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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 (RMG)-137 Commonwealth entities Executive Remuneration Reporting Guide for Annual Reports, NAIF reports on its policies which support its remuneration practices.

Table 11.1 lists the Key Management Personnel (KMPs) for FY19-20. It includes all Non-Executive Directors and those Executives deemed to be KMP by the Board, namely the CEO. These individuals are identified as KMPs consistent with the definition in the Australian Accounting Standards Board (AASB) 124 Related Party Disclosures.

A further five Employees are classified as senior executives and eight as other highly paid Employees for the purposes of the Commonwealth’s remuneration reporting. Refer to table 9.1 and table 9.2 following. Senior executives are defined as those executives, 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 $225,000 threshold for the FY19-20 reporting period.

FY2019-20 KMPs

Name

Title

KMP Status

FY19-20 Status

Board

Mr Khory McCormick

Chair

Full Year

Current

Mr Bill Shannon

Director

Full Year

Current

Ms Karla Way-McPhail

Director

Full Year

Current

Mr Barry Coulter

Director

Full Year

Current

Mr Justin Mannolini

Director

Full Year

Current

Ms Kate George

Director

Full Year

Current

Ms Belinda Murphy

Director

Full Year

Current

Management

Mr Chris Wade

Chief Executive Officer

Part Year

Current

Ms Laurie Walker

Chief Executive Officer

Part Year

Not Current

Ms Carol Bellettini

Chief of Staff

Part Year

Not Current

Mr Adam Thatcher

General Counsel

Part Year

Not Current

The following changes were made to KMPs from the previous year:

  • Ms Belinda Murphy was appointed Director 1 July 2019.
  • Ms Laurie Walker ceased employment 31 October 2019.
  • Ms Carol Bellettini ceased employment 21 May 2020.
  • Mr Adam Thatcher ceased employment 20 May 2020.

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 Employees.

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

NAIF’s Employees include specialist project financiers (investment specialists, 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 Employees are employed on common law contracts. NAIF Employees are not considered public servants and are not covered by the Australian Public Service Act 1999.

Remuneration for all Employees (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 Employees 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 indicators (KPIs’) outcomes. The STI program is known as an Annual Performance Incentives.

Fixed Annual Remuneration (FAR)

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

  • Market salary will be determined by comparing each Employee’s salary, to salary data from the financial services sector to provide independent benchmarking in determining appropriate remuneration for roles across the organisation. 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 Incentives

The provision of Annual Performance Incentives is discretionary. Incentives are considered, where corporate and individual KPIs are met and the organisations 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 Incentives 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.

Incentives payments are pro-rata based on Employee Full Time Equivalent (FTE) status and tenure, factoring in the date of commencement and extended periods of leave. Incentives for Employees who commenced after 1 January are only considered in exceptional circumstances.

Following a review of Corporate KPI’s level of achievement, PRemCo recommends to the Board the STI allocation pool. The STI pool is determined at the discretion of the Board.

Following the year end annual performance review process and STI pool allocation, the CEO and HR reviews and applies the STI Framework. Employees must have been an Employee of NAIF prior to 1st January to be eligible to participate.

Salary Increases

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. The new funding declaration was approved for remuneration increases of up to six percent averaged over three years for the September 2020 to September 2023 period.

Employees who commence after 1 January are not eligible for a salary review in September of their starting year. Employees 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 HR and approved by the CEO having regard to the individual performance, career progression and comparable market data.

Directors Remuneration

All NAIF Directors are appointed by the Commonwealth Government through the responsible Minister. These appointments are made in accordance with s15 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 NAIF Board Audit and Risk Committee (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.

Remuneration Tribunal (the Tribunal) Board and Committee fees (excluding superannuation) for FY19-20

Position

Annual Fee set by the Tribunal

Note

NAIF Chair

$119,890

NAIF Director

$ 59,600

Mr Coulter AO received an annual member fee of $46,530 instead of $59,600.

NAIF BARC Chair

$ 16,320

NAIF BARC Member

$ 8,160

CEO Remuneration

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

In accordance with the Tribunal Determination 2019 total remuneration for the Chief Executive Officer was $435,720. In accordance with the Tribunal’s determination the CEO position is not entitled to participate in the STI Program.

Remuneration Governance Arrangements

The NAIF Board established a People Remuneration Committee (PRemCo) effective 1 July 2019 which operates under a People Remuneration Committee Charter. The primary role of the PRemCo is to provide oversight of NAIF’s people, remuneration policies and strategies. The establishment of the PRemCo is consistent with outcomes of discussions with the ANAO during the NAIF Performance Audit completed in 2019.

Employee remuneration decisions, within NAIF, consistent with the NAIF Employee 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 all Employees to support the NAIF’s key strategic initiatives as detailed in the NAIF Corporate Plan. Year end review of performance against the KPIs is completed by people leaders with all Employees.
  • with HR and the Executive Team, conducts a moderating review to ensure consistent application of performance ratings.
  • prepares a recommended STI pool provision for review by PRemCo and recommendation to the Board. The size of the STI pool provision is based on achievement of the corporate KPI’s and budget allocations.
  • with HR applies the performance management ratings and STI framework to all Employees.
  • with HR provides PRemCo analysis including a summary of the allocated performance outcomes and STI payments.

The PRemCo:

  • considers the recommendations presented by the CEO.
  • provides advice to the Board as to whether to endorse the STI pool at the July / 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 Employees including through the following steps.
  • considers recommendations made by the CEO and PRemCo in that regard and at the Board’s discretion approves the payment of a Bonus pool.

FY2019-20 Remuneration Information

The following tables details the remuneration paid to NAIF KMPs, senior executives and other highly paid staff in FY19-20.

Remuneration paid to KMPs in FY19-20

$

Short-term benefits:

Salary

1,355,630

STI Performance Incentives

-

Other benefits and allowances (Incl annual leave)

10,000

Total short term benefits

1,365,630

Superannuation

131,295

Total post employment benefits

131,295

Long service leave

3,316

Total other long term benefits

3,316

Termination benefits

204,386

Total key management personnel remuneration

1,704,627

Remuneration Paid to KMP's cont'd

Short-term benefits

Post-employment benefits

Other long-term benefits

Name

Position title

Salary

Annual Leave Adjustment

Base salary

STI Incentives

Other benefits and allowances

Superannuation contributions

Long service leave

Other long-term benefits

Termination Benefits

Total remuneration

Khory McCormick

Board

119,890

-

119,890

-

-

11,390

-

-

-

131,280

Justin Mannolini

Board

75,774

-

75,774

-

-

7,198

-

-

-

82,972

William Shannon

Board

68,440

-

68,440

-

-

6,502

-

-

-

74,942

Karla Way-McPhail

Board

60,280

-

60,280

-

-

5,727

-

-

-

66,007

Kate George

Board

59,600

-

59,600

-

-

5,662

-

-

-

65,262

Belinda Murphy

Board

66,249

-

66,249

-

-

6,294

-

-

-

72,543

Barry Coulter

Board

46,530

-

46,530

-

-

4,420

-

-

-

50,950

Laurie Walker

CEO

135,777

8,974

144,751

-

-

17,544

-

-

-

162,295

Christopher Wade

CEO

178,493

12,205

190,698

-

10,000

16,957

3,316

-

-

220,971

Adam Thatcher

General Counsel

303,293

1,225

304,518

-

-

24,767

-

-

116,672

445,957

Carol Bellettini

Chief of Staff

212,773

6,127

218,900

-

-

24,834

-

-

87,714

331,448

TOTAL

1,327,099

28,531

1,355,630

-

10,000

131,295

3,316

-

204,386

1,704,627