Executive Remuneration

Effective executive remuneration:

1. Achieves and maintains sustainable performance
2. Attracts the right mix of skills and experience
3. Retains this talent from competitors
4. Receives shareholder support
5. Is cost effective and compliant

Designing executive pay is not just a box-ticking exercise, it’s one of the best mechanisms a Remuneration Committee has to align C-suite performance with total shareholder return.

At Guerdon Associates, we collaborate with Board Chairs, Remuneration Committees (RemCos), and executive teams to design, evaluate, and refine executive reward frameworks. As part of the global GECN Group, and Australia and New Zealand’s leading independent executive remuneration adviser, we combine deep quantitative research, financial modelling and behavioural economics to help boards manage human capital risk, navigate regulatory demands, and secure investor support.

Aligning Executive Remuneration with Sustainable Shareholder Value

Executive compensation must incorporate the risk and return parameters set by the board and expected by shareholders, reflected in the company’s market valuation. At the same time, packages must remain competitive to attract and retain high quality executives capable of delivering on company goals.

Getting this wrong has severe consequences: investor and proxy advisor backlash, remuneration report strikes, regulatory scrutiny from bodies like APRA and ASIC, executive misalignment and loss off value.

Our advisory model focuses on three underlying pillars:

• Tailored Approach: Guerdon Associates recognises that every company is different. We approach each project with a bespoke methodology to suit your specific needs and objectives.
• Value-Driver Alignment: We ground performance metrics and remuneration frameworks in the operational, financial, and strategic drivers that create long-term company value.
• Competitor Dynamics: Our analysis benchmarks against appropriate peer groups competing for capital, talent, and customers across Australia, New Zealand and global markets.

The Elements of an Effective Remuneration Framework

A robust executive framework is a unified economic and behavioural system. We assist boards in structuring and integrating each component to fit their purpose and strategy:

• Fixed Remuneration: Guaranteed annual remuneration, typically comprising base salary, superannuation, and non-monetary benefits. Benchmark-tested against tailored peer groups to reflect the talent market, role scope and opportunity for development.
• Short-Term Incentive (STI): Annual incentive plans tied to clear, balanced performance measures covering financial, strategic, and non-financial KPIs to address business goals in the short-term (measured over 1 year or less). These may incorporate structured deferral mechanisms that connect short-term outcomes to long-term value, and forfeiture provisions consistent with the board’s risk appetite.
• Long-Term Incentive (LTI): Annual incentive plans usually delivered in equity instruments using performance metrics evaluated over the long-term (typically not less than 3 years) to align leadership with multi-year shareholder returns and strategy.
• Service-Based Capital Accumulation plans: Equity granted based on continued employment over a multi-year vesting period to promote key talent retention, align executive interests with long-term security holders, and facilitate stock ownership.
• Minimum shareholding, aka “skin in the game”: Usually configured in conjunction with other design elements to promote security holder alignment.

Our Specialist Advisory Services

We provide end-to-end guidance from initial framework reviews through to post-AGM engagement:

Why Boards Partner with Guerdon Associates

Independence: We are independent advisers. Usually our clients are company boards. We do not sell services of higher value to people within a company who may otherwise benefit from remuneration advice we provide to their boards. We do not sell insurance, offer software, perform statutory account audits, run wealth management platforms, eliminating the structural conflicts common in generalist HR or accounting firms.

Pioneers in Market Practice: Guerdon Associates and its founders introduced many of the core mechanisms now standard across ASX-listed entities, including performance rights, relative TSR hurdles, and advanced risk-adjustment mechanisms.

Proprietary Market Intelligence: Our advice is backed by extensive research engines, tracking real-time proxy voting trends, AGM outcomes, CEO pay dynamics, regulatory shifts, financial trends, and much more. While we use artificial intelligence, humans with decades of experience develop the AI queries, combine AI agents, review AI outcomes, and use human judgement to combine and weight the highly complex financial, economic, legal, actuarial, psychosocial, and strategic factors for optimal client advice.

Global Footprint, Local Authority: As a founding partner of the Global Executive Compensation Network (GECN), we offer seamless international reach for cross-border talent requirements, led by your local experts here in Sydney and Melbourne.

Frequently Asked Questions

How does Guerdon Associates maintain independence in remuneration advisory?

We consult solely on executive and director remuneration, board evaluation, and corporate governance. By abstaining from product sales, platform implementations, or generalist HR outsourcing, our recommendations remain entirely objective and dedicated to serving your board RemCo’s duties.

How do you handle non-financial performance metrics and risk management?

Modern governance standards require a balanced approach. We help boards design, weigh, and apply non-financial metrics such as safety, risk management, customer outcomes, and ESG objectives alongside financial measures to ensure pay outcomes reflect value creation, risk and conduct expectations.

How do you assist with proxy advisor and institutional shareholder pushback?

We perform proactive stakeholder reviews, testing proposed remuneration structures against the voting guidelines of major proxy firms and institutional investors. We work with board and Remco chairs engaging with external stakeholders to thread the needle for optimal investor support, regulatory compliance, social license, tax effectiveness, value creation and risk management. This allows boards to refine rationales, metrics and disclosures before final release, significantly reducing the risk of adverse votes or strikes.

How frequently should executive incentive structures be reviewed?

While benchmarking of quantum is typically conducted annually, a structural review of the underlying plan design (including equity instruments, LTI hurdles, STI weightings, and deferral periods) should take place every two to three years, and/or immediately following significant strategic shifts, mergers, or market and regulatory changes.

Contact us for advice.