to determine whether an employee has
effectively mastered a role and is performing at a fully satisfactory level. Where this is not the
case, the PMS provides a structure for providing support to achieve the required levels of
performance. In general, where an employee has reached the fully satisfactory level in both
“workplace effectiveness” and “objective achievement” dimensions of his/her position, individual
remuneration will be aligned to or move closer toward the market median for that position.
Performance that consistently exceeds expectations can result in remuneration paid at above-
median levels.

Fixed remuneration for executives is provided on a Total Cost basis, providing flexibility to receive
remuneration as cash, payments to superannuation or non-cash benefits such as vehicles, along
with related expenses. Where FBT is payable by the Company for allowed items such as vehicles,
the amount of the FBT is included in determining the amount allocated to the Total Cost package.

All employees have the flexibility to receive a portion of their remuneration in the form of minor
items limited by the provisions of legislation covering Fringe Benefits Tax (FBT) or as
superannuation beyond that contributed by the Company.

Performance-Based (At-Risk) Remuneration

In addition to fixed remuneration, a proportion of total remuneration for more senior employees is
at risk and only payable on the basis of performance achieving defined hurdles. Performance
relative to financial and individual targets set during the annual budget process provides the basis
for determining payments made for at-risk remuneration. Financial performance targets relate to
the Company and Divisional or Business Unit results relevant to each individual. Individual
performance targets relate to key objectives that must be delivered during the period.

Achievement of established performance objectives results in the payment of at-risk remuneration
of 60% of the maximum entitlement. Threshold and stretch hurdles are also established for each
performance measure, yielding payment for at-risk elements ranging from 20% to 100% of the
maximum potential. No payment is made if performance does not achieve threshold levels.

The proportion of remuneration that is at risk increases with seniority and can include short-term
(payable annually) and long-term (vesting after three years) components. The amount of
remuneration that is at risk is set at a level that, subject to the achievement of stretch targets for
both financial and individual performance, will realise total remuneration at the upper quartile of
competitors and comparable industry positions. Performance-based remuneration is paid as cash
or equity.     The forms of equity component used are described below in Equity-Based

Maximum entitlements to short and long-term incentives for executive Directors and senior
executives are included in Attachments 2 and 3. Achievement of maximum payments under
incentive schemes requires performance of both the Company and the individual to achieve
stretch targets. The Board also has the discretion to consider additional payments above the
maximum in the event performance exceeds the established stretch targets.

Equity-Based Remuneration

Equity-based remuneration is used for delivering components of at-risk remuneration through:

o   Shares awarded under the terms of the Employee Share Plan, under which all qualifying
    employees, except executive Directors, are eligible to receive up to $1,000 worth of Company
    shares per year, depending on performance relative to financial and safety targets, with
    qualifying permanent part-time employees participating at pro-rata levels. Shares awarded
    through the Plan are purchased on market, with costs fully expensed; or

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o   Options awarded under the terms of the shareholder-approved Senior Executive Option Plan as
    a long-term component of remuneration provided to senior executives. Options awarded
    through the Plan have an exercise price established on the basis of the market price at the
    time of approval, a three-year vesting period and clear performance hurdles requiring out-
    performance relative to a reference group of listed companies. Values disclosed for options
    awarded are determined by actuaries using a Monte Carlo Simulation technique that adopts
    the same principles and assumptions used in the Black-Scholes formula but allowing for the
    incorporation of performance hurdles. Options are currently not recorded as an expense in
    the Statement of Financial Performance but the Company discloses an estimate of the expense
    that would be incurred when accounting standards relating to options come into effect. The
    total number of options that can be awarded is limited to 5% of total number of shares on

Termination Payments

Termination payments are based on specific contractual arrangements or governed by the Total
Cost Remuneration Policy, General Terms and Conditions of Employment, or relevant industrial
instruments as appropriate for all other employees. The basis for determining entitlements in the
event of termination is consistent with the contractual obligations set out in those documents,
which in turn align with market norms and practice. Attachment 4 provides details of termination
provisions applicable to senior executives.

Disclosure of Remuneration

Total remuneration reported will include appropriate values for all elements of remuneration,
incorporating fixed remuneration, performance-based remuneration comprising payments made or
value provided for at-risk components, superannuation and value for benefits provided and equity-
based components of remuneration. Where possible, reported remuneration will relate to the
year in which the remuneration is earned.

Other than disclosure included in this document and annual reports, remuneration information is
confidential between the Company and the employee, other than when disclosure is required by
law, and there is a mutual obligation and expectation to retain that confidentiality. Remuneration
data may be used for valid internal benchmarking, review and analysis and may be disclosed
pursuant to regulatory and compliance requirements, but is otherwise required to be dealt with
sensitively and confidentially and in accordance with the company’s Privacy Principles. Similarly,
performance data are to be used only for performance management and related review processes.

July 2005                                                                                       4.
Attachment 1

                            Annual Fees Payable to Non-Executive Directors

                   Board Fees
                   Chairman                           $340,000(1)
                   Member                             $105,000
                   Committee Fees
                   Chairman                           $40,000
                   Member                             $20,000
                   Chairman                           $13,333
                   Member                             $6,666
                   Health, Safety & Environment
                   Chairman                           $13,333
                   Member                             $6,666
                   Chairman & Members                 $0

      Chairman’s fees are inclusive of all Committee fees as from 1 July 2004

25% of fees must be sacrificed for the purchase of shares under the terms of the shareholder-
approved Non-Executive Director Share Plan or as superannuation, provided a Director electing to
receive the benefit as superannuation holds a minimum of 25,000 Origin Energy shares either
directly or indirectly.

The benefits accrued to Non-Executive Directors under the terms of the Non-Executive Directors
Retirement Scheme were frozen at multiples, to be applied to 75% of final remuneration,
determined as at 31 December 2002 for Non-Executive Directors in office as at that date.

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Attachment 2

Key Terms of Executive Director Contract of Employment

Managing Director

 Contract End Date                              30 June 2009
 Fixed Remuneration                             $1.3 million from 1 July 2004
                                                Subject to annual review
 Short-Term Incentives                          Maximum 60% of Fixed Remuneration
 Long-Term Incentives                           Delivered at Board discretion in the form of
                                                Options as approved by shareholders*
 Termination               With cause           Immediate with payment of accrued
                                                entitlements only
                           Without cause        12 months notice or payment in lieu, including
                                                payment of short-term incentive potential
                           Poor Performance     Maximum of 12 months of fixed remuneration,
                                                including 6 months notice or payment in lieu,
                                                with no payment of short-term incentive
                           Resignation          12 months notice or payment in lieu, with no
                                                payment of short-term incentive

* With options, as the mechanism through which long-term incentives are provided, the relative
value used to determine the corresponding number of options is determined using a Monte Carlo
Simulation technique that adopts the same principles and assumptions used in the Black-Scholes
formula but allows for Total Shareholder Return performance hurdles to be incorporated in the
valuation process. Options awarded have an exercise price based on the market price at the time
of approval, a three-year vesting period and clear performance hurdles requiring out-performance
relative to a reference group of listed companies.

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Attachment 3

Senior Executive Performance-Based Remuneration

For executives reporting to the Managing Director, maximum potential entitlements are expressed
as a proportion of an executive’s fixed Total Cost, as set out in the following table:

Position Held            Maximum                             Maximum
                         Short-term Incentive                Long-term Incentive
                         (as a percentage of                 (as a percentage* of
                         Total Cost)                         Total Cost)

Members     of   the     45% - 60%                           45% - 60%
Executive Management
* With options, as the mechanism through which long-term incentives are provided, the relative
value used to determine the corresponding number of options is determined using a Monte Carlo
Simulation technique that adopts the same principles and assumptions used in the Black-Scholes
formula but allows for Total Shareholder Return performance hurdles to be incorporated in the
valuation process. Options awarded have an exercise price based on the market price at the time
of approval, a three-year vesting period and clear performance hurdles requiring out-performance
relative to a reference group of listed companies.

July 2005                                                                                     7.
Attachment 4

Senior Executive Termination Payments

Senior executives, other than executive Directors, are employed as permanent employees under
the terms of Executive Service Agreements. Those agreements provide for termination, with
related payments, as follows:

 With cause              Immediate termination, with payment of accrued entitlements only.
 Without cause           Notice period of up to 3 months notice or payment in lieu plus
                         severance payment equivalent to 3 weeks of Fixed Remuneration per
                         year of service, to a maximum of 74 weeks entitlement.
                         A minimum of 6 months combined notice and severance applies.

 Resignation             One month notice or payment in lieu.

In certain circumstances, primarily redundancy, senior executives may also be entitled to receive
pro-rata portions of at-risk remuneration for the year during which termination occurs.

July 2005                                                                                      8.

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