EXECUTIVE REMUNERATION STRATEGY
A Balanced Perspective
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ONE: Ensuring that the quantum of executive remuneration in line with market practice.
This needs to be based on a rigorous analysis of your target market. Positioning too low will create attraction and retention issues. Positioning too high will waste financial resources.
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TWO: Determining the right ratio of fixed to variable remuneration.
This is a key strategy issue. Finding the right balance for your operating environment depends on the drivers of your business, the capacity of executives to impact results and the view of key stakeholder groups.
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THREE: Setting the right short and long term KPIs.
The balanced scorecard approach is well established across most industry sectors. The weighting of financial and non-financial metrics has been the subject of much discussion lately, particularly in the Financial Services Sector.
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FOUR: Designing STI and LTI Plans.
Overly complex models can detract from the line of sight around critical KPIs. Your performance based plans should be streamlined, transparent and aligned to business strategy.
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FIVE: Drafting the Executive ‘Employment Agreement’ (Contract).
This is a critical document which sets out the legal parameter of the employment relationship. Beware of the boilerplate approach.
“I have known and worked with Geoff Nunn & Associates over a 10 year period in my capacity as chair and director of various utility companies. They have always been able to source reliable and accurate Utilities Benchmark remuneration data that has enabled the setting of board fees, CEO and executive team remuneration packages which support the attraction and retention of the best talent”
Dr Tom Parry, Former Chair and Director, ActewAGL, Founding Chair, Powering Australia Renewables Fund, Former Director, Icon Water, Founding Chair, AEMO, Former Chair, Sydney Water
Geoff Nunn & Associates has worked in the area of board and executive remuneration since 1993. We have provided independent remuneration advice to over 1000 organisations across Australia, New Zealand and Singapore. For a preliminary discussion contact Geoff Nunn on +61418 595 107 or email gtnunn@gna.net.au
“Re-thinking the nature of executive remuneration in our corporations to better align with the interests of all stakeholders is a priority for Australian boards.”
— GEOFF NUNN SUBMISSON TO THE FINANCIAL SERVICES ROYAL COMMISSION MAY 2018