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Appendix G: Executive remuneration reporting

Introduction

In accordance with the Public Governance, Performance and Accountability Rule 2014, the CEFC has set out below the remuneration approach for Key Management Personnel (KMP), including the CEFC non-executive Board and senior executive team, and Other Highly Paid Staff (OHPS).

CEFC remuneration is calculated and disclosed in accordance with AASB 119 Employee Benefits. All amounts are calculated and disclosed on an accruals basis.

Governance arrangements

Remuneration for non-executive Board members is determined by the Remuneration Tribunal, subject to the Remuneration Tribunal Act 1973.

The remuneration of the CEO and other Executives included as Key Management Personnel (KMP) is determined by the CEFC Board People and Culture Committee and approved by the non-executive Board.

The Board People and Culture Committee develops, reviews and makes recommendations to the Board on:

  • The CEFC policy covering all Executive remuneration, and any changes to the Remuneration Policy and the implementation of the policy, including any required Ministerial approvals.
  • Corporate goals and objectives relevant to the remuneration and performance of Executives in light of these objectives.
  • The remuneration arrangements for the CEO and other Executives included within KMP (including base pay, incentive payments, superannuation and other retirement rights); and any changes to their remuneration including proposed awards after evaluating annual performance against KPIs.
  • CEFC policies on the recruitment, selection, retention and termination of the CEO and other Executives included within KMP and any changes to those policies.
  • Specific individual contractual arrangements for the CEO and other Executives included within KMP.

Remuneration for OHPS is governed by the CEFC Remuneration Policy and determined by the CEO in consultation with other members of the senior executive team.

Executive remuneration policies and practices

Executives are employed on individual contracts, with terms and conditions based on the National Employment Standards contained in the Fair Work Act 2009. KMPs are not covered by the Australian Government Industry Award 2016, which applies to other CEFC employees, including any OHPS, whose remuneration is shown in Figure 40.

During 2018–19, the total reward for Executives included fixed remuneration (base salary plus superannuation), in addition to variable compensation.

Fixed remuneration is determined with reference to market benchmarking data to support the recruitment and retention of Executives with the required skills to manage the CEFC’s diverse functional areas. Remuneration data is provided by the Financial Industry Remuneration Group (FIRG), across large, medium and smaller organisations, both in the private and public sectors.

Executive remuneration is reviewed annually and may be adjusted to reflect market relativities or a change in individual responsibilities. The CEFC has committed to a maximum average salary increase of 2.0 per cent per annum over the next three years, in accordance with the Australian Government Public Sector Workplace Bargaining Policy 2018.

Variable compensation plan

After a qualifying period, Executives are invited to participate in the CEFC Variable Compensation Plan which covers performance-based remuneration. In developing the Variable Compensation Plan, consideration was given to the CEFC Act; Investment Mandate; requirements of the charters of both the CEFC Board and Board People and Culture Committee; the Prudential Standards of Australian Prudential Regulation Authority (APRA); and other relevant legislation. The CEFC Board reserves the absolute right to suspend or alter the Variable Compensation Plan at any time.

The CEFC Corporate Key Performance Indicators (KPIs) are central to the Variable Compensation Plan, and link Executive performance with organisational performance. The Corporate KPIs cover the strategic themes of Impact, Innovation and Organisational Effectiveness. The size of the available Variable Compensation Pool is entirely dependent on the achievement of the CEFC Corporate KPIs.

“On target” variable compensation is 50 per cent of fixed remuneration for the CEO and 30 per cent of fixed remuneration for other Executives included within KMP and OHPS at senior levels. “On target” variable compensation for OHPS ranges between 15 and 30 per cent, depending on career level. Higher percentage “outperformance” awards are available for all staff, excluding the CEO.

Variable compensation payments to the CEO, other Executives included within KMP and OHPS at senior levels reflect a “split weighting” between corporate and individual components, of 75 per cent and 25 per cent respectively. Payments to OHPS at lower career levels are based on a 100 per cent individual component.

All recommendations in relation to payments to the CEO and other Executives included within KMP may be adjusted by the Board People and Culture Committee, with recommendations made to the Board for approval prior to payment. All payments under the Variable Compensation Plan are made at the Board’s absolute discretion.

In line with industry practice, payments to the CEO, other Executives included within KMP and OHPS at senior levels are subject to a deferral, with 25 per cent of the annual variable compensation payment retained by the CEFC. The retained amount is paid in three equal instalments over three years, provided there are no adverse matters arising in relation to transactions, breaches of practice, reputational damage, acts of malice or fraud committed by the individual.

The CEO and Board also have the discretion to enact a “claw-back” of variable compensation amounts paid to an Executive to the extent an adverse outcome arises that causes a re-assessment of that individual’s performance in a previous performance period.

These provisions are designed to protect the CEFC and the delivery of its obligations under the CEFC Act, the PGPA Act and other governing legislation.

Key Management Personnel

The CEFC defines Key Management Personnel (KMPs) as Board Members and staff who have the authority and responsibility for planning, directing and controlling the activities of the CEFC, directly or indirectly. The CEFC has determined that non-executive Board members, the CEO and other members of the senior executive team reporting to the CEO are KMPs.

In the 2018–19 year, the senior executive team included the Chief Executive Officer; Chief Financial Officer; Chief Governance and Strategy Officer (until 30 November 2018); General Counsel/Company Secretary; two Chief Investment Officers; the Chief Investment Risk Officer (until 21 September 2018); the Chief Risk Officer (from 24 September 2018); the Chief Asset Management Officer (from 29 January 2019); and the Executive Director, People and Culture.

Figure 39: KMP Remuneration 2018–19

Short-term benefits

Post-employment benefits

Other long-term benefits

Termination benefits

Total remuneration

Name

Position title

Annual fees

($)

Base salary1

($)

Performanc base compensation

($)

Movement in leave provisions2

($)

Other benefits and allowances7

($)

Superannuation contributions

($)

Performance based compensation

($)

Long service leave

($)

Other long-term benefits

($)

Termination benefits

($)

Total remuneration

($)

Non-Executive Board Members:

Steven Skala

Chair

108,680

–

–

–

–

10,325

–

–

–

–

119,005

Leeanne Bond

Director

54,340

–

–

–

–

5,162

–

–

–

–

59,502

Samantha Tough

Director

54,340

–

–

–

–

5,162

–

–

–

–

59,502

Nicola Wakefield Evans

Director

54,340

–

–

–

–

5,162

–

–

–

–

59,502

Philip Coffey

Director

54,340

–

–

–

–

5,162

–

–

–

–

59,502

Laura Reed

Director

54,340

–

–

–

–

5,162

–

–

–

–

59,502

Andrea Slattery

Director

54,340

–

–

–

–

5,162

–

–

–

–

59,502

CEO and Senior Executive Team:

Ian Learmonth

Chief Executive Officer

–

549,450

210,000

(9,107)

–

20,550

70,000

11,561

–

–

852,454

Andrew Powell

Chief Financial Officer

–

396,389

138,750

13,809

–

20,550

46,250

10,889

–

–

626,637

Leanne McDonald

Executive Director People and Culture

–

319,313

101,250

1,773

–

20,550

33,750

4,067

–

–

480,703

Stephen Panizza3

Chief Investment Risk Officer

–

97,664

–

3,746

–

4,747

–

(7,488)

–

–

98,669

Kevin Holmes4

Chief Governance and Strategy Officer

–

179,059

–

(3,567)

–

9,880

–

8,071

–

232,634

426,077

Rebecca Cottrell

General Counsel

–

349,450

120,000

(22,168)

–

20,550

40,000

7,995

–

–

515,827

Ludovic Theau

Chief Investment Officer

–

422,450

150,000

12,386

–

20,550

50,000

11,838

–

–

667,224

Paul McCartney

Chief Investment Officer

–

395,989

150,000

(530)

–

20,550

50,000

11,172

–

–

627,180

Michael Johnston5

Chief Risk Officer

–

288,626

92,055

(13,005)

–

15,802

30,685

10,449

–

–

424,612

Sara Leong6

Chief Asset Management Officer

–

167,461

53,096

14,066

–

10,670

17,699

1,378

–

–

264,368

Total

434,720

3,165,851

1,015,151

(2,598)

–

205,696

338,384

69,931

–

232,634

5,459,769

1. Base Salary is “grossed-up” for any amounts sacrificed by a KMP for the purchase of additional leave (maximum two weeks).

2. Movement in annual leave provisions is shown separately from Base Salary. KMPs accrue a maximum of four weeks annual leave per year. A positive movement means more leave was accrued than was taken in the year.

3. Remuneration for Mr Stephen Panizza is shown for the period to 21 September 2018, following his resignation as Chief Investment Risk Officer.

4. The role of Chief Governance and Strategy Officer was made redundant during the year. Accordingly, remuneration for Mr Kevin Holmes is shown for the period to 30 November 2018.

5. The role of Chief Risk Officer came into effect from 24 September 2018. Accordingly, remuneration for Mr Michael Johnston is from that period. Prior remuneration for Mr Johnston is reported as part of Figure 40 relating to OHPS.

6. Remuneration for the Chief Asset Management Officer is for the period from 29 January 2019, when Ms Sara Leong was appointed to the CEFC.

7. The CEFC does not provide benefits or allowances (such as car parking and motor vehicle benefits, housing benefits, and health benefits and the associated fringe benefits tax), resulting in $Nil consideration for the reporting period.

Senior executives

The CEFC does not have any senior executives other than those already included within the KMP disclosures in Figure 39.

Other Highly Paid Staff

Other Highly Paid Staff (OHPS) are CEFC employees (excluding KPMs and senior executives) whose total remuneration exceeds the $220,000 threshold for the 2018–19 year.

Figure 40: Remuneration of OHPS

Short-term benefits

Post-employment benefits

Other long-term benefits

Termination benefits

Total remuneration

Average base salary1

($)

Average performane base compensation

($)

Average movement in leave provisions2

($)

Average other benefits and allowances4

($)

Average superannuation contributions

($)

Average performance based compensation

($)

Average long service leave

($)

Average other long-term benefits

($)

Average termination benefits

($)

Average total remuneration

($)

88,131

37,260

9,294

–

5,133

–

1,289

–

–

141,107

147,352

50,336

1,646

–

14,452

–

3,549

–

18,827

236,163

180,673

55,826

2,102

–

17,933

–

4,554

–

–

261,088

187,764

70,934

7,074

–

16,634

–

3,801

–

–

286,207

176,289

48,333

(2,785)

–

16,232

–

(458)

–

71,744

309,354

210,071

87,500

3,302

–

19,524

–

5,067

–

–

325,465

238,613

84,250

1,819

–

20,448

–

6,322

–

–

351,452

251,053

101,667

7,153

–

20,550

–

7,119

–

–

387,541

264,787

122,500

2,228

–

20,550

–

6,938

–

–

417,003

304,303

108,333

754

–

20,550

–

7,637

–

–

441,578

275,123

145,000

4,791

–

20,550

–

9,344

–

–

454,808

398,234

75,000

(3,408)

–

20,550

25,000

11,248

–

–

526,625

365,653

116,250

4,088

–

20,550

38,750

10,307

–

–

555,597

389,450

108,750

15,012

–

20,550

36,250

5,002

–

–

575,014

1. Base Salary is “grossed-up” for any amounts sacrificed by an individual for the purchase of additional leave (maximum two weeks).

2. Movement in annual leave provisions is shown separately from Base Salary. Individuals accrue a maximum of four weeks annual leave per year. A positive movement means more leave was accrued than was taken in the year.

3. Includes remuneration for Mr Michael Johnston to 24 September 2018, at which time he was appointed Chief Risk Officer.

4. The CEFC does not provide benefits or allowances (such as car parking and motor vehicle benefits, housing benefits, and health benefits and the associated fringe benefits tax), resulting in $Nil consideration for the reporting period.

Visit

https://www.transparency.gov.au/annual-reports/clean-energy-finance-corporation/reporting-year/2018-2019-67