AUSTRALIA | NEW ZEALAND | SINGAPORE
Board Advisors & Remuneration Specialists
The Sustainable Reward Plan is a new initiative focused on providing companies with a sustainable and ethical approach to CEO and executive variable reward. It effectively replaces existing STI and LTI schemes with a single plan delivering reward over a rolling 3-4 year period. It is based on a balanced scorecard of measures using the following corporate KPI clusters:
Financial Performance
Strategy & Planning
People & Safety
Environment, Social & Governance (ESG)
Customer & Stakeholder Relations
Operational Performance
Contact Geoff by email if you would like to discuss how this approach can be tailored for your CEO and executive team. Our mission is to support those companies which focus on mitigating climate change: gtnunn@gna.net.au For further detail see: The Sustainable Reward Plan and our Governance Update July, 2024
The Sustainable Reward Plan:
Finding Balance In A Competitive Market
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Corporate performance is evaluated over a rolling 3-4 year period. Year 1 may serve as the baseline and the standard expectation is that KPI results should not drop below the threshold for a score to accrue. Each corporate KPI is assessed annually and the target re-set for the following year. With some KPIs the target may increase progressively such as financial and renewable measures. In other cases, sustaining performance may be sufficiently challenging.
The bar cannot be continuously raised in all cases. A realistic and pragmatic approach to the annual review of corporate KPIs is best for ethical and sustainable performance.
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Individual roles specific executive KPIs are included in the scorecard approach and the weighting should be 20% to 30%. only 3-4 priority KPIs should be included for variable reward purposes.
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The standard model calls for three year rolling delivery. Therefore, one third is delivered in year 1, one third in year 2 and one third in year 3. From year 3 onward a full reward is payable spanning the three-year period and this continues to roll forward. The percentages and time-frame may be varied to suit specific circumstances. An overall “Threshold” performance must be achieved in any given year for previous years deferred amounts to vest.
Providing Expert Advice to Boards, Directors and CEOs.
We specialise in working with boards, directors and CEOs in the areas of board and executive / KMP remuneration strategy development, corporate governance, board advisory, board dynamics and board structures.
Geoff Nunn & Associates was established in 1993 as an independent provider of board advisory and executive remuneration services to the government and corporate sectors. Over the last 30 years we have worked with over 1,000 companies and government entities in Australia & New Zealand on board, CEO & Executive Salaries.
TAILORED REMUNERATION SOLUTIONS.
Over the past three years we’ve expanded our analysis of board, CEO and executive remuneration in the Utilities Sector. Our database enables tailored benchmarking, remuneration strategy and remuneration structure design focused on delivering sustainable outcomes. If you under invest in executive remuneration you’ll have difficulty attracting and retaining the best talent. If you over invest you’ll waste financial resources. Striking the right balance is key to an effective strategy.
Utilities Benchmark 2024
Each year we undertake a benchmark analysis of board and executive remuneration in the Utilities Sector across Australia and New Zealand. This year we analysed remuneration practice for 72 utility companies involved in electricity generation, transmission, distribution and retail, gas production, pipelines, distribution and retail, water supply, wastewater treatment, recycling and retail. The 2024 report is now available.
See our webpage:
Our Remuneration Advisory and Market Intelligence services include:
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Executive Remuneration Strategy
Executive Remuneration is a critical corporate governance issue. How a company pays its CEO and executive team impacts on its capacity to attract the best people and to motivate them to maintain focus on critical business objectives. There is no one size that fits all.
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Tailored Remuneration Solutions
Since the late 1990s we’ve helped over 60 utilities companies across Australia and Singapore on issues of board, CEO and executive remuneration. Our data base covers 72 utility organisations across Australia & New Zealand and includes board CEO & executive salaries.
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Board Remuneration Strategy
Directors fees need to be equitable and appropriate for the size of the company and the market in which it operates. Directors bring their expertise to contribute to business success and ensure that governance obligations are met. This needs to be recognised and rewarded.
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Remuneration Governance Processes
The Corporations Act 2001 places obligations on the boards of listed companies to ensure that their remuneration decisions are made in a responsible and ethical manner. Many other private and government owned entities follow the same principals as set out in the Act and ASX Principle 8.
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Renewables Benchmarking
The Renewable Energy Benchmark is a unique offering to help companies formulate executive remuneration strategy. Some companies have been paying a premium to attract the right directors, CEOs and senior executives. The market is volatile and demand is strong. Our 2024 report will be available shortly to act s a guide to market positioning.
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Utilities Benchmarking
Each year we undertake a benchmark analysis of board and executive remuneration in the Utilities Sector across Australia and New Zealand. In 2024 we analysed remuneration practice for 72 utility companies.
The 2024 report will be available shortly and the market shows sound growth in FAR for CEOs and executives.
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Applied Intelligence
We monitor KPI reporting across the Utilities Sector and can provide your company with a benchmark analysis. KPI metrics provide a useful snapshot. But they do not tell the full story. Boards, Remuneration Committees and CEOs need to look beyond the numbers and delve deep into the heart of KPI results.
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Bespoke Analysis
Each year we analyse data from around 70 utility companies. Our primary focus is on our core expertise; remuneration for directors, CEOs and the executive team. In the process we gather specific data on: The Quantum of Board, CEO and Executive Remuneration, How Companies Structure Executive Packages, Levels of STI and LTI “At Risk” Remuneration and other vital information.
OUR Core Purpose
Our Core Purpose is to work with boards, remuneration committees and CEOs to develop optimal board and executive remuneration strategies which balance the interests of all stakeholder groups. In order to do this we:
Take the complexity out of remuneration strategy.
Deliver excellent results to our clients.
Support companies who focus on pollution reduction and fighting climate change.
Submissions:
In September 2019 Geoff Nunn made a submission to APRA regarding Draft Prudential Standard CPS 511 Remuneration. Whilst well intentioned, we believe the standard further embeds remuneration practices which do not effectively balance the interests of all stakeholder groups.