Macquarie Investment Management Limited

Transcription

1 Macquarie Investment Management Limited Executive Officers Remuneration Disclosure RSEL: L ABN: AFSL: Version: 6.0 Effective date: 31 July 2017 Disclosure Table A: Remuneration disclosures for Executive Officers (excluding Non-Executive Directors) for the financial years ending 31 March 2016 and 31 March 2017 Macquarie Investment Management Limited ( MIML ) is a wholly owned subsidiary of Macquarie Bank Limited and is part of the Macquarie Group ( Group ). MIML s operations encompass a broad range of financial product and service offerings, including acting as a Registrable Superannuation Entity Licensee ( RSE Licensee ). The Executive Officers of MIML identified for the purposes of these disclosures, have roles within the Group, which comprise of activities broader than superannuation-related activities within MIML and indeed broader than the business operations of MIML. The remuneration disclosures below for MIML Executive Officers relate to the proportion of each Executive Officer s role, as it relates to their involvement with MIML, in its capacity as an RSE Licensee. This is a time-based apportionment, the allocation of which varies for each Executive Officer, depending on the nature and mix of their role within the Group. For those Executive Officers not directly involved with superannuation related activities, the allocation will be shown as nil. Fixed remuneration is reviewed annually and reflects technical and functional expertise, role scope and market practice. Profit share is allocated to individuals as set out below in the commentary under the heading Performance-related remuneration. 1

2 Name Year Short-term Employee Benefits Salary (including superannuation) Performancerelated remuneration 1 Total short-term employee benefits Long-term Employee Benefits Restricted profit share 2 Earnings on prior year restricted profit share 3 Total longterm employee benefits Sharebased Payments Equity Awards (including shares 4 ) Total remuneration $ $ $ $ $ $ $ $ S. Asplin , , , , , , , , , ,397 M. Aubrey S. de Broglio R. Cartwright ,610 16,929 53, ,603 57, ,406 4,974 17, ,058 18, ,023 J. Delaney ,772-44, (34,482) 10,942 C. Dunn ,995 81, , , , ,371 72, , , , R. Ellerton C. Garrett , , , , , ,571 4,589 9, ,093 10, M. Githens ,845-1, (41) 1, T. Graham ,613 56,691 83,304 12,320 1,063 13,383 31, ,658 K. Gray 5 P. Hodgens 5 O. King T. Langshaw B. Lewthwaite ,662 1,134 2, , ,054 3,454 6, (27) , ,195 11,128 32, ,724 34, ,968 9,358 30, ,619 31, ,192 32,318 92, , , ,703 30,847 89, ,776 96, The cash portion of each individual s profit share allocation for the reporting period when they were an Executive Officer of MIML. 2 The amount of retained profit share which is deferred to future periods and held as a notional investment in Macquarie managed-funds. 3 The earnings on profit share which was retained in prior years and notionally invested in Macquarie-managed funds. 4 The current year amortisation for retained profit share which is invested in Macquarie shares under the Macquarie Group Employee Retained Equity Plan (MEREP). Whilst MEREP awards in respect of the current year s performance will be granted in the following financial year, Macquarie begins recognising an expense from 1 April of the current financial year related to these future grants. The expense is estimated using the Macquarie share price as at 31 March In the following financial year, Macquarie will adjust the accumulated expense recognised for the final determination of fair value for each MEREP award when granted and will use this valuation for recognising the expense over the remaining vesting period. 5 M. Aubrey, K. Gray, P. Hodgens, K. Lim and J. Ong ceased to be Executive Officers of MIML on 28 February R. Cartwright, M. Oliver and R. Rasker were appointed Executive Officers of MIML on 28 February J. Delaney resigned from Macquarie and ceased to be an Executive Officer of MIML on 11 September R. Ellerton resigned from Macquarie and ceased to be an Executive Officer of MIML on 26 June M. Githens resigned from Macquarie and ceased to be an Executive Officer of MIML on 13 November T. Graham ceased to be an Executive Officer of MIML on 1 March 2016.

3 Short-term Employee Benefits Salary (including superannuation) Performancerelated remuneration 11 Total short-term employee benefits Long-term Employee Benefits Restricted profit share 12 Earnings on prior year restricted profit share 13 Total longterm employee benefits Sharebased Payments Equity Awards (including shares 14 ) Total remuneration Name Year $ $ $ $ $ $ $ $ K. Lim D. Longden ,844-15, ,566 21, ,328 21,560 52, ,243 58, M. Lukin M. Oliver J. Ong C. Pelling ,699 1,579 6, ,576 R. Rasker ,514 9,197 20, ,656 22,367 C. Vignes A. Wood ,411 29,825 82, ,046 92, ,437 30,892 83, ,251 92, The cash portion of each individual s profit share allocation for the reporting period when they were an Executive Officer of MIML. 12 The amount of retained profit share which is deferred to future periods and held as a notional investment in Macquarie managed-funds. 13 The earnings on profit share which was retained in prior years and notionally invested in Macquarie-managed funds. 14 The current year amortisation for retained profit share which is invested in Macquarie shares under the Macquarie Group Employee Retained Equity Plan (MEREP). Whilst MEREP awards in respect of the current year s performance will be granted in the following financial year, Macquarie begins recognising an expense from 1 April of the current financial year related to these future grants. The expense is estimated using the Macquarie share price as at 31 March In the following financial year, Macquarie will adjust the accumulated expense recognised for the final determination of fair value for each MEREP award when granted and will use this valuation for recognising the expense over the remaining vesting period. 15 D. Longden ceased to be an Executive Officer of MIML on 30 September 2016 due to a transfer of employment upon the sale of another business unit within Macquarie which he was affiliated with. 16 M. Lukin ceased employment with Macquarie on 9 June 2014, but remained an Executive Officer of MIML. Mr. Lukin ceased to be an Executive Officer of MIML on 24 June C. Pelling ceased to be an Executive Officer of MIML on 27 April C. Vignes ceased to be an Executive Officer of MIML on 29 June 2015.

4 Performance-related remuneration While performance-based remuneration in the form of profit share is aligned with company performance, Macquarie s approach to performance-based remuneration is driven by a detailed assessment at the business group and individual level. The company-wide profit share pool is determined annually with reference to a proportion of Macquarie s after tax profits and its earnings over and above the estimated cost of capital. The Macquarie Group Board has the discretion to adjust the company-wide profit share pool up or down to reflect internal and external factors if deemed in the interests of Macquarie and its shareholders. Such factors may include performance, risk and compliance considerations, the employment environment and staff retention risk. As in some previous years, not all the profit share pool has been paid to employees in the current year. Allocations to business groups and teams reflect their performance and are made with reference to the company-wide profit share pool taking into account each business relative contribution to profits, capital and funding usage, risk management and compliance, market developments and the employment environment. Allocations to individuals are based on their performance. The criteria used to assess each individual s performance vary depending on their role and include: financial performance risk management and compliance business leadership people leadership and professional conduct consistent with the Code of conduct and What We Stand For. For staff whose primary role is risk and financial control, the Macquarie Board also seeks to ensure that their remuneration preserves the independence of the function and maintains Macquarie s robust risk management framework. Risk Considerations The MIML Board considers that the effective alignment of remuneration with prudent risk-taking is fundamental to its remuneration approach. Performance-based remuneration reflects an individual s performance, which includes an assessment of a range of factors including risk management and compliance as well as behavioural measures to promote good conduct and commitment to the Code of conduct and What We Stand For. The MIML Board and the Board Remuneration Committee ( BRC ) take risk and behavioural matters very seriously. There are consistent and transparent practices in place for managing non-compliance with Macquarie s policies and to ensure that staff behaviour is aligned with the Code of conduct and What We Stand For. There are robust processes in place to ensure that these matters are appropriately considered when assessing performance and determining remuneration outcomes. To assist the BRC: the Macquarie CFO confirms to the BRC that the forecast profit share pool would not result in the elimination of capital surpluses the Macquarie CRO provides an independent annual report to the BRC detailing any material breaches of the risk management framework, losses and impairments, the residual risks associated with large transactions concluded during the current financial year, return on economic capital by business and the relationship between profitability and risk the Macquarie Global Head of HR discusses the CRO s report with the Macquarie Group Heads to ensure any matters listed in the report are appropriately reflected in remuneration outcomes for relevant staff. HR subsequently provides a report to the BRC detailing how this has been achieved Macquarie operates a robust consequence management process whereby incidents, breaches of policy or regulation or conduct issues are managed and regularly shared with senior management. The Macquarie Global Head of HR annually reports to the BRC on the outcomes from the consequence management process and confirms that these matters have been considered in determining remuneration and promotion outcomes where appropriate. The BRC uses this information when considering the remuneration allocated to businesses and individuals. Standard retention rates by role Macquarie retains a percentage of certain individual s annual gross profit share allocation (retained profit share). The percentage is set according to their role.

5 Role % Executive Officers Executive Director level 19 40% Executive Officers Staff other than Executive Directors 25% 20 The allocation of retained profit share is a function of the Executive Officer s role, responsibilities and level. Retained profit share is invested either directly or notionally, in Macquarie equity or Macquarie-managed funds as set out in the table below: Role Macquarie-managed fund equity % MEREP (Macquarie shares) % Executive Officers with Funds responsibilities Other Executive Officers Retained profit share vests and is released over a period that reflects the scope and nature of an individual s role and responsibilities. For each year s allocation, once the vesting period has been determined, it will remain fixed for that allocation. Retained profit share is released when it vests. The current vesting schedules are as follows: Role Executive Officers Designated Executive Directors 21 Executive Officers Other Executive Directors Executive Officers Staff other than Executive Directors Release schedule Retained profit share delivered as Macquarie equity one-fifth in each of years 3-7 after the year retained one-third in each of years 3-5 after the year retained one-third in each of years 2-4 after the year retained A significant portion of an Executive Officer s retained profit share is invested in Macquarie equity, delivered as Restricted Share Units (RSUs). RSUs are granted in the financial year following the year of the performance to which the grant relates. For example, RSUs granted in June 2016 relate to the Executive Officers performance in the 2016 financial year. RSUs granted during the financial year ended 31 March 2017 were granted on 17 June There have been no alterations to the terms or conditions of the grants set out above since the grant date. Retained profit share (regardless of how it is invested) is subject to forfeiture upon leaving Macquarie, except in the case of a genuine retirement, redundancy or in certain other limited exceptional circumstances. There were no forfeitures during the year. The value of the grants at vesting could vary significantly as they are dependent on the Macquarie Group Limited share price at the time of vesting. Retained profit share notionally invested in Macquarie-managed funds Retained profit share notionally invested in Macquarie-managed funds is delivered through a plan that comprises exposure to a notional portfolio of Macquarie-managed funds. Any such retained amounts for Executive Officers are notionally invested over the retention period. This investment is described as notional because employees do not directly hold securities in relation to this investment. However, the value of the retained amounts will vary as if these amounts were directly invested in actual securities, giving the employees an effective economic exposure to the performance of the securities. Notional returns may be paid annually to employees. The notional returns are calculated based on Total Shareholder Return. If the notional investment of retained profit share results in a notional loss, this loss will be offset against any future notional income until the loss is completely offset. Retained profit share is notionally invested on 1 July of the financial year following the year of the performance to which profit share allocation relates. There were no forfeitures during the current financial year. The value of the notional investments at vesting could vary significantly as they are dependent on the value of the underlying securities at the time of vesting. 19 References to Executive Director in this document refer to Executive Director as a career title within the Macquarie Group. 20 Dependent on certain thresholds. 21 Executive Directors who have a significant management or risk responsibility in the Macquarie Group.

6 Forfeiture of retained profit share (Malus) Since 2012, the Macquarie Board or its delegate has had the ability to reduce or eliminate unvested profit share for certain senior employees in certain circumstances (Malus). The current Malus provisions provide the Macquarie Board or its delegate with the ability to reduce or eliminate in full, the unvested profit share awarded in respect of FY2015 and subsequent years to certain senior employees if it determined that the individual has at any time: acted dishonestly (including, but not limited to, misappropriating funds or deliberately concealing a transaction) acted or failed to act in a way that contributed to a breach of a significant legal or significant regulatory requirement relevant to Macquarie acted or failed to act in a way that contributed to Macquarie, Macquarie Bank or any Group within Macquarie incurring: - significant reputational harm - a significant unexpected financial loss, impairment charge, cost or provision acted or failed to act in a way that contributed to MGL or MBL making a material financial misstatement. Each of the above is a Malus Event. Macquarie has always had and continues to have, the ability to terminate staff where a Malus Event has occurred, at which time any unvested profit share would be forfeited in full. The Macquarie Board Remuneration Committee considers whether, and the extent to which, to apply Malus, taking into account local employment laws, the nature and circumstances of the event and any other redress that has been or may be applied. Early vesting and release of retained profit share Unvested retained profit share for an Executive Officer who is also an Executive Director is only paid out on termination of employment in the case of death, serious incapacitation, genuine retirement, redundancy, disability, serious ill-health or other limited exceptional circumstances. The Macquarie Board, or its delegate, has discretion to accelerate the vesting of retained profit share under these circumstances (subject to the conditions of early release as set out below). Discretion may be exercised in certain other limited exceptional circumstances on the grounds of business efficacy, in connection with strategic business objectives (including in connection with the divestment or internalisation of Macquarie businesses) or when an employee resigns to fulfil a senior full-time role in a governmental organisation or agency. Where such discretion is exercised, the Macquarie Board or its delegate may impose such other conditions as it considers appropriate. Conditions of early release of retained profit share to departing Executive Directors In addition to the Malus provisions, the Macquarie Board or its delegate may reduce or eliminate in full the retained profit share of any departing Executive Director for whom discretion has been exercised to accelerate the vesting of their retained profit share upon termination, if it determines that the Executive Director has at any time during or after their employment committed a Malus Event (as described above) or: a) taken staff to a competitor or been instrumental in causing staff to go to a competitor, or b) joined a competitor. Each of the above is a Post Employment Event. In the case of death or serious incapacitation, the Macquarie Board or its delegate will typically accelerate the vesting of retained profit share and immediately release it to the Executive Director or, to the Executive Director s legal personal representative. In other circumstances, the release will occur over the period from six months to two years after the Executive Director leaves, in accordance with the following table:

7 First period Second period Third period Time post departure Six months Six months one year One year two years Unvested retained profit share released Subject to From all but the last two years of employment No Malus Event or Post Employment Event as set out above. From the second year prior to the end of employment No Malus Event or Post Employment Event during First Period, and No Malus Event or Post Employment Event a)above during Second Period From the year prior to the end of employment No Malus Event or Post Employment Event during First Period, and No Malus Event or Post Employment Event a) during Second Period, and No Malus Event during the Third Period. Where an Executive Director has a tax liability on termination of employment in respect of any unvested retained profit share, the Board or its delegate has discretion to release unvested retained profit share up to an amount equal to the Executive Director s tax liability, at an earlier time than noted above. Employment contract details The following table summarises key features of the employment contracts for Executive Officers who are part of management: Length of contract Remuneration review period Fixed Remuneration Profit share participation Termination of employment Permanent open-ended 1 April to 31 March annually Fixed remuneration is reviewed annually and reflects technical and functional expertise, role scope and market practice Executives are eligible to be considered for a profit share allocation as set out above Termination of employment by Macquarie or the employee requires no more than four weeks notice Subject to compliance with local regulatory and legal requirements. In Australia, Executives given notice by Macquarie may receive an additional week s notice if they are over 45 years of age and have more than two years continuous service at the time of the termination of their employment.

8 Disclosure Table B: Non-Executive Directors remuneration for the financial years ending 31 March 2016 and 31 March 2017 To reflect the nature of the Board s role, the remuneration arrangements applicable to MIML s Non-Executive Directors differ to those of the Executive Officers in Disclosure Table A. Non-Executive Directors are remunerated via Board and Committee fees, which are periodically reviewed. These fees are paid quarterly. The Board fees and Committee memberships are set taking into account a number of factors, including market rates, complexity of the business and level of experience of the Non-Executive Directors. Non-Executive Directors are not granted equity, nor are they eligible to receive profit share payments. There are no termination payments to Non-Executive Directors on their retirement from office, other than payments relating to their accrued superannuation contributions comprising part of their remuneration. The remuneration disclosures below reflect the proportion of MIML fees received by the Non-Executive Directors, as it relates to their involvement with MIML, in its capacity as an RSE Licensee. This is on a time-based apportionment. Name H. Brown M. Davis J. Edstein I. Miller B. Terry 24 Directors Fees 23 Year $ , , , , , , , , , Includes Board fees and Committee fees where relevant, including the Board Audit, Risk and Compliance Committee (BARCC) and the Superannuation IDPS and Investment Committee (SIIC). 24 B. Terry ceased to be Non-Executive Chair on 30 June Mr. Terry resigned from the Board on 30 June 2015.