MAXIMIZE YOUR INVESTMENT

Tailored Remuneration Solutions

 

Board and Executive Remuneration in the Utilities Sector

We commenced working with the Utilities Sector in the late 1990s. Since then we’ve helped over 60 utilities companies across Australia and Singapore on issues of board, CEO and executive remuneration. We know the challenges the sector faces.

 

The Key Design Imperatives:

  • One

    Remuneration decisions need to be underpinned by sound and current remuneration information. You need to be “In the Market” if you are going to attract and retain the best directors and executives.

  • Two

    You need to maximize your investment in executive remuneration. If you under-invest you’ll experience difficulty in attracting the best people. They know their worth. On the other hand, if you over-invest, that is, pay to much, you’ll waste financial resources.

  • Three

    You need to minimize complexity. Overly complex models, and we see them every day, detract from the line of sight around those KPIs which underpin your business strategy and performance.

  • Four

    You need to communicate your executive remuneration strategy. Participants need direct involvement in setting the corporate and individual KPIs by which their performance will be assessed and rewarded.

  • Five

    You need the right governance protocols to ensure you comply with the relevant regulatory frameworks and stakeholder expectations.

  • Boards and Remuneration Committees are under scrutiny like never before. The Banking Royal Commission in 2018 and 2019 highlighted the pitfalls associated an unbalanced executive remuneration strategy. We can help you build a framework that will support your business plans.

Our Remuneration Solutions are:

  • Underpinned by a comprehensive and unique analysis of 70+ utility firms across Australia and New Zealand.

  • Targeted to specifically cover board, CEO and executive roles.

  • Tailored to fit your operating environment and business strategy.

  • Developed specifically for utility organisations to attract and retain the best.

  • Focused on performance outcomes.

  • Transparent, reliable, replicable year on year and easy to interpret.

Our Process

We rigorously analyze data to achieve the best result for your company. Our staged approach is streamlined and ensures quality outcomes:

  • Stage 1:

    We hold initial consultations with the CEO and/or Board Remuneration Committee to determine the remuneration strategy imperatives and the specifics of the company’s operating environment.

  • Stage 2:

    We undertake a comprehensive analysis of market relativity and the structure of existing executive remuneration packages. Then apply our extensive industry based research to generate innovative solutions.

  • Stage 3:

    We prepare comprehensive reports, with commentary on current market positioning and appropriateness of the executive remuneration strategy and structure. This enables informed remuneration decisions by the CEO and Remuneration Committee.

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Case Study Overview:

The Board requested benchmarking of the CEO and each executive role against the utilities market, specifically for a company of their size, operating environment and revenue base. Using our ‘Tailored Remuneration Solutions’ approach we helped to develop a streamlined strategy and structure.

This included the design of a market aligned fixed remuneration structure that recognised individual executive performance and capability.

STI and LTI Plans were reviewed and simplified. Alignment with corporate and individual KPIs was strengthened to ensure a clear line of sight with those measures which have the most impact.

The overall executive remuneration strategy was revised and simplified. It was captured in a single document for Remuneration Committee and Board approval.

“I have known and worked with Geoff Nunn over a 10 year period in my capacity as chair and director of various utility companies. He has 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 supports attraction and retention of the best talent”

Dr Tom Parry, Former Director and Chair, ActewAGL, Founding Chair, Powering Australia Renewables Fund, Former Director, Icon Water, Founding Chair, AEMO, Former Chair, Sydney Water

“Boards across most industry sectors have embraced the lessons of the past year. They have placed strategy as the centerpiece of their governance platform. This will continue for 2022 and beyond as we see a deeper and more connected governance paradigm continue to evolve. One that balances a fair return for investors with community presence and ethical conduct.”

— GEOFF NUNN & ASSOCIATES, GOVERNANCE UPDATE, January 2021