ASX Announcement - New long-term incentive for NAB Group Chief Executive Officer - 30 August 2007

The National Australia Bank Board today agreed a new long-term incentive (LTI) package for the Group Chief Executive, Mr John Stewart.

NAB Chairman Michael Chaney said the LTI arrangements were linked to sustainable shareholder returns, CEO succession planning and cultural and management development.

The LTI has a two-year performance period but cannot be accessed by Mr Stewart for four years from August 2007.

"The new LTI award is being made to Mr Stewart in order to provide ongoing financial incentives as NAB moves into its next phase of development. Mr Stewart has been instrumental in the rebuilding of the National Australia Bank since his appointment in 2004 and he will continue to play a critical role in motivating, developing and retaining the right executive team going forward," Mr Chaney said.

The LTI allocation to Mr Stewart will comprise three tranches of performance rights with an approximate accounting value of $6.6 million. No dividends will be payable until the required level of performance has been met and the rights exercised.

Shareholders will be asked to approve the new long-term incentive at the next annual general meeting.

All other terms and conditions relating to John Stewart’s existing employment contract are unchanged.

Summary of new long-term incentive:

Tranche 1

77,000 performance rights (approximate accounting value of $1.8 million) tied to the relative total shareholder return compared with the performance of other major Australian banks.

50% of this tranche will vest if NAB is ranked at the median in the comparator group. 100% will vest if NAB is ranked in the upper quartile.

The first performance test will take place at the end of year two (30 August 2009). Only one further test will be performed at the end of year three (30 August 2010).

If the performance test is satisfied, any shares resulting from the exercise of the performance rights would be restricted from trading until the end of year four (30 August 2011).

Tranche 2

77,000 performance rights (approximate accounting value of $2.4 million) tied to internal Return On Equity targets as determined by the Board.

50% of this tranche will be performance tested at year two (30 August 2009). A further 25% will be tested at year three (30 August 2010). In the event that either of these portions does not meet the performance test, a further test will be allowed 12 months later based on the higher hurdle established for that later date. The final 25% of this tranche will be tested at year four (30 August 2011), with no further test allowed.

If any of the performance tests are satisfied, any shares resulting from the exercise of the performance rights would be restricted from trading until the end of year four (30 August 2011).

Tranche 3

77,000 performance rights (approximate accounting value of $2.4 million) tied to CEO succession planning, cultural and management development as determined by the Board.

All of this tranche will be performance tested at year two (30 August 2009). If the performance test is satisfied any shares resulting from the exercise of the performance rights would be restricted from trading until the end of year four (30 August 2011).

For all tranches, the trading restrictions would continue to apply if Mr Stewart, with the Board’s prior approval, separates from the National Australia Bank Group prior to 30 August 2011.

In the event that income tax is payable by Mr Stewart on any of the performance rights or shares prior to the end of year four, then shares to the value of the tax may be released. Any remaining shares would continue to remain restricted.

NAB intends to purchase on-market all shares resulting from the exercise of the performance rights under this LTI package.

For further information:

Brandon Phillips
Media Relations
M 0419 369 058

Kerrina Lawrence
Media Relations
M 0417 034 738

Hany Messieh
Investor Relations
M 0414 446 876