Flexible Working

NAIF offers an agile working environment to provide its employees with options to assist them in managing their work, travel and personal commitments. All employees have the technology to work remotely or from any NAIF office. NAIF employees have both formal and informal flexible work arrangements as outlined in NAIF's Working from Home Policy.

Wellbeing Initiatives / Employee Assistance Programs

NAIF’s employees benefit from many of Export Finance Australia’s wellbeing programs, which promote improved health awareness, self-management skills and healthy work practices.

Through Export Finance Australia, NAIF’s employees also have access to an employee assistance program, which provides support to them and their immediate families as needed, as well as access to a free confidential counselling service.

In addition, NAIF team strategy sessions have included discussion on topics such as resilience, personal growth, leadership, mind fitness and managing and responding to workplace challenges.

All NAIF staff were offered a complimentary influenza vaccination as part of the commitment to health and wellbeing of employees.

Work, Health and Safety

While NAIF’s employees are predominantly located in NAIF’s Cairns head office, Export Finance Australia’s Sydney office, DIIS’s Brisbane office or Austrade Perth office, they travel frequently across northern Australia, to Canberra and other capitals, as well as using NAIF’s technology options for remote working.

NAIF’s office space is in secure buildings with restricted security pass access. Workstations and facilities have modern safety features, such as adjustable seats and computer monitors. Employees are also given information on ergonomic self-assessment and provided with additional equipment as required. Ergonomic assessments with trained professionals are undertaken.

NAIF works closely with Export Finance Australia around work, health and safety (WHS). NAIF engages with its employees on WHS matters, including the adequacy of its facilities, and takes steps to ensure a positive, productive and risk free working environment. NAIF has a designated First Aid Officer and Fire Warden in its Sydney and Cairns office and first aid training is also offered to other staff.

NAIF takes a pragmatic, risk based approach to WHS compliance framework and management practices. Workplace hazards are prioritised according to the risk that they pose to the health and safety of NAIF’s employees, and are dealt with promptly.

NAIF records and monitors hazards and controls. Key risk areas that require specialised monitoring have been identified as domestic travel, often to remote areas of northern Australia.

NAIF has a process for incident notification and investigation, which includes reporting of ‘near misses’. Incidents and near misses are managed, and proactive measures are put in place to reduce the potential risks identified.

NAIF had no workplace injuries among employees and contractors, and was not investigated and did not receive any notices or record any ‘notifiable incidents’ under the WHS Act, during the reporting period.

Executive Remuneration Policies and Practices

In accordance with the requirements of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) and the Department of Finance Resource Management Guide 137 Commonwealth entities Executive Remuneration Reporting Guide for Annual Reports, NAIF reports on its policies which support its remuneration practices.

Figure 18 lists the Key Management Personnel (KMPs) for FY18-19. It includes all Non-Executive Directors and those executives deemed to be KMP by the Board, namely the CEO, Chief of Staff and General Counsel. These individuals are identified as KMPs consistent with the definition in the Australian Accounting Standards Board (AASB) 124 Related Party Disclosures.

A further three executive are classified as senior executives and six as other highly paid staff for the purposes of the Commonwealth’s remuneration reporting. Refer to Figure 21 and Figure 22 following. Senior executives are defined as those executive, other than KMPs who are responsible for making decisions, or having substantial input into decisions, that affect the operations of the entity. Other highly paid staff are employees who are neither KMP nor senior executives and whose total remuneration exceeds the $220,000 threshold for the FY18-19 reporting period.

The following changes were made to KMPs during the year:

• Professor Khory McCormick was appointed Chair on 1 August 2018. For the period 1 July 2018 to 31 July 2018, Mr McCormick held the position as Acting Chair.
• Mr Ross Rolfe was appointed Director on 1 August 2018. Mr Rolfe resigned effective 17 April 2019.
• Ms Kate George was appointed Director effective 29 March 2019.

Figure 18: FY18-19 KMPs

Remuneration

To achieve its business outcomes, as outlined in the Corporate Plan and as more broadly set through Government direction including the Investment Mandate and Statement of Expectations, NAIF needs to be able to attract, reward and retain skilled executives.

NAIF’s Staff Remuneration Policy and processes are directed to supporting that outcome, recognising that NAIF has to work within an acceptable cost framework and comply with relevant Commonwealth Government’s policies for its statutory agencies.

NAIF’s executives include specialist project financiers (origination, execution and financial analysts and project finance legal advisers). Other roles include support for strategy, budgeting, audit, government and indigenous stakeholder engagement, corporate planning and reporting, communications and team support.

NAIF executives are employed on common law contracts. NAIF executives are not considered public servants and are not covered by the Australian Public Service Act 1999.

Remuneration for all executives (excluding the CEO) consists of two components; a Fixed Annual Remuneration (FAR) and ‘at risk’ remuneration delivered through a Short-Term Incentive (STI) program. The FAR aims to reward executives for executing the core requirements of their role. The STI program is an ‘at risk’ annual incentive opportunity where an STI payment may be awarded to ensure alignment with strategic objectives. Both FAR and STI remuneration determinations are made balancing relevant corporate and individual key performance indicator (KPI) outcomes. The STI program is known as an Annual Performance Reward or Bonus.

Fixed Annual Remuneration (FAR)

FAR is comprised of base salary, superannuation contributions and any non-cash benefits. The following principles, outlined in the NAIF Staff Remuneration Policy underpin NAIF’s setting of appropriate FAR:

• Market salary will be determined by comparing each executive’s salary, to salary data from the financial services sector to provide independent benchmarking in determining appropriate remuneration for roles across the organisation. The NAIF uses data obtained from the Financial Institutions Remuneration Group (FIRG). The FIRG data incorporates the salaries paid by other financial institutions for comparable roles or job families. This takes into account the complexity of the role. Remuneration benchmarking aims to position total remuneration competitively against comparable organisations. The guiding principle is to position total FAR remuneration towards the mid-point of the benchmark for comparable roles in the Australian market, whilst having regard to (and complying where required) with broader Government remuneration related policies such as the Australian Public Service Commission (APSC) Workplace Bargaining Policy.
• An individual’s skills and experience. Within each job family, the FIRG material recognises that individuals will bring different levels of competence to a role, and that an individual’s competence changes over time.
• End of year performance discussions.

STI Program - Annual Performance Rewards (Bonus)

The provision of Annual Performance Awards (Bonus) is discretionary. Bonuses are considered, where individual KPIs are met and the organisation's values have been demonstrated over the course of the year.

NAIF values a number of financial and non financial outcomes and behaviours and actions in considering bonus recommendations. Certain performance gateways are required to be achieved by the individual before any STI payment can be earned being a minimum overall performance rating on KPIs which include risk and behavioural KPIs.

Bonus payments are pro-rata based on employee FTE status and tenure, factoring in the date of commencement and extended periods of leave. Bonuses for executive who commenced after 1 January are only considered in exceptional circumstances.

Following the year end annual performance review process the CEO may recommend a performance bonus for NAIF executive. Executive must be employed with NAIF, and not in their notice period, at the time the bonus is paid to be eligible.

The Board considers those recommendations. Bonuses are determined at the discretion of the Board.

Salary Increases

Annual salary adjustments are at the sole discretion of the Board under the advice of the CEO.

NAIF works within the parameters of the Remuneration and Funding Declaration (Declaration) under the Workplace Bargaining Policy approved by the APSC Commissioner. The Declaration sets out the maximum amount to be awarded in non-promotional salary package increases. A funding declaration was approved for remuneration increases of up to six percent averaged over three years for the September 2017 to September 2019 period.

Executives who commence after 1 January are not eligible for a salary review in September of their starting year. Executives on extended leave including parental leave must be considered for a remuneration increase. This principle is consistent with best practice as a mechanism to assist in reducing the gender pay gap.

Salary increases are recommended by the CEO having regard to the individual performance, career progression and comparable market data. Recommendations by the CEO are referred to the RemCo.

Directors Remuneration

All NAIF Directors are appointed by the Commonwealth Government through the responsible Minister. These appointments are made in accordance with section 15 of the NAIF Act. Board Fees for Directors are set and paid according to the determination of the independent Commonwealth Remuneration Tribunal (the Tribunal). This includes fees for Directors as well as those Directors appointed as members of the BARC. NAIF has no role in determining the level of the Board Director fees. Statutory superannuation is paid in addition to the fees set by the Tribunal.

CEO Remuneration

The CEO position is classified as a Full-Time Public Office holder under the Tribunal Determinations.

In accordance with the Tribunal Determination 2018 total remuneration for the Chief Executive Officer was $427,170. In accordance with the Tribunal’s determination the CEO position is not entitled to a Bonus.

Figure 19: Remuneration Tribunal (the Tribunal) Board and Committee fees (excluding superannuation) for FY18-19

Position	Annual Fee	Note
NAIF Chair	$117,530
NAIF Director	$58,430	Mr Coulter received an annual member fee of $45,610 instead of $58,430.
NAIF BARC Chair	$16,000
NAIF BARC Member	$8,000

Remuneration Governance Arrangements

The NAIF Board established a RemCo effective 1 July 2019 which operates under a Remuneration Committee Charter. The primary role of the RemCo is to provide oversight of NAIF’s remuneration policies and strategies. The establishment of the RemCo is consistent with outcomes of discussions with the ANAO during the NAIF Performance Audit completed in FY18-19. Following its establishment, the RemCo supported the Board with the FY18-19 end of year remuneration decisions. The RemCo does not have decision making powers other than to provide recommendations and advice to the Board for the Board’s endorsement.

Executive remuneration decisions, within NAIF, consistent with the NAIF Staff Remuneration Policy are determined as follows:

The CEO:

• is responsible for implementing NAIF performance management and remuneration policies and practices.
• ensures KPIs are set for executives to support the NAIF four strategic pillars outlined in the NAIF Corporate Plan (Origination, Risk Management, People & Culture and Stakeholder Engagement). Year end review of performance against the KPIs is undertaken by appropriate management executives with individual executives.
• with management collectively considers the outcomes of those annual performance discussions across all executive (excluding the CEO’s direct reports who are assessed by the CEO) to ensure a consistent approach in benchmarking and to ensure there are no discrepancies or biases in the analysis.
• prepares a recommended Bonus pool provision for the review of the RemCo and recommendation to the Board. The size of the Bonus pool provision is developed based on a bottom up analysis of the performance of all eligible employees, taking into account considerations listed above. It is expected that the Bonuses assumed in that analysis will vary for performance but also to reflect the complexity and responsibility of different executive roles and also to reflect the complexity and responsibility of the individual remit in delivering NAIF’s mandate / objectives.
• provides the RemCo that analysis and recommends a Bonus pool (equivalent to that provision) for review by the RemCo to the Board. The analysis will include a summary of the allocation performance outcomes and FIRG benchmarking data points.

The RemCo:

• considers the recommendations presented by the CEO.
• in respect of the proposed bonus pool, takes into account the individual recommendations of the CEO in considering the proposed Bonus pool and allocations recommended by the CEO to ensure recommendations look fair and reasonable given their experience of the executives throughout the year.
• provides advice to the Board as to whether to endorse the Bonus pool at the August Board meeting each year.

The Board:

• is responsible for ensuring that NAIF has coherent policies and practices that fairly and responsibly manage the performance and remuneration arrangements for the NAIF executives including through the following steps.
• considers recommendations made by the CEO and RemCo in that regard and at the Board’s discretion approves the payment of a Bonus pool.
• if the CEO proposes any differences between Bonuses proposed in the pool recommended to the RemCo for endorsement for KMPs and final recommendations by the CEO for those KMPs approval from the Board must be provided.

FY18-19 Remuneration Information

The following figures details the remuneration paid to NAIF KMPs, senior executives and other highly paid staff in FY18-19.

Figure 20: Remuneration paid to KMPs in FY18-19

Figure 21: Remuneration paid to senior executives in FY18-19

Figure 22: Remuneration paid to other highly paid staff in FY18-19

Independent Review of NAIF’s Staff Remuneration Policy and Associated Practices

Following the completion of the ANAO Performance Audit (refer section 6), NAIF is progressing an independent review of its remuneration procedures and policies.

The intention of the review is to confirm the NAIF Staff Remuneration Policy and associated policies including position mapping remain appropriate taking into account the unique operating environment of the NAIF including its legislative mandate and timeframes, the commercial market in which NAIF operates as a gap financier and the requirements of the NAIF Investment Mandate to have regard to Australian best practice government governance principles, and Australia best practice corporate governance for Commercial Financiers.

The scope for the review was prepared in FY18-19 and work by a selected independent adviser will be completed in FY19-20. Findings from this review will contribute to deliberations in a review of NAIF’s human resources remuneration and associated policies and practices as part of the broader response to matters raised by the ANAO in discussions with NAIF.