As required under APRA’s prudential standard APS330 Public Disclosure all ADIs are required to publicly disclose on their websites information about remuneration practices. This further complements risk profile and capital disclosures that have been disclosed under this standard over recent years.
This disclosure is made in the interests of full transparency for our members and other stakeholders and is completed in accordance with the Remuneration Policy of the credit union as established in compliance with the APRA prudential standard CPS510 – Governance.
The period reported coincides with the financial year of the credit union, as at 30th June each year, and is updated accordingly.
The Board of Directors has appointed the Assessment, Remuneration & Training (ART) Committee to assist the Board to oversee, implement & review the Remuneration Policy.
The ART Committee consists of 3 non-executive Directors, with one being the Chairman of the Board.
The objectives of this committee are:
• To attract and retain capable and motivated staff;
• To reward staff for their performance;
• To ensure that we have leaders who have strategic vision, able to drive growth while maintaining stability and the financial soundness of Summerland;
• To encourage behaviour that supports long term financial soundness and the risk management framework;
• To ensure the independence of Risk and Control staff in the performance of their functions is not compromised;
• To ensure remuneration arrangements are, and remain, compliant with corporate governance requirements, including requirements under CPS510.
To meet these objectives the key responsibilities of the committee are:
• Annual remuneration recommendations to the Board;
• Conduct regular reviews of the Remuneration Policy, ensuring its effectiveness and compliance with the requirements of CPS510;
• Implement the Remuneration Policy;
• Development, implementation and review of Board and CEO performance assessment process;
• Completion of Board, Directors and CEO performance assessment on an annual basis;
• Development of the Training Needs Analysis for Directors and the CEO;
• Succession planning process for the Board and CEO;
• Coordination of the activities of the Board Nomination Committee, with one member of the committee appointed to the Board Nomination Committee;
• Ensure the Committee has the necessary experience and expertise to undertake its responsibilities, including by supplementing its expertise with appropriate external advice.
In the last 12 months, the ART Committee has not utilised the services of any external consulting firms to assist with determining market rates for remuneration. This is generally completed periodically.
As per APS330, remuneration disclosures are to include executive managers and material risk-takers. These are defined in CPS510 as “persons whose primary role is risk management, compliance, internal audit, financial control or actuarial control’’ or “all other persons …whose activities, individually or collectively, may affect the financial soundness” of the credit union.
Accordingly this policy applies to seven (7) key management positions, being the four (4) Executive Managers and three (3) senior mangers within the credit union.
There are no other employees outside this group considered as material risk takers.
The Remuneration Policy was established when APS510 was originally released and is reviewed bi-annually, or as directed by the Board.
The ART Committee reviewed the credit union's remuneration policy during the last twelve months. No material changes were made.
Remuneration consists of fixed and performance-based components:
• The fixed components consist of base salary, superannuation benefits and other fringe benefits offered to staff as outlined in their contract of employment.
• The performance-based component comprises:
- Short-term: performance bonuses based on the achievement of Key Performance Indicators and Behaviour ratings as outlined in the Summerland Performance management program. These bonuses are paid at the end of the 12 month period ending June or December.
- Deferred: performance bonuses based on the achievement of strategic plan objectives. These payments are deferred until results are realised.
Performance-based remuneration takes the form of cash payments. As a mutual institution, Summerland does not provide equity, or equity linked forms of remuneration.
The Board has the discretion to adjust the performance based components of the remuneration of a person covered by this Policy downwards, to zero if necessary, if such adjustment is necessary to protect the financial soundness of the credit union.
Remuneration is reviewed annually for all staff of the credit union, to take effect on 1 July. This process involves a number of external benchmarking exercises.
Firstly there is a survey done between a peer group of mutuals to share and compare remuneration components of specific classes of employee roles. Then through engagement of the Australian Institute of Management annual salary survey, each position is assessed based on turnover, industry and region.
Following the compilation of this information the salary levels of all staff are reviewed by the Executive Management for a final decision. This excludes the Executive Management and the 3 senior management positions noted as key risk management roles, which are drafted as recommendations to the ART Committee for their review and decision.
Remuneration for all staff are fixed salaries and a variable annual performance bonus or, where applicable a long-term incentive.
The performance-based remuneration program in the credit union is based on the Summerland performance management program which applies to all staff, including Executive Management. At the beginning of each 12 month period, the Credit Union develops operational goals and budgets for the year which is cascaded down to each department. These are in turn developed into individual Key Performance Indicators (KPIs) and each employee and their team leader will review these goals at the beginning of the year.
At the end of the twelve month period, a formal review of KPIs is completed and an overall rating assigned to each employee from 1-4.
Clear indication is provided in each KPI category of how to achieve each result, with each KPI having a quantitative scale which generally represents:
1 = Exceeds requirements by a large percentage
2 = Exceeds requirements
3 = Meets requirements
4 = Does not meet requirements
The second part of the performance process covers the behavioural capabilities of employees. Whilst KPIs measure the outcome, the behaviours measure how the employee has achieved the outcomes.
Each position has 5 behaviours that they are measured on. At the end of the year a formal review of each employee’s performance is completed and they get a rating of A, B, C or D. Based on the overall rating a bonus, as a percentage of salary is paid.
The KPI rating coupled with the behaviour review form the basis of the annual performance appraisal.
There have not been any changes to the performance management or remuneration framework over the past 12 months.
Focus on Risk Management
As part of the annual performance incentive and long-term incentive paid to staff, the performance management structure includes a quality check that has the impact of reducing the KPI result and subsequently the incentive payment if breaches of policy occur. This is to ensure a focus by all staff on risk management and quality.
These breaches also cascade up to the team leader for their team, departmental manager, Executive Manager & ultimately the CEO for full accountability across the organisation.
Long Term Performance
Executive Managers, who are primarily responsible for the financial performance and soundness of the credit union, receive long term incentives (LTIs). These are in the form of cash payments based on achievement of the strategic plan objectives of the credit union over the period of these officers’ contracts.
The quantitative disclosures below are aggregated as all positions identified are senior managers.
During the financial year the ART Committee held three (3) meetings.
Apart from the Chairman of the ART Committee who receives a Chair allowance of $3,450, the other committee members receive no additional remuneration above their Board allowance for involvement on the ART committee.
Variable remuneration refers to the annual bonus, which applies to all seven (7) managers as part of this disclosure and long-term bonuses, as applicable to two (2) managers of this group.
No termination payments were made above and beyond the legal entitlements to annual or long service leave throughout the year.
Fluctuation & Adjustments
There have been no implicit or explicit adjustments to remuneration packages for any staff.
Remuneration includes all payments made and accrued during the last financial year, including superannuation paid by the credit union.
|Total Value of Remuneration
- Cash based
- Cash based