Culture and
employee
development
10%
Exceeded target: IAG focused on aligning the culture of the Group and the Group
people strategies in light of the recent acquisition and change in operating
model. The Group culture results were positive and continue to outperform
those of the financial services sector. IAG proudly embraces an inclusive and
diverse workplace. Women hold 31.5% of senior management roles across the
Group, and 33.3% in the Australian and New Zealand businesses. Although this
is short of the goal set in 2010 of 33% of senior management roles being held
by women across the Group, IAG has improved significantly from 27% reported in
2010. IAG continues to improve this, including by introducing training to reduce
unconscious bias in recruitment.
II. STI outcomes for the year ended 30 June 2015
Cash and deferred STI payments made to the Group CEO and the Executive team for the year ended 30 June 2015 are set out below,
and were based on achievement against the balanced scorecard measures described in table 5.
Each individual Executive’s STI outcome is linked to the financial performance of the Group as well as to the execution of his or her
division’s strategic goals during the year. In line with the overall performance, the STI awarded to the Group CEO and the Executive
team are, on average, less than those for last year.
TABLE 6 - ACTUAL STI OUTCOMES FOR THE YEAR ENDED 30 JUNE 2015
MAXIMUM STI
OPPORTUNITY
ACTUAL STI OUTCOME
CASH STI
OUTCOME
(2/3 OF OUTCOME)
DEFERRED STI
OUTCOME
(1/3 OF OUTCOME)
(% of fixed pay)
(a)
(% of maximum)
(a)
(% of fixed pay)
(% of fixed pay)
(% of fixed pay)
Michael Wilkins
150
%
62
%
93
%
62
%
31
%
Ben Bessell
120
%
51
%
61
%
41
%
20
%
Duncan Brain
120
%
64
%
76
%
51
%
25
%
Andy Cornish
120
%
71
%
86
%
57
%
29
%
Peter Harmer
120
%
58
%
70
%
47
%
23
%
Alex Harrison
(b)
120
%
60
%
72
%
72
%
-
%
Nicholas Hawkins
120
%
74
%
89
%
59
%
30
%
Jacki Johnson
120
%
48
%
57
%
38
%
19
%
Leona Murphy
120
%
69
%
83
%
55
%
28
%
Clayton Whipp
120
%
55
%
66
%
44
%
22
%
(a)
The proportion of STI forfeited is derived by subtracting the actual % of maximum received from the maximum STI opportunity and was 39% on average for the year
ended 30 June 2015 (compared to 21% in 2014).
(b)
Alex Harrison's STI will be settled entirely in cash due to his departure from IAG on 31 August 2015.
III. Linking IAG's long term performance and long term reward
IAG’s LTI performance measures are challenging over the long
term and require strong performance over both an internal capital
efficiency measure (ROE) and an external market measure
(relative TSR). Executives are only rewarded under the LTI plan
when the Group exceeds its challenging long term performance
targets and delivers superior financial performance over at least a
three-year period.
The LTI vested in the year ended 30 June 2015 was based
against IAG’s performance against the ROE hurdle at 30 June
2014, and relative TSR measured at 30 September 2014.
IAG measures the ROE component of the LTI over three years
using cash ROE, which is the basis on which dividends are
calculated for shareholders. The average cash ROE for the three
years to 30 June 2014 was 2.34 times IAG’s WACC. This was a
strong result compared to historical returns and resulted in full
vesting of the ROE portion of the 2011/2012 Series 4 EPR. This
is only the second time the ROE portion of the LTI has vested and
this strong cash ROE performance has similarly been reflected in
the solid dividend provided to shareholders. The adjacent graph
shows IAG’s cash ROE against WACC for each of the last five
financial years with reference to the LTI vesting range, to put the
recent performance in a longer term context. The graph also
shows the three year average cash ROE over the performance
period, as measured by the LTI plan.
IAG’s TSR was in the top quartile of its peer group, ranking at the 95th percentile over the three years up to 30 September 2014.
26 IAG ANNUAL REPORT 2015
