The format and content of the remuneration report are reviewed each year with a view to presenting information consistently, concisely and in a form that complies with the Corporations Act 2001. In line with stakeholder feedback, this year the Group has continued to provide voluntary disclosure of actual remuneration received by the Group's Managing Director and Chief Executive Officer (Group CEO) and the executive team. Actual remuneration is provided in addition to the statutory reporting of remuneration to increase transparency about what an executive actually received during the year.
IAG delivered an improved performance for the year ended 30 June 2012, meeting both GWP growth and insurance margin guidance. In line with this performance, the short term incentives (STI) awarded to the Group CEO and the executive team are, on average, higher than last year. Each executive's STI outcome is closely linked to the financial performance of the Group, as well as to the execution of his or her division's strategic goals.
In addition the Group CEO and the executive team were rewarded under IAG’s long term incentive (LTI). IAG’s performance against its peer group, all entities within the S&P/ASX 100 Index, resulted in the total shareholders’ return (TSR) performance hurdle being met for executive performance rights (EPR) granted in the year ended 30 June 2009. This resulted in 66% of the rights linked to the TSR hurdle vesting. The portion of EPR granted in the same period subject to the return on equity (ROE) hurdle did not result in any vesting as ROE did not meet the required performance level. The EPR granted under the ROE portion will lapse.
The remuneration structure for IAG's Group CEO and the executive team has not changed over the last year and is summarised below:
|
Fixed Remuneration
|
|
|
|
Cash
|
− Base salary and superannuation
|
− Attract and retain high quality people
|
|
At Risk Remuneration
|
|
|
|
Cash STI
|
− 2/3 of STI outcome paid as cash in October
|
− Align reward to shareholder interests
− Strike a balance between short and long term results and reward for exceptional performance
− Retain high quality people
|
|
Deferred STI
|
− 1/3 of STI outcome is deferred over a period of two years, subject to ongoing employment conditions
− Provided as grant of rights in the form of deferred award rights
− The actual value of shares will depend on the future share price
− The IAG Board has discretion to adjust downwards to protect the financial soundness of the Group or to ensure an appropriate reward outcome
|
|
LTI
|
− Provided as grant of rights in the form of EPR
− 3–5 year period
− Subject to performance hurdles of relative TSR and ROE being achieved
− The IAG Board has discretion to adjust downwards to protect the financial soundness of the Group or to ensure an appropriate reward outcome
|
− Align reward to shareholder interests
− Align remuneration with longer term financial performance
− Retain high quality people
|
The IAG Board is confident that IAG's remuneration policies are in line with governance requirements and continue to support the Group's financial and strategic goals and to attract the right people, which ultimately benefits shareholders, customers, employees and the community.
|
|
$000
|
$000
|
$000
|
$000
|
$000
|
$000
|
$000
|
$000
|
|
Brian Schwartz
|
523
453
|
208
203
|
24
24
|
–
–
|
–
–
|
–
–
|
–
–
|
755
680
|
|
Yasmin Allen
|
166
161
|
63
68
|
16
15
|
–
–
|
–
–
|
–
–
|
–
–
|
245
244
|
|
Peter Bush
Director since 7 December 2010
|
162
89
|
28
15
|
17
9
|
–
–
|
–
–
|
–
–
|
–
–
|
207
113
|
|
Phillip Colebatch
|
162
156
|
18
18
|
16
16
|
–
–
|
–
–
|
–
–
|
–
–
|
196
190
|
|
Hugh Fletcher
|
162
156
|
109
107
|
17
16
|
–
–
|
–
–
|
–
–
|
–
–
|
288
279
|
|
Anna Hynes
|
162
156
|
34
32
|
18
17
|
–
–
|
–
–
|
–
–
|
–
–
|
214
205
|
|
Philip Twyman
|
165
159
|
55
50
|
16
15
|
–
–
|
–
–
|
–
–
|
–
–
|
236
224
|
(A) This balance included the portion of the company's superannuation contribution that the Directors elected to receive as cash instead of paying it into their nominated superannuation funds.
2012 remuneration snapshot
The table below shows the actual remuneration that all current executives received during the financial years ended 30 June 2012 and 2011. This voluntary disclosure includes fixed pay, other benefits and leave accruals, cash STI paid as well as any deferred STI or LTI that vested in the relevant financial year.
|
|
$000
|
$000
|
$000
|
$000
|
$000
|
$000
|
|
Executives (including executive director) who are Key Management Personnel (KMP)
|
|
|
|
|
|
|
|
Mike Wilkins
Managing Director and Chief Executive Officer
|
1,992
1,915
|
230
119
|
1,567
1,104
|
388
327
|
746
295
|
4,923
3,760
|
|
Justin Breheny
Chief Executive Officer, Asia
|
877
845
|
310
18
|
587
429
|
185
174
|
296
116
|
2,255
1,582
|
|
Andy Cornish
Chief Executive Officer, Australia Direct
|
990
936
|
75
42
|
600
610
|
154
132
|
249
–
|
2,068
1,720
|
|
Ian Foy
Chief Executive Officer, United Kingdom
|
698
666
|
371
575
|
287
292
|
105
63
|
200
14
|
1,661
1,610
|
|
Peter Harmer
Chief Executive Officer, Australia Intermediated (CGU)
KMP since 8 November 2010
|
932
591
|
62
23
|
504
275
|
–
–
|
–
–
|
1,498
889
|
|
Nick Hawkins
Chief Financial Officer
|
956
910
|
93
52
|
568
460
|
160
151
|
305
113
|
2,082
1,686
|
|
Jacki Johnson
Chief Executive Officer, New Zealand
|
863
808
|
124
23
|
505
337
|
172
180
|
296
117
|
1,960
1,465
|
|
Leona Murphy
Chief Strategy Officer
|
862
801
|
58
36
|
512
404
|
139
110
|
251
41
|
1,822
1,392
|
(a) Fixed pay (base salary and superannuation) included an average pay increase of 4.1% effective September 2011.
(b) Changes in other benefits and leave accruals from the prior year were mainly due to:
■ annual and long service leave accruals increased for all executives (except for Mr Foy who is not entitled to carry forward accrued leave
based on the UK legislation); and
■ for those executives located overseas, other benefits in the year ended 30 June 2012 including:
– Mr Breheny, relocation costs and accommodation of $252,000 relating to his relocation to Singapore;
– Mr Foy, retention payments of $335,000 (£218,000) and other recurring allowances and benefits of $36,000; and
– Ms Johnson, accommodation allowances and other benefits of $45,000
For remuneration details provided in accordance with the Accounting Standards, see page 30 of the remuneration report in the 2012 annual report.
