For FY21 the GCEO&MD and senior executives’ remuneration arrangements were comprised of two key remuneration components:

1. Fixed annual remuneration (FAR); and
2. Short Term Incentive (STI) opportunities.

Remuneration mix

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The variable, at risk component of target remuneration, is 41 per cent for both the GCEO&MD and senior executives. The Target STI opportunity is 70 per cent of FAR for the GCEO&MD and senior executives as at 30 June 2021.

The maximum STI, at risk component of remuneration, is 100 per cent of FAR for the GCEO&MD and senior executives.

Fixed annual remuneration

FAR aims to reward the GCEO&MD and senior executives for executing the core requirements of their role. FAR generally includes base salary, benefits and entitlements received in cash, superannuation and any salary sacrificed items. FAR is typically reviewed annually.

Short-term incentives

STI aims to reward the GCEO&MD and senior executives for delivering financial performance and non-financial performance against a range of key performance indicators (KPIs) that are aligned to the strategic priorities of the Group. The STI plan is called the APCIP. In FY21 the GCEO&MD and senior executives’ relative performance was assessed against the Enterprise scorecard forming the basis for their STI outcomes.
In addition to the KPIs, the APCIP includes Enterprise financial and individual behavioural gateways that must be met prior to an individual being eligible for an incentive payment:
Financial Gateway

1. Incentives will only be paid to eligible APCIP participants if a Profit Before Tax (PBT) financial target gateway is met (PBT Financial Gateway).
2. Incentives associated with achievement of any stretch KPI will only be paid if PBT stretch (PBT Stretch Financial Gateway) is achieved.

Behavioral & Performance Gateways

1. Living our enterprise values and meeting minimum behaviour expectations.
2. Meeting our Code of Ethics.
3. Completion of all assigned compliance training.
4. Minimum performance rating of at least 3 (or a minimum of 2 for new starters or new to role employees).

Remuneration by level

In FY20, in response to the initial onset of the COVID-19 (coronavirus) pandemic and the uncertainty it presented to the health, community and business, Non-executive Directors, the GCEO&MD, and senior executives volunteered to reduce their Fixed Remuneration by 20 per cent during the period 16 April to 8 July 2020. This temporary reduction was made, for Non-executive Directors, by a determination of the Remuneration Tribunal and, for the GCEO & MD, with the consent of the Remuneration Tribunal.

Overall financial performance against the enterprise scorecard was strong in FY20 and this was reflected in the award of the ‘at risk’ performance based incentives to eligible participants of the APCIP. However, the Board decided that incentive payments would not be made for the GCEO&MD and EGMs for FY20. This reflected the uncertainty of the extraordinary circumstances of the nation. Additionally, a wage pause was applied in FY20 to increases in wages and salary related allowances, including the Enterprise Agreements across Australia Post.

GCEO&MD FY21 remuneration
The Government has determined that the Australia Post GCEO&MD’s remuneration should be set by the Remuneration Tribunal.

The Remuneration Tribunal is an independent statutory authority established under the Remuneration Tribunal Act 1973. The Remuneration Tribunal’s role is to determine, report on and provide advice about remuneration, including allowances and entitlements for office holders within its jurisdiction. The Australia Post GCEO&MD position was classified by the Remuneration Tribunal as a Principal Executive Officer (PEO) Band E which falls within the Tribunal’s remit.

The Remuneration Tribunal sets the Total Remuneration Reference Rate (TRRR) applicable to the Australia Post GCEO&MD. The Board then determines the GCEO&MD’s FAR within a range from 10% below to 5% above the Reference Rate. The GCEO&MD FAR may not exceed the Reference Rate within the first 12 months of appointment.

The Remuneration Tribunal also confirmed performance pay incentive arrangements for the GCEO&MD up to a STI maximum potential of 100 per cent of FAR. The Board of Australia Post is responsible for determining the performance of the GCEO&MD and determining any incentive outcomes.

Senior executive FY21 remuneration
FAR is positioned competitively to attract, motivate and retain senior executives and reflect the individual’s responsibilities, skills, performance, qualification and experience. Reviews are informed by a range of internal and external factors including market comparative remuneration benchmarking to roles in companies of similar size, revenue and complexity, other Government Business Enterprises’ remuneration positioning, any changes in role and responsibility, previous salary adjustments, community expectations and internal relativities.

The FY21 STI has been designed to provide a framework that rewards for delivering performance and value creation for Australia Post and the Shareholder. The plan recognises the varying contributions of each business unit and enables differentiation in remuneration outcomes based on individual leadership and safety management. The STI scheme is an “at risk” annual incentive opportunity where an STI payment may be awarded subject to the achievement of relevant individual, team, strategic and enterprise KPIs.

Senior executives’ STI opportunities are communicated as STI Target (the award available if target performance is achieved) or STI Maximum (the maximum potential award available).
In FY21, the senior executive STI framework aligns to both individual, business unit and enterprise performance. The relative performance of the GCEO&MD and senior executives is measured against the Enterprise Scorecard for the determination of incentives. The key measures that determine a STI outcome for senior executives for FY21 include:

1. Enterprise financial performance
2. Business unit financial performance
3. Business unit strategic KPIs
4. Leadership and safety management.

The STI target opportunity for senior executives is communicated as a percentage of FAR. Senior executives have the opportunity to receive a STI Target award of 70 per cent of their FAR and, in circumstances where performance has significantly exceeded target, may receive up to 100 per cent of FAR (STI Maximum).

Unless the Board determines otherwise and in accordance with the APCIP rules, 25 per cent of the senior executives’ STI award is deferred until September of the following year and remains “at risk”, contingent on the sustained performance of the business at the absolute discretion of the Board. The Board determined that deferral of FY21 APCIP outcomes would not be applied to senior executives employed at the date of the STI payment.

Other contract level employees FY21 remuneration
Remuneration packages for contract level employees are designed to reward employees for the skills and experience they bring to their role. Dependent on an employee’s role, the remuneration package is comprised of an appropriate mix of fixed and variable remuneration components typically consisting of the following:

1. FAR: comprising fixed base salary and superannuation; and
2. STI opportunity: both a target and stretch opportunity as a percentage of FAR.

To inform Australia Post in setting market competitive and sustainable remuneration budgets and ensure employees are being rewarded fairly and equitably for their role, FAR is regularly benchmarked to multiple sources of information including external market surveys.

When considering remuneration benchmarking and grade, Australia Post typically considers:

• Mercer IPE job evaluation methodology as the standard approach for job sizing roles
• the responsibilities and accountabilities of the role
• internal relativities and external market survey data and movements.

Remuneration benchmarking is conducted relative to a series of external remuneration surveys purchased from Mercer, Aon and Korn Ferry as the content of each external market survey focuses more on a specific industry sector.

Based on the information considered and listed above, FAR recommendations are formulated relative to FAR remuneration ranges. FAR ranges are set based on Mercer Position Class and are calculated using aggregated median market data for all relevant roles in that position class.

Remuneration packages are reviewed on an individual basis on appointment, on promotion or during the annual remuneration review. New entrants are typically positioned up to the midpoint to provide an opportunity to progress within the salary band once they are proven in role. During the annual review process a recommendation on the FAR increase is based on an individual’s position in range and their performance outcome and this is provided to the Manager for decision.

STI amounts are determined on the employee’s employment type, grade and performance rating.

Eligible employees have a series of individually tailored and quantitative measures cascaded from the Enterprise and Business Unit used in their scorecard. The outcomes of the scorecard are the basis for eligible individuals STI outcome.

Annually the Board is asked to review and approve the fixed remuneration review budget for contract level employees and the APCIP.

Unless the Board determines otherwise, participants who have a FAR of $400,000 or more as at 30 June of the performance cycle will have 25 per cent of their total target and stretch incentive deferred until September of the following year. This amount remains “at risk”, contingent on the sustained performance of the business at the absolute discretion of the Board.

The Enterprise does not generally support the provision of discretionary payments. The GCEO&MD, as outlined in the Board approved Group Remuneration Policy, can in exceptional circumstances approve the provision of a discretionary or retention payment opportunity to any employee. Such opportunities must be clearly documented outlining the reasons for the payment opportunity and the performance period and/or criteria required to be satisfied prior to receiving the payment.

FY21 Performance scorecards
GCEO&MD (Enterprise scorecard) and senior executives’ business unit are both aligned to the Enterprise Scorecard that contains Enterprise and BU level financial, strategic, leadership and safety KPIs.

All other eligible employees have a series of tailored or cascaded quantitative measures used in their scorecard.