Citigroup’s annual “ASX100 CEO Remuneration Analysis” reveals that:
· CEO pay has not been reduced for all ASX100 CEOs and
· vesting of both STI and LTI awards has varied widely for CEOs, despite recent media reports focussing on pay cuts and forfeiture of incentive payments.
The wide variability of practice is consistent with Guerdon Associates’ own annual reviews of ASX300 executive pay published each December (for example, see HERE)
The research, published on 17 September 2012, analysed statutory remuneration for the CEOs of companies in the ASX100 index as at 9 August 2012. Data was drawn from the most recently-available remuneration report for each company (i.e. for either the 2011 or 2012 financial year).
The main findings of the analysis include:
· CEO STI awards vary widely, with several CEOs receiving close to target or maximum awards while others received no bonus or voluntarily relinquished their entitlements
· Compared with Citigroup’s equivalent June 2011 study, companies disclosed more detailed information on incentive performance criteria and assessment
· LTI performance measures vary, with 30% using only one metric and 70% using two or more metrics. The most popular metrics are relative TSR and EPS growth, with 71% and 44% of ASX100 companies using them, respectively. The most prevalent combinations were relative TSR and EPS growth, with relative TSR and ROC or ROE a close second
· Various financial and non-financial performance metrics are used for STIs. Safety is a common non-financial metric within the resources sector, while the most common financial metrics are EBIT/EBITDA or return on some measure of capital (e.g. ROCE, ROE, etc.).
The detailed STI and LTI information presented in the Citigroup paper includes performance metrics and the rationale for their use, reward quantum, vesting schedules and vesting outcomes, significant changes to incentive plans and remuneration report voting results.
The report allows directors and executives alike to readily compare remuneration practices at their company with those in ASX100 companies, although remuneration policy and structure must be customised to suit the needs of individual companies.
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