105Variable Pay – Victim or Villan?
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has stirred adverse commentary about the role of variable pay in influencing key management personnel (senior executives and non-executive directors) and others to behave unethically, even criminally. But how valid are these opinions?
104BEAR: Concerns With Variable Pay Deferral
This Insight contains the contents of a letter sent to Mr Wayne Byres, Chairman of the Australian Prudential Regulatory Authority, expressing concern over the variable pay deferral aspects of the BEAR legislation, and the need for it to be amended or clarified via APRA determinations.
103Rethinking Executive Remuneration
Co-written with the KBA Consulting Group, this important Insight offers an in-depth overview of executive reward. In many vital respects, the current paradigm fails both shareholders and executives, as creating shareholder wealth is often confused with maximising short-term profits. The economic interests of executives need greater alignment with the long-term best interests of their company, its shareholders and its many other legitimate stakeholders. We look at SIP, with Wesfarmers as a case study, and explore better alternatives.
102KMP Remuneration Issues for 2018
2018 is shaping up to be a year of change in relation to key management personnel (KMP) remuneration. This GRG Remuneration Insight seeks to identify and comment on areas where change is underway or likely to occur in the next 12 months or so.
101Are You Prepared for the BEAR?
The Banking Executive Accountability Regime (BEAR) is likely to be passed quite soon by Parliament. It will apply to Authorised Deposit-taking Institutions (ADIs) including banks and credit unions and, potentially, insurers and superannuation funds. The legislation is in many respects less than clear, particularly with regards to remuneration. How boards interpret the policies and procedures will affect their exposure to risk of breaching the BEAR requirements.
100Short Termism and the Threat Posed by an Absence of Clear Thinking
The evidence is clear: successful companies that create ongoing shareholder wealth are focused on the long term. Performance management processes and executive reward plans need to reflect this by avoiding the encouragement of short-termism, even inadvertently.
99Does Deferred/Held Equity Give Better Alignment than LTI?
Some companies appear to be replacing LTI plans by requiring executives to defer a substantial part of their STI earnings into equity that must be retained for several years. We explore the significant defects of this approach, especially via the implementation of Single Incentive Plans (SIPs, sometimes referred to as Total Incentive Plans).
98Are STIs Working?
To settle some recently reprised myths about STI awards, we recently analysed remuneration disclosures from the ASX 300 2016 Remuneration Reports. A lack of understanding by most commentators is made worse by unclear communication and disclosure by some companies. Boards can resolve this public furore by explaining more clearly how incentives are intended to work, and why.
97ASX300 Incentive Practices
This Insight summarises and comments on the incentive practices of companies in the ASX300. The data was extracted from FY16 annual reports. As change in the incentive area tends not to be rapid, companies can be confident that this data is reflective of current practices.
96Remuneration Reports and Risk Management – Being Prepared
The two-strike rule has made the resolution on the Remuneration Report one of the highest focus areas for governance and transparency. It is in some ways the “cutting edge” for the interaction between companies and external stakeholders. But when a strike is really a protest and not about remuneration governance, there is only one defence: having your Board’s KMP remuneration governance systems, and disclosure in the Remuneration Report, in top condition.