MIRVAC gRoup AnnuAl RepoRt 2012 - Mirvac - Mirvac Group

DIReCtoRs’ RepoRt
3 ouR AppRoAch to eXecutive ReMuneRAtion
Design / continueD
c) Market positioning
Consistent with the principles outlined above, Mirvac has
adopted a market positioning strategy designed to attract
and retain talented employees, and to reward them for
delivering strong performance. The market positioning
strategy also supports fair and equitable outcomes
between employees.
Definition of market
when determining the relevant market for each role, Mirvac
considers the companies from which it sources talent, and
to whom it could potentially lose talent. A distinction is made
between the market for business roles and the market for
corporate roles.
For business roles:
— the primary comparison group is the Australian Real estate
Investment Trust (“A-ReIT”) sector, plus Lend Lease, FKP
Property Group and Australand Property Group; and
— the secondary comparison group is a general industry
comparison group with a similar market capitalisation
(50-200 per cent of Mirvac’s 12 month average market
capitalisation).
For corporate roles:
— the primary comparison group is a general industry
comparison group with a similar market capitalisation
(50-200 per cent of Mirvac’s 12 month average market
capitalisation) to reflect the greater transferability of skills.
where disclosed data is unavailable, Mirvac relies on
published remuneration surveys covering relevant industries
and the broader market.
targeted market positioning
Fixed remuneration at Mirvac is positioned at the median
(50th percentile), with the ability to work within a range
around the median based on criteria such as:
— the criticality of the role to successful execution of the
business strategy;
— assessment of employee performance/potential; and
— the employee’s experience level.
Target total remuneration at Mirvac is positioned at the
median (50th percentile) with the opportunity to earn total
remuneration up to the upper quartile (75th percentile) in
the event that both the individual and the business achieve
stretch targets.
d) Remuneration mix
Mirvac’s remuneration structures strive to fairly and
responsibly reward employees, while complying with all
relevant regulatory requirements.
A significant portion of total remuneration for executives
is variable or at risk if applicable performance criteria are
not met or exceeded each year.
The average remuneration mix at target for eLT members
for the year ended 30 June 2012 was as follows:
Managing Director
Other ELT members
Fixed remuneration
Target short-term incentives
Target long-term incentives
12 mirvac group annual report 2012
In order to reweight executives’ remuneration mix towards
equity, Fy12 saw the introduction of Minimum Securityholding
Guidelines for eLT members, as follows:
Level Minimum securityholding
Managing Director 100% of fixed remuneration
other eLT members 50% of fixed remuneration
This initiative will further align the interests of eLT members
with the interests of securityholders. executives covered
by the Minimum Securityholding Guidelines will have five
years to build up their securityholding to the suggested level.
Consistent with this approach, from Fy13 25 per cent of any
STI allocation to an eLT member will be paid in equity (rather
than cash), with the intention that executives will use those
securities to build up part of their minimum securityholding.
4 ReMuneRAtion coMponents AnD outcoMes
foR the elt
At Mirvac, the three components of executive remuneration
— fixed remuneration, sti grants and lti grants —
are weighted so as to direct executives’ focus towards
building long-term value for the group. to earn their
at-risk components, executives must first create
sustainable value for securityholders.
a) fixed remuneration
Fixed remuneration acts as a base-level reward for a
competent level of performance in an executive’s particular
role. It includes cash, compulsory superannuation and any
salary-sacrifice items (including FBT). The following factors
are taken into account when setting fixed remuneration
levels at Mirvac:
— the size and complexity of the role;
— role accountabilities;
— skills and experience of the individual; and
— market pay levels for comparable roles.
The opportunity value for the at-risk components
of remuneration is determined by reference to fixed
remuneration, so Mirvac is conscious that any adjustments
to fixed remuneration have a flow-on impact on the
executive’s potential STI and LTI awards.
Mirvac regularly considers benchmarking information
and, having regard to its market positioning strategy and
the desired remuneration mix, decides whether to adjust
fixed remuneration for each executive. Following a review
conducted during Fy12, the fixed remuneration levels for
some eLT members will be reduced effective 1 July 2012.
To recognise their acceptance of reduced fixed remuneration,
the affected executives will receive increased LTI awards
in the Fy13 and Fy14 grants. The additional awards will be
“at risk” to the executive and subject to applicable
performance hurdles and service conditions. Specific
details of the adjustments will be included in the Fy13
remuneration disclosures.
31% 23% 46%
37% 26% 37%