2021
Australian
Executive Remuneration
Overview
27
total strikes
second strikes
6
Quantum not excessive compared to industry peers and the underlying workforce
Pay increases transparently explained and justifiable due to change in role and responsibility
STI and LTI are usually a percentage of base pay so justification of the overall potential increase is also valuable
BASE PAY
SHORT-TERM INCENTIVES
LONG-TERM INCENTIVES
BASE PAY
SHORT-TERM INCENTIVES
LONG-TERM INCENTIVES
BASE PAY
SHORT-TERM INCENTIVES
Awarded as deferred unvested equity with clear hurdles, targets and maximum awards
Combination of relative and absolute measures preferred > Any changes to targets, hurdles or quantum need to be
appropriately justified and aligned to long term
shareholder outcomes
Demonstrated over time as genuinely ‘at risk’
Non-financial metrics need to be clearly articulated and must be beyond the scope of an executive’s 'day job'
LONG-TERM INCENTIVES
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has led to increased transparency and strengthened alignment of pay and performance measures.
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Avoiding a strike is important for directors, executives and the reputation of the business - being in the media for the wrong reasons is never ideal. So, how can you avoid a strike? By understanding how proxy advisors assess your remuneration policy and by actively engaging with investors ahead of any significant changes.
In 2021, retail and institutional shareholders continued to hold issuers to account on executive remuneration, making their opinions clear.
The scrutiny surrounding retention awards continued in 2021, especially in the context of rising markets, record profits and JobKeeper support.
The following information was produced as part of Computershare’s 2021 AGM Intelligence report
Over the last 10 years,
the "two strikes" policy
strikes
7
spill resolution
carried
1
company received
a fourth consecutive
strike
1
The highest average
percentage of against
votes was again recorded by the ASX50 at
The lowest average
percentage of against
votes was recorded
by the ASX300 at
11.1%
8.7%
Executive remuneration
for listed companies is generally broken into three components:
Targets (threshold, target and maximum), performance and outcomes clearly disclosed for all key executives (retrospective is permissible)
Linked to short term strategies that are outside the “day job” of the executive
Sufficient stretch aligned to shareholder outcomes
> Usually in cash with a component of deferred
equity preferred
The Australian Prudential Regulation Authority (APRA) is also seeking material weight to non-financial metrics when determining variable remuneration from January 2023 under the CPS511 Executive Remuneration standard.
Additional inclusions to consider:
1
2
3
4
5
Excessive termination benefits beyond the statutory cap
Change of control provisions
Use of discretion by the board clearly articulated and justified by the financial results and underlying performance
Limited dilution of other investors
Quantum
1
2
3
4
5
Is your remuneration policy easy to understand and are changes clearly represented and justified?
Transparency is the key to success.
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2021 strike data