Executive Pay Data – How to Exercise Due Diligence

Your investment in executive remuneration should achieve compliance; market competitiveness; stakeholder engagement and more. This requires defensible, data-driven market information based on best-practice principles.

GRG Remuneration Insight 173

27 March 2025

The return on your investment you make into the remuneration practices of your executive team should be designed to achieve multiple outcomes: compliance; market competitiveness; stakeholder engagement; and alignment with your strategic compensation strategy.

If your role is to design and execute a program that achieves these outcomes, you will first need access to defensible, data-driven market information based on best-practice principles to inform your decisions.

Choosing the right data source

When choosing your data source, it is vital to exercise due diligence – after all, consider the impact should you choose not to.

The right compensation data source should provide you with:

• A large database of quality, Australian market-specific information,
• On an engaging platform where you can easily customise and flex the market data to your specific needs,
• All backed by a reputable survey provider that offers support and additional resources when you need them.

Leveraging the right data source gives you confidence that your executive remuneration practices are both in line with current market demands and tailored to your specific organisational needs and goals. You’ll be maximising the value proposition for both employees and the company – and making a defensible, data-driven remuneration decision. Let’s take a closer look at how to choose the right remuneration data source.

Start with the market data

Any remuneration survey begins with the survey provider systematically collecting current, Australian-based compensation data for specified job roles across particular industries, company sizes, and/or employee groups (for example). This process requires clear and concise data collection methodologies to ensure the validity of any analysis. This is how ‘the market’ is first determined. The larger the data set collected, the more robust and market-related the remuneration survey results. A survey based on remuneration data from 100 companies cannot provide a view as comprehensive as a survey based on 1,000 companies. For executive and general manager benchmarks, it’s even more complex. For accurate market analysis, the data must be specific to the size of your company’s operations. (This is typically defined as market capitalisation for listed companies, and business valuation or revenue for unlisted companies.

The platform should be intuitive

Source data should be presented in a way that allows you to critically interrogate the database in real time, to customise and flex the information to meet your specific needs – to tailor the data to reflect the key determinants of pay such as company size, sector and chosen peer group.

The platform on which you’re interrogating this data must be intuitive. It should be easy to understand, easy to navigate and be dynamic – something you can quickly log into as and when needed.

And it should be built for the Australian market to ensure maximum applicability of the information.

Depth & breadth of data output

Also consider how many audience types and data formats you may need in order to convey market data. Outputs must cater to all such requirements and be compatible with various software packages to provide a streamlined report generation experience.

Survey outputs should also include a range of statistics that provide in-depth insights into current market pay ranges by each remuneration component. Amongst the executive and general management employee population – roles often closely aligned to company performance – there are many remuneration levers designed for mutual employee/employer benefit. It is critical that all are considered when setting or reviewing market-based pay rates.

At a high level, executive pay falls into three key components:

• Fixed pay (including benefits),
• Short-term incentives, and
• Long-term incentives.

Any survey outputs designed for the executive and general manager employee group should conduct a deep analytical dive into incentive types, providing details relating to target (outcome that is challenging but achievable) and stretch (maximum possible outcome) amounts offered in the market.

At GRG we have found that stretch levels of STI are typically between 125% and 150% of target, while stretch levels of LTI are most often 200% of the target, with target vesting of 50% and threshold being either 0% or 50% of target.

Having a data source that elucidates all three components, including an in-depth exploration of incentive type, is a prerequisite of any executive and general manager data source.

Know your data provider’s provenance

Remuneration databases have undergone significant changes in the market – the importance of using data to drive business decisions has affected the practices of many companies. Suppliers recognise its power and many commoditised products have flooded the market, some publishing questionable and concerning findings. Applying a critical lens to any data source in the market ensures it provides you with robust, defensible information you can confidently rely upon to make critical business decisions.

Research your data provider and:

• Understand how they source their data and the key data validation principles they undertake.
• Determine the provider’s business intentions and purpose of their source data.
• Consider if the provider is viewed as an expert or thought leader in the remuneration space – ask your network if you’re not sure.
• Examine the value-add services provided alongside the data source so they supplement your direct data needs and enhance your ‘client experience’.

For example, GRG’s Executive Remuneration Survey (ERS) is designed by executive remuneration specialists for the executive remuneration specialist. It offers Australian-specific, comprehensive market data, delivered in an engaging platform.

Consider the holistic view

Knowing how much to pay an executive or general manager is only half the story. Incentives also play a critical role, so determining the most effective incentive design type and metrics requires a well- supported analysis of current market prevalence. For example, an extract from GRG’s latest Executive Remuneration Survey (ERS) analysis of the ASX300 found that 85% of companies currently operate a short-term incentive plan for their executives, measuring multiple KRAs.

In addition, an analysis of LTI prevalence across the ASX300 found that 86% currently have a plan in place.

Clearly, access to incentive plan design, its many variances, compliance requirements and key principles, is essential to any remuneration professional’s toolkit. Combine this detailed information with current market rates of pay per role, presented according to your company size, industry and peer group, and you have the full suite of analysis to support your data-driven remuneration strategy.