2016 STI Deferral Share Offer Guide March 2016 This guide explains the terms and conditions of your invitation to participate in the Offer. The NAB shares on offer are provided under the Plan which, together with this guide, sets out the terms and conditions of the NAB shares. You can obtain a copy of the Plan, without charge, by contacting Computershare during AEDT business hours. Copies are also available on the NAB Employee Online Website. The terms set out in this guide may vary from those previously communicated and you should read them carefully. In the event of any inconsistency, the terms in this guide expressly prevail over any communications relating to your NAB shares. The information in this guide, any accompanying information and any advice provided by NAB in connection with the Offer is general advice only and does not take into account your personal objectives, financial situation and needs. You should consider obtaining your own financial product advice from an independent person who is appropriately authorised or licenced to give such advice. This document has not been reviewed by or registered with any regulatory authority in any jurisdiction. National Australia Bank Limited ABN 12 004 044 937 1. Key dates Key dates Performance Period The year ended 30 September 2015 Offer period 12 February 2016 to 26 February 2016 Opt-out Date 5:00pm 26 February 2016 (AEDT) WASP Period The five trading days from 22 February 2016 to 26 February 2016 inclusive Conversion Date 26 February 2016 Anticipated Allocation Date 9 March 2016 End of Restriction Period • NAB Group Short Term Incentive (STI) Plan Tranche 1 - 18 November 2016 • NAB Asset Management Specialist Incentive Plan • Corporate Superannuation Manager Sales Incentive Plan • JANA Investment Advisers Pty Ltd Short Term Incentive (STI) Plan • Personal Banking Star Sales Incentive Plan • Mobile Banker Star Sales Incentive Plan • Growth Partnerships Sales Incentive Plan • NAB Financial Planning Revenue Share Plan • NAB FP Non-Practitioner Sales Incentive Plan • MLC Sales & Advice Partnership Incentive Plan • Wholesale Banking Proprietary Traders Specialist Incentive Plan Partners Incentive Plan • Antares Fixed Income Profit Share Plan Tranche 1 - 18 November 2016 • Wholesale Banking Global Markets Specialist Incentive Plan (Two tranches) Tranche 2 - 18 November 2017 • NAB Private Wealth Advisory Incentive Plan Tranche 1 - 1 August 2016 Tranche 2 - 18 November 2016 • Wholesale Banking Global Markets Specialist Incentive Plan (Three Tranche 1 - 18 November 2016 tranches) Tranche 2 - 18 November 2017 Note: If you are a UK Material Risk Taker (as advised by NAB), these Restriction Periods also apply irrespective of which STI Plan applies to you. Tranche 3 - 18 November 2018 End of the Retention Period1 Tranche 1 - 18 May 2017 Tranche 2 - 18 May 2018 Tranche 3 - 18 May 2019 1 Only applicable if you are a UK Material Risk Taker (as advised by NAB). NAB STI Deferral Share Offer Grant Guide Page 2 2. Details of the offer Key questions Answer What’s on offer? NAB shares. A certain portion of the STI award you earn under each NAB STI plan listed in section 1 (NAB STI Plans) must be deferred in the form of NAB shares (Deferral Award). How many NAB The number of NAB shares on offer is worked out using the following formula: shares are on offer? the value of your Deferral Award (converted to A$ on the Conversion Date if any award is shown in a foreign currency) WASP at which NAB shares are traded on the ASX during the WASP Period (rounded up to the nearest whole number of NAB shares) This WASP can differ from the average closing prices over the WASP Period because it reflects the volume of NAB shares traded and the price at which they were traded. Who can participate Your eligibility to receive NAB shares will be determined in accordance with the in the offer? following process: Complete your performance review Around the end of the Performance Period, your People Leader will review your performance for that period. You will only be eligible to receive an STI award if you meet the eligibility criteria set out in the relevant NAB STI Plan. Following the announcement of NAB’s annual results NAB will determine the STI award you have earned under the relevant NAB STI Plan, including the amount to be provided in the form of NAB shares. If NAB determines that you are eligible to receive NAB shares, you will only receive those NAB shares if you continue to be employed by a company within the NAB Group on the day the NAB shares are allocated (which is expected to be on the Anticipated Allocation Date). You are not eligible to receive NAB shares simply because you have received this guide. What do I need to do You do not need to take any action to participate in the offer and you do not need to to participate? pay anything to be allocated the NAB shares if you become eligible to receive them. What do I do if I don’t If you DO NOT want to participate, then you need to opt-out before 5pm AEDT on the want to participate? Opt-out Date. You can opt-out by completing and signing the Opt-Out Form included in this guide. The completed Opt-Out Form must be emailed to [email protected] If you opt out then you will not receive the deferred component of your STI award if you qualify for such an award. The deferred component of your STI award under a NAB STI Plan can only be provided in NAB shares and cash will not be provided as an alternative. How will I know if I If you are eligible to receive NAB shares, you will receive a confirmation of the share have received the allocation from Computershare shortly after the Allocation Date. NAB shares? NAB STI Deferral Share Offer Grant Guide Page 3 3. Dealing in the NAB shares Key questions Answer Will I be free to deal No. If you participate, your NAB shares will be held by the Trustee on your behalf until with my NAB shares the earlier of: from the Allocation the relevant Milestone Date; and Date? the date you are notified that an Acceleration Event has occurred. This period is called the Restriction Period. You can’t deal in your NAB shares during that time.2 What can I do at the You can choose to either sell or keep the NAB shares. Information on how to do this end of the can be obtained from Computershare at the end of the Restriction Period. If you Restriction Period?3 decide to sell the NAB shares you will then receive the proceeds of sale (after sale costs have been deducted). If you don’t give any instructions about how you want to deal with the NAB shares, the Trustee can still decide to sell them on your behalf or alternatively it can transfer them into your name. The Trustee may require you to reimburse costs associated with any transfer or sale. Can I ever be forced Yes - you will forfeit some or all of your NAB shares (as determined by the Board or its to forfeit my NAB delegate) if during the Restriction Period: shares? you resign from the NAB Group; your employment with the NAB Group is terminated by your employer for any reason other than redundancy (unless the Board determines, in its absolute discretion and subject to compliance with law, that the NAB shares not be forfeited); you breach the NAB Code of Conduct or equivalent (eg you receive a “Red” Conduct Gate rating) or it is determined that you have engaged in conduct that would have caused you to breach the NAB Code of Conduct or equivalent if you were still employed by the NAB Group; it is found that the allocation of NAB shares to you was made in error or your performance outcome has changed and that outcome means you have been allocated too many NAB shares; or the Board determines that you should forfeit all or some of your NAB shares in certain circumstances. Participants in the Wholesale Banking Proprietary Traders Specialist Incentive Plan: some or all of your NAB shares may be forfeited (as determined by the Board or its delegate) having regard to the terms of that plan. What happens to my As noted above, if you cease employment with the Group before the Restriction Period NAB shares if I cease is over, you may forfeit your NAB shares. employment with the If your NAB shares are not forfeited, they will remain in trust subject to the forfeiture NAB Group? conditions listed above. You will still be restricted from dealing in your shares until the 4 Restriction Period has ended. 2 UK Employees Only: If you are a UK Material Risk Taker (as advised by NAB): at the end of the Restriction Period there is a further Retention Period which ends on the earlier of: the End of the Retention Period (as described in the Key Dates section); or the date that you are notified that an Acceleration Event has occurred; you can’t deal in your NAB shares during the Restriction Period or the Retention Period although, where required by law, the Trustee may transfer or deal with your shares even though the Restriction Period or Retention Period has not ended; and if you have a tax liability at the Milestone Date, the default position is that NAB (and/or your employer or former employer) will sell or procure the sale of a sufficient number of your NAB shares at the Milestone Date to fund your tax liability (unless the liability is met by deducting the necessary amount from your remuneration or you paying the necessary amount directly to the NAB Group) and only a net number of shares will be subject to the Retention Period.