Create capabilities that improve your corporate remuneration governance

Key management personnel (KMP) remuneration is a complex and evolving area. Regulatory changes have had a significant impact upon corporate remuneration practices and governance frameworks in Australia.

Areas of consistent review that impact remuneration governance are:

  • The Corporations Act 2001
  • ASX Listing Rules and Guidance Notes
  • ASX Corporate Governance Council’s Principles and Recommendations
  • ASIC Regulations and Guidelines
  • Employee Share Scheme taxing provisions
  • APRA – Requirements for APRA Regulated Entities

APRA regulated entities are also required to engage an independent party to review their Remuneration Framework against the requirements of APRA CPA 511 and CPG 511, and to assess efficacy, at least once every 3 years.

As a remuneration governance specialist whose primary customers are remuneration committees and boards, GRG is in a unique position to provide such an independent review. For over 20 years GRG has provided comprehensive solutions that help optimise remuneration governance outcomes.

Over that time we have observed that with board turnover and role changes, committees can end up “reinventing the wheel” each time they revisit an issue, particularly when aspects of remuneration are only deeply reviewed each three years or so, such as in the case of long term incentives. Many problems arise from inconsistent decision making and the lack of a commonly shared or agreed set of principles that are best outlined in a framework, and can serve to efficiently inform and align new board or committee members.

We assist remuneration committees and/or decision makers to develop KMP Remuneration Governance Frameworks that overcome the inevitable changes in both board composition and the governance landscape.

KMP Remuneration Governance Framework

The KMP Remuneration Governance Framework defines the company’s remuneration governance system, purpose, strategy, and commitment to appropriately and consistently managing KMP remuneration matters for the organisation. The framework will define what policies, procedures, incentive plan rules and controls are needed for overall good governance and will be the point of reference for remuneration decision making.

GRG’s deep expertise allows us to set up a comprehensive, holistic and effective KMP Remuneration Governance Framework for your company. GRG can also conduct an independent review of APRA regulated entities as required by APRA CPA 511 and CPG 511. Contact us today.

Enquiry about a KMP Remuneration Governance Framework

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Use GRG as your trusted advisor on KMP remuneration policies and procedures

Boards increase their effectiveness by creating well defined policies and procedures that recognise and manage regulatory risks related to board and executive remuneration. Whether or not your company has a Remuneration Governance Framework in place, GRG can help draft or review individual components.

If you wish to review any of your current remuneration policies and procedures or variable remuneration plan rules, GRG can support your team with a comprehensive range of solutions:

Nomination & Remuneration Committee Charter

Remuneration Committee Charter

Mandates the role and responsibilities of the Remuneration Committee and its members, which is focussed on supporting the board to apply sound KMP remuneration governance principles and practices.

Executive Remuneration Policy & Procedure

Executive Remuneration Policy & Procedure

Outlines the principles underpinning executive remuneration governance, including desirable elements of remuneration, intended market positioning and processes to establish and regularly review executive remuneration, focussing on the link between performance and reward.

STVR Policy & Procedure

STVR Policy & Procedure

Outlines the principles underpinning short term variable remuneration (STVR) applicable to executives, including processes to annually review and calibrate the suitability and difficulty of performance hurdles against the Variable Remuneration Framework.

STVR Plan

STVR Plan

Defines the rules, terms, conditions and, annually, the specific performance hurdles that form the link between performance and reward over a 1-year period.

LTVR Policy & Procedure

LTVR Policy & Procedure

Outlines the principles underpinning long term variable remuneration (LTVR) applicable to executives, including processes to annually review and calibrate the suitability and difficulty of performance hurdles against the Variable Remuneration Framework.

LTVR Plan

LTVR Plan

Defines the rules, terms, conditions and, annually, the specific performance hurdles that form the link between performance and reward over a 3-year period.

Clawback & Malus Policy & Procedure

Clawback & Malus Policy & Procedure

Empowers the board to recover overpayments of variable remuneration (“Clawback”) or adjust future remuneration opportunities that are on-foot (“Malus”) to ensure that variable remuneration outcomes are appropriate and aligned with the experiences and expectations of stakeholders.