Remuneration report
Remuneration strategy
Remuneration for all Agency staff, including members of the Agency Management Committee, meets the requirements outlined in the Australian Public Sector Workplace Bargaining Policy (the Bargaining Policy), which was introduced in March 2014, and later revised in October 2015 and 2018 to set the terms and conditions of employment for Australian Public Service entities.
All employees, including SES and non-SES, operate on individual employment contracts.
While Agency remuneration arrangements are determined by the Chair of the Board, as Accountable Authority for the Agency, consultation with the Board is provided through the Board’s Remuneration & Nominations Committee.
Performance related pay
In addition to fixed pay, ongoing staff have the opportunity to earn a variable pay component known as Performance Related Pay (PRP), which is based on both personal performance (Individual Plan) and investment performance (Fund Plan).
The mix of variable pay based on personal performance and variable pay based on investment performance depends on the individual’s role, with investment performance a higher component of variable pay for investment staff.
All staff have some exposure to investment performance in their variable pay arrangements, which serves to help focus all employees on the pursuit of the mandated investment objectives.
Performance related pay tied to personal performance
Actual variable pay based on personal performance reflects an individual’s performance against key performance indicators (goals) and the organisation’s values.
Each individual’s goals align to the organisation’s strategic imperatives, which define what the Agency must do to succeed:
- The best portfolios to achieve our Investment Mandates.
- A well-managed Agency with a talented, motivated and engaged team.
- Efficient, effective and fit-for-purpose processes and technology.
- The trust and respect of Government, Parliament and the investment community.
Performance related pay tied to investment performance
Actual variable pay based on Fund performance reflects the average performance over rolling three-year periods for the Future Fund and is determined once performance results are audited and confirmed.
Performance related pay for investment performance is assessed against the Future Fund’s absolute return against its mandated target return over three years.
Remuneration of Key Management Personnel in 2018-19
Key Management Personnel (KMP) are those who have authority and responsibility for planning, directing and controlling the activities of the Board and Agency directly and indirectly throughout the year. This represents members of the Board and members of the Agency’s Management Committee.
The Board of Guardians and the Agency are established by the Future Fund Act 2006 (the Act). In accordance with the Act members of the Board are appointed by the responsible Ministers.
The Act prescribes that fees payable to Board members are determined by the Commonwealth Remuneration Tribunal (the Tribunal).
The Tribunals’ Determination 2018, taking effect from 1 July 2018, set the annual fee payable to the Chair at $210,460 and the fee for other members at $105,230.
The official travel entitlement for Board members was set at Tier 1. Board members are not eligible for performance related payments.
During 2018-19, the Guardians of the Fund were as follows:
Future Fund Board of Guardians
|
Name |
Title |
|---|---|
|
Hon Peter Costello AC |
Chairman |
|
Ms Erin Flaherty |
Board member |
|
Mr John Fraser1 |
Board member |
|
Ms Carolyn Kay |
Board member |
|
Mr John Poynton AO |
Board member |
|
Mr Michael Wachtel |
Board member |
|
Dr Jane Wilson |
Board member |
Notes:
- John Fraser's Board term commenced on 12 November 2018.
During 2018–19, the Agency’s Management Committee comprised the following:
Management Committee
|
Name |
Title |
|---|---|
|
Mr David Neal |
Chief Executive Officer |
|
Dr Raphael Arndt |
Chief Investment Officer |
|
Mr Richard Large1 |
Chief Technology Officer |
|
Mr Paul Mann |
Chief Financial Officer |
|
Mr Gordon McKellar |
Chief Operating Officer |
|
Ms Elizabeth McPherson |
Chief Culture Officer |
|
Mr Cameron Price |
General Counsel and Chief Risk Officer |
Notes:
- Richard Large commenced with the organisation on 11 February 2019.
Remuneration mix for Management Committe
As is the case for all staff, remuneration for members of the Management Committee includes both fixed and at risk performance related pay. At risk performance related pay includes elements tied to investment performance (Fund Plan) and personal performance (Individual Plan).
Executives with greater influence over the investment portfolio have a larger proportion of their available at risk performance related pay linked to investment performance. Those in non-investment focused roles have at risk performance related pay more closely tied to the delivery of personal objectives that support the implementation of the business strategy.
The following table summarises the composition of at risk performance related pay for each member of the Management Committee.
At risk performance related pay for each member of the Management Committee in 2018-19
|
Name |
Maximum at risk performance related pay as a % of fixed remuneration |
% of at risk performance related pay tied to investment performance (Fund Plan) |
% of at risk performance related pay tied to personal performance (Individual Plan) |
|---|---|---|---|
|
Mr David Neal |
120 |
70 |
30 |
|
Dr Raphael Arndt |
120 |
70 |
30 |
|
Mr Richard Large1 |
45 |
25 |
75 |
|
Mr Paul Mann |
55 |
25 |
75 |
|
Mr Gordon McKellar |
55 |
25 |
75 |
|
Ms Elizabeth McPherson |
45 |
25 |
75 |
|
Mr Cameron Price |
45 |
25 |
75 |
- Richard Large commenced with the organisation on 11 February 2019.
Remuneration outcomes for Key Management Personnel in 2018-19
Remuneration outcomes for members of the Board are set by the Determination of the Remuneration Tribunal.
Remuneration outcomes for members of the Management Committee reflect the combination of fixed pay and performance related pay as outlined above.
The use of rolling three-year periods for the calculation of absolute investment performance aligns to the organisation’s long-term investment objective.
At 30 June 2019, over three years the Future Fund earned $39.8 billion, returning 9.8% per annum.
Key remuneration outcomes for Key Management Personnel in 2018-19
|
Short‑term benefits |
Post‑employment benefits |
Other long‑term benefits |
Termination benefits |
Total remuneration ($) |
|||||
|---|---|---|---|---|---|---|---|---|---|
|
Name |
Position title |
Base salary ($) |
Bonuses ($) |
Other benefits and allowances ($) |
Superannuation contributions ($) |
Long service leave ($) |
Other long‑term benefits ($)1 |
||
|
David Neal |
Chief Executive Officer |
648,591 |
770,759 |
0 |
25,000 |
23,432 |
0 |
0 |
1,467,782 |
|
Raphael Arndt |
Chief Investment Officer |
664,832 |
759,367 |
0 |
20,532 |
18,733 |
0 |
0 |
1,463,464 |
|
Richard Large2 |
Chief Technology Officer |
196,546 |
67,206 |
0 |
15,700 |
3,001 |
0 |
0 |
282,453 |
|
Paul Mann |
Chief Financial Officer |
492,826 |
232,116 |
0 |
33,282 |
19,571 |
0 |
0 |
777,795 |
|
Gordon McKellar |
Chief Operating Officer |
524,262 |
273,784 |
0 |
33,282 |
17,317 |
0 |
0 |
848,645 |
|
Elizabeth McPherson |
Chief Culture Officer |
510,489 |
197,136 |
0 |
33,282 |
19,456 |
0 |
0 |
760,363 |
|
Cameron Price |
General Counsel and Chief Risk Officer |
524,207 |
0 |
0 |
33,282 |
16,818 |
214,540 |
0 |
788,847 |
|
Peter Costello |
Chairman |
209,791 |
0 |
699 |
19,927 |
0 |
0 |
0 |
230,417 |
|
Erin Flaherty |
Board Member |
104,895 |
0 |
478 |
9,964 |
0 |
0 |
0 |
115,337 |
|
John Fraser3 |
Board Member |
66,644 |
0 |
130 |
6,247 |
0 |
0 |
0 |
73,021 |
|
Carolyn Kay |
Board Member |
104,895 |
0 |
443 |
9,964 |
0 |
0 |
0 |
115,302 |
|
John Poynton |
Board Member |
104,895 |
0 |
1,624 |
9,964 |
0 |
0 |
0 |
116,483 |
|
Michael Wachtel |
Board Member |
104,895 |
0 |
427 |
9,964 |
0 |
0 |
0 |
115,286 |
|
Jane Wilson |
Board Member |
104,896 |
0 |
455 |
16,151 |
0 |
0 |
0 |
121,502 |
Notes:
For the purposes of reporting requirements under the PGPA Act, all Future Fund senior executives are captured in the Key Management Personnel disclosure.
1. Under the Agency’s Deferred Earnings Plan, staff are able to defer receipt of a proportion of their Performance Related Pay payable to them in a given financial year and have this treated as a notional investment in the Future Fund.
2. Richard Large commenced with the organisation on 11 February 2019.
3. John Fraser’s Board term commenced on 12 November 2018.
Remuneration outcomes for other highly paid staff in 2018-19
|
Short‑term benefits |
Post‑employment benefits |
Other long‑term benefits |
Termination benefits |
Total remuneration |
|||||
|---|---|---|---|---|---|---|---|---|---|
|
Total remuneration bands |
Number of other highly paid staff |
Average base salary ($) |
Average bonuses ($) |
Average other benefits and allowances ($) |
Average superannuation contributions ($) |
Average long service leave ($) |
Average other long‑term benefits1 ($) |
Average termination benefits ($) |
Average total remuneration ($) |
|
$220,001 - $245,000 |
6 |
169,153 |
33,872 |
0 |
18,894 |
5,772 |
4,490 |
0 |
232,181 |
|
$245,001 - $270,000 |
8 |
195,166 |
21,762 |
0 |
23,887 |
5,386 |
8,892 |
0 |
255,093 |
|
$270,001 - $295,000 |
5 |
181,915 |
71,841 |
0 |
16,771 |
4,986 |
7,857 |
0 |
283,370 |
|
$295,001 - $320,000 |
2 |
212,038 |
62,195 |
0 |
27,786 |
8,211 |
0 |
0 |
310,229 |
|
$320,001 - $345,000 |
8 |
203,548 |
81,354 |
0 |
19,440 |
8,788 |
16,323 |
0 |
329,453 |
|
$345,001 - $370,000 |
2 |
256,437 |
37,734 |
0 |
23,297 |
7,236 |
25,871 |
0 |
350,573 |
|
$370,001 - $395,000 |
4 |
242,330 |
89,244 |
0 |
22,963 |
7,596 |
20,213 |
0 |
382,345 |
|
$395,001 - $420,000 |
2 |
280,559 |
85,109 |
0 |
24,291 |
19,258 |
0 |
0 |
409,217 |
|
$420,001 - $445,000 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
$445,001 - $470,000 |
2 |
239,796 |
177,497 |
0 |
20,005 |
13,353 |
0 |
0 |
450,651 |
|
$470,001 - $495,000 |
2 |
282,383 |
153,670 |
0 |
20,329 |
18,239 |
0 |
0 |
474,621 |
|
$495,001 - $520,000 |
4 |
313,464 |
159,287 |
0 |
25,700 |
8,634 |
0 |
0 |
507,085 |
|
$520,001 - $545,000 |
4 |
315,160 |
78,861 |
0 |
25,955 |
11,666 |
100,936 |
0 |
532,578 |
|
$545,001 - $570,000 |
1 |
294,310 |
227,726 |
0 |
24,999 |
21,312 |
0 |
0 |
568,347 |
|
$570,001 - $595,000 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
$595,001 - $620,000 |
1 |
327,478 |
250,815 |
0 |
24,999 |
9,316 |
0 |
0 |
612,609 |
|
$620,001 - $645,000 |
1 |
366,304 |
229,792 |
0 |
24,999 |
10,130 |
0 |
0 |
631,225 |
|
$645,001 - $670,000 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
$670,001 - $695,000 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
$695,001 - $720,000 |
1 |
319,791 |
317,309 |
0 |
58,830 |
18,176 |
0 |
0 |
714,106 |
|
$720,001 - $745,000 |
1 |
360,358 |
329,963 |
0 |
24,999 |
16,617 |
0 |
0 |
731,937 |
|
$745,001 - $770,000 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
$770,001 - $795,000 |
1 |
382,253 |
363,749 |
0 |
24,999 |
12,570 |
0 |
0 |
783,571 |
|
$795,001 - $820,000 |
1 |
379,550 |
261,299 |
0 |
33,282 |
11,913 |
128,700 |
0 |
814,744 |
|
$820,001 - $845,000 |
1 |
383,603 |
396,358 |
0 |
24,999 |
16,363 |
0 |
0 |
821,324 |
|
$845,001 - $870,000 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
$870,001 - $895,000 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
$895,001 - $920,000 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
$920,001 - $945,000 |
1 |
431,391 |
0 |
0 |
24,999 |
18,563 |
449,598 |
0 |
924,551 |
|
$945,001 - $970,000 |
1 |
444,569 |
481,629 |
0 |
20,539 |
12,156 |
0 |
0 |
958,893 |
|
$970,001 - $995,000 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
$995,001 - $1,020,000 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
$1,020,001 - $1,045,000 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
$1,045,001 - $1,070,000 |
2 |
460,795 |
563,807 |
0 |
22,766 |
17,076 |
0 |
0 |
1,064,444 |
Notes:
1. Under the Agency’s Deferred Earnings Plan, staff are able to defer receipt of a proportion of their Performance Related Pay payable to them in a given financial year and have this treated as a notional investment in the Future Fund.
Remuneration of all staff in 2018-19
While the Agency operates on individual employment contracts rather than an enterprise agreement, it adjusts its practices to meet the requirements of the Bargaining Policy and associated Directions for fixed pay (which includes superannuation). The Bargaining Policy and Directives apply for three years: 2017-18, 2018-19 and 2019-20.
In addition to fixed pay, ongoing staff have the opportunity to earn a variable pay component known as Performance Related Pay (PRP). Non-salary benefits are also available to staff, reflecting our commitment to ensuring our people have every opportunity to balance their work and life. We support and encourage flexible working arrangements to cater for family, study, community and similar commitments.
Other non-salary benefits include annual flu vaccinations, skin and health checks, ergonomic assessments and furniture, contributions to relevant professional memberships and salary sacrifice arrangements.
Salary ranges by classification level in 2018-19
|
Minimum Salary |
Maximum Salary |
|
|---|---|---|
|
SES 3 |
388,000 |
700,000 |
|
SES 2 |
388,000 |
700,000 |
|
SES 1 |
388,000 |
700,000 |
|
EL 2 |
268,000 |
589,000 |
|
EL 1 |
196,000 |
332,000 |
|
APS 6 |
145,000 |
253,000 |
|
APS 5 |
114,000 |
191,000 |
|
APS 4 |
82,000 |
137,000 |
|
APS 3 |
56,000 |
99,000 |
|
APS 2 |
56,000 |
99,000 |
|
APS 1 |
0 |
0 |
|
Other |
0 |
0 |
|
TOTAL1 |
56,000 |
700,000 |
Notes:
The Future Fund Management Agency operates a classification system that ranges from FFMA1 – FMMA7. In line with reporting requirements under the PGPA Act remuneration information is now reported in accordance with the Australian Public Service classification system.
Actual salaries fall within the available ranges shown above. Salaries are inclusive of superannuation. Where a staff member sits in a range is influenced by market data. How and when a staff member moves through a range is influenced by market data, organisational and personal performance.
1. In line with reporting requirements under the PGPA Act, the total minimum salary is intended to show the lowest minimum salary available. Likewise, the total maximum salary is intended to show the highest maximum salary available.
Performance Related Pay
As highlighted previously, in addition to fixed pay, ongoing staff have the opportunity to earn a variable pay component known as Performance Related Pay (PRP), which is based on both individual performance and fund performance.
The mix of variable pay based on individual performance and variable pay based on fund performance depends on the individual’s role, with fund performance generally a higher component of variable pay for investment staff.
At 30 June 2019, over three years the Future Fund earned $39.8 billion, returning 9.8% per annum.
The payments detailed in the table below include pro rata performance pay for staff who were not employed for the full 12-month cycle but were eligible for payment.
Performance pay by classification level in 2018-19
|
Number of employees receiving performance pay |
Aggregated (sum total) of all payments made |
Average of all payments made |
Minimum Payment Made |
Maximum Payment made |
|
|---|---|---|---|---|---|
|
SES 3 |
1 |
770,759 |
770,759 |
770,759 |
770,759 |
|
SES 2 |
3 |
1,265,267 |
421,756 |
232,116 |
759,367 |
|
SES 1 |
0 |
0 |
0 |
0 |
0 |
|
EL 2 |
42 |
7,656,299 |
182,293 |
5,275 |
568,132 |
|
EL 1 |
12 |
1,053,461 |
87,788 |
30,461 |
212,639 |
|
APS 6 |
30 |
1,404,461 |
46,815 |
7,826 |
136,715 |
|
APS 5 |
27 |
690,949 |
25,591 |
1,268 |
57,071 |
|
APS 4 |
28 |
241,888 |
8,639 |
291 |
24,088 |
|
APS 3 |
2 |
8,535 |
4,268 |
537 |
7,998 |
|
APS 2 |
2 |
9,315 |
4,658 |
3,264 |
6,051 |
|
APS 1 |
0 |
0 |
0 |
0 |
0 |
|
Other |
0 |
0 |
0 |
0 |
0 |
|
TOTAL |
147 |
13,100,934 |
89,122 |
291 |
770,759 |
Notes:
The Future Fund Management Agency operates a classification system that ranges from FFMA1 – FMMA7. In line with reporting requirements under the PGPA Act remuneration information is now reported in accordance with the Australian Public Service classification system.
Visit
https://www.transparency.gov.au/annual-reports/future-fund-management-agency/reporting-year/2018-2019-49