Deep in the money
UniSuper investment chief John Pearce is the highest-paid executive among Australia’s industry superannuation funds and one of 10 people to take home a pay packet of more than $1 million.
Pearce was handed $1.73 million for the year to June 30, a 9 per cent increase on 2018. His package included a base salary of $589,744 with a short-term bonus of $1.02 million, according to Investment Magazine’s 2020 pay survey, which has compiled the data from publicly available annual reports.
Now in its sixth year, the survey includes remuneration for non-profit licensed super funds for the financial year ended June 30, 2019. It also includes the country’s largest government funds and the Future Fund, but does not include bank-owned or other for-profit super funds.
This year’s survey comes just as the prudential regulator plans to introduce pay reforms across the financial services sector in 2021, which revamp bonus structures and defer the bulk of all payouts for up to seven years to ensure that staff do not profit from risky short-term investments.
The chief people officer at UniSuper, Julie Watkins, said it had become clear since the Hayne royal commission that taking a longer-term view on performance measures was required and that if not already built into a remuneration package, a long-term pay incentive could be beneficial.
“We are aware that a deferral period and clawback is likely to apply to some roles,” she said. “We expect to see further governance around incentives, deferrals, financial and non-financial metrics in performance plans. Whether this leads to higher or lower incentives is yet to be determined.”
Watkins confirmed that the $85 billion fund uses Australian benchmark data to remunerate Pearce and said she was “confident” his compensation was appropriately competitive. The data was sourced from banking, funds management, superannuation and insurance.
“Our focus is on ensuring greater retirement outcomes for members and the CIO performance incentive is related to significant influence on fund performance and results,” she added.
UniSuper last year topped Chant West’s best performance list. The balanced fund, which has among the highest allocation to equities among its peers, returned 18.4 per cent in 2019 compared to 14.7 per cent for the industry.
Watkins said metrics in UniSuper’s performance plans also measured long-term investment returns between three to 10 years, which provided a broad view of performance outcomes.
Best paid CIOs & CEOs
The highest paid executives are typically investment chiefs, accounting for seven of the top 10 who earned more than $1 million, the survey showed. After UniSuper’s John Pearce, AustralianSuper’s Mark Delaney, the Future Fund’s Raphael Arndt and First State Super’s Damian Graham are the next three highest-paid CIOs. Delaney received a total remuneration package of $1.63 million while Arndt took home $1.46 million. Graham made fourth place, receiving $1.33 million followed by Commonwealth Superannuation Corporation’s (CSC) Alison Tarditi who was paid $1.27 million.
Other investment heads whose pay hit the $1 million mark included QSuper’s Brad Holzberger, now retired, and Sunsuper’s Ian Patrick.
Among the highest paid chief executives, the Future Fund’s David Neal – who is leaving the $212 billion sovereign wealth fund to join global money manager IFM Investors – topped the ranks earning just over $1.46 million. His short-term bonus was $770,759.
David Elia, CEO of the $45 billion Hostplus super fund, came in second. He received $1.19 million. AustralianSuper’s Ian Silk, CEO of the country’s largest super fund overseeing assets of $189 billion, came in third, receiving $1.06 million. UniSuper’s Kevin O’Sullivan was in 10th place with a total pay package of $849,320.
Incidentally, Elia is one of the few CEOs to earn more than their respective CIO; in this case, Elia’s investment chief Sam Sicilia was paid $967,624, putting him in eighth spot.
While the fat pay packets and lavish bonus plans of the private sector have come under fire in the wake of the royal commission, salaries in superannuation are generally lower. The public inquiry found that super funds were not as plagued with the problem of extravagant bonuses as the banks.
ANZ Bank boss Shayne Elliott, for example, was paid around $4.09 million, while National Australia Bank’s new chief, Ross McEwan, has a base salary of $2.5 million on top of bonuses. Commonwealth Bank’s Matt Comyn took home a $3.4 million package last year, lower than his predecessor Ian Narev who was paid an eye-watering $12.3 million. Former Westpac CEO Brian Hartzer earned $4.9 million.
This compares to the maximum payout for a CEO in our survey of $1.46 million and $1.73 million for a CIO.
“The salaries (at industry funds) are reasonably competitive,” said Korn Ferry’s Graeme Bricknell, head of global financial services Australasia at the executive search firm. “But there is a wider range from the top to the bottom, which is different to the major banks, because of the variance in the funds.”
He said future remuneration payouts would likely be affected by the ongoing consolidation in the superannuation industry that is already forecast to swell to swell to $4.8 trillion in assets by 2034. Around 10 to 12 large funds are expected emerge from the flurry of deal making, including a handful of mega funds with assets north of $500 billion.
“Given the complexity of the roles and size of the sector, salaries need to be at a level that not only attract good talent but retain it,” said Bricknell. “There are a few ex-bankers on the list and many have come out of the asset management industry.”
Base salaries vs bonuses
While UniSuper’s Pearce received the biggest bonus of any CIO of a large super fund with a $1.02 million payout, his base salary was $589,744. That’s lower than AustralianSuper’s Delaney who is on $740,800 and Arndt at the Future Fund who gets paid a base of $664,832.
In 2019, Delaney’s package included short-term incentives of nearly $861,525, while CSC’s Tarditi had a base salary of $593,753 and a short-term bonus of $605,097.
Michael Moses, a principal in Mercer’s remuneration consulting practice, said base salaries for superannuation fund executives would likely increase following new regulation and constrain short-term bonus payouts.
This year’s pay survey has again revealed that long-term incentives (see methodology for further explanation) were paid by just three funds including CBA Group and Mine Super. By comparison, 22 out of 55 chief executives and the same number of CIOs received short-term bonuses as part of their total payout.
First State’s Graham was the only investment chief of a major fund to receive a bonus linked to both long-term and short-term incentives (STI). Graham participates in a bonus scheme that includes both a cash and a deferred component. In the 2018/2019 financial year, he earned a base salary of $804,469 and was paid an STI of $262,021. In addition, he is entitled to a deferred bonus of $242,021, which will be paid in two years.
First State’s group executive of people and workplace environment, Steve Hill, said Graham’s total bonus was based on investment performance outcomes and individual performance measures.
“At First State, our remuneration and reward structures seek to have a direct connection to member outcomes,” Hill said. “One, three and five-year investment returns are core performance measures to drive a longer-term focus, with a 50 per cent weighting towards the latter.”
He added that deferred incentives helped with retention and aligned with First State’s “commitment to deliver sustainable long-term returns to members”.
Topping the list of chairs was TWU Super’s David Galbally, who took home $284,400. Second place went to AustralianSuper’s Heather Ridout, who was paid $253,602, while First State’s Neil Cochrane received a total remuneration package of $210,087.
Data for Investment Magazine’s 2020 pay survey was compiled by Conexus Financial researcher, Poh Jenkinson.
Top 10 earners
The highest-paid CHAIRS
|4||230,417||Peter Costello||Future Fund||162,500|
|6||210,087||Neil Cochrane||First State Super||98,000|
|7||210,050||Ken Marshman||REST Industry Super||55,000|
|8||201,500||Grahame Kelly||Mine Super||10,769|
|9||188,870||David Leggo||Telstra||22,345||inc. investment comm chair|
The highest-paid CHIEF EXECUTIVES
|1||1,467,782||David Neal||Future Fund||162,500|
|4||982,992||Michael Pennisi||QSuper||113,000||25% of STI is deferred for 2 years. LTI is Unvested benefits accrued|
|5||962,208||Michael Dwyer||First State Super||98,000||retired 30/11/2018. REM includes termination pay of $408,478|
|7||911,353||Deanne Stewart||First State Super||98,000||commenced 22/10/2018|
|8||892,117||David Atkin||Cbus Super||56,500||STI is actual FY19. Base salary includes super|
The highest-paid CHIEF INVESTMENT OFFICERS
|2||1,627,325||Mark Delaney||AustralianSuper||165,000||20% of STI deferred for 1yr|
|3||1,463,464||Raphael Arndt||Future Fund||162,500|
|4||1,329,042||Damian Graham||First State Super||98,000||LTI is deferred STI from prev yr|
|10||807,225||Kristian Fok||Cbus Super||56,500||STI is FY19. Base inc. super|
Average C-SUITE EXECUTIVE PAY
|ROLE||AVERAGE OF REM REPORTED||MAX OF REM REPORTED|
Executives with highest STI
|CIO||UniSuper||80,000||John Pearce||589,744||1,022,580||1,728,817||REM includes long service leave|
|CIO||AustralianSuper||165,000||Mark Delaney||740,800||861,525||1,627,325||20% of STI deferred for 12 months|
|CEO||Future Fund||162,500||David Neal||648,591||770,759||1,467,782|
|CIO||Future Fund||162,500||Raphael Arndt||664,832||759,367||1,463,464|
|CEO||QSuper||113,000||Michael Pennisi||557,297||307,943||27,348||982,992||25% of STI is deferred for 2 years. LTI is Unvested benefits accrued|
Primary Target Data:
All values collected must be as stated in public reports
FY19 values for:
- Base Salary
- Total REM<
§ If Total REM not reported, calculate total from other monetary elements
§ Any relevant footnotes, comments or considerations
Published reports only
- Accrued annual or long service not to be included
- Non-monetary benefits
If monetary value for benefit assigned in report and this contributes to the reported Total REM then include in dataset
The highest paid CIOs
|Australia Post Super||7,800||Alister Wong||225,337||225,337||start 5/18|
|Australian Catholic Super||8,500||Michael Block||425,590||458,719||may inc. car & other|
|AustralianSuper||165,000||Mark Delaney||740,800||861,525||1,627,325||20% of STI deferred for 1yr|
|BUSSQ||4,000||David O'Sullivan||235,560||41,821||326,813||left 4/19|
|BUSSQ||4,000||Simon Mather||60,388||37,500||107,011||start 4/19|
|Catholic Super||9,500||Anna Shelley||410,000||435,000||start 5/18|
|Cbus Super||56,500||Kristian Fok||643,750||163,475||807,225||STI is FY19. Base inc. super|
|Christian Super||1,500||Tim Macready||269,115||289,147|
|Commonwealth Bank Super||11,061||Ruwanie Dias||289,206||58,667||385,131|
|Energy Super||7,058||William Graus||147,517||158,528||left 2/19|
|Energy Super||7,058||Kevin Wan Lum||62,500||68,438||start 4/19|
|EquipSuper||26,000||Troy Rieck||346,496||112,000||479,027||STI relate to FY18 target|
|First State Super||98,000||Damian Graham||804,469||262,021||242,021||1,329,042||LTI is deferred STI from prev yr|
|Funds SA||32,270||Richard Friend||not disc, band $511-531K|
|Future Fund||162,500||Raphael Arndt||664,832||759,367||1,463,464|
|GESB||29,000||Paul Taylor||138,798||138,798||start 1/19|
|Local Govt Super||12,000||Craig Turnbull||417,363||457,012|
|LUCRF||6,750||Leigh Gavin||not disc|
|Maritime Super||5,900||Grant Harslett||410,269||455,708|
|Media Super||5,473||Norman Zhang||183,333||204,416|
|Mine Super||10,769||Seamus Collins||260,707||272,315||start 4/19|
|Mine Super||10,769||David Bell||200,652||40,889||256,940||resigned 2/19|
|MTAA Super||11,800||Philip Brown||258,167||288,796|
|NGS Super||11,430||Ben Squires||371,162||431,530|
|Prime Super||5,842||Jane Kang||180,629||8,037||206,347||4-day wk|
|QANTAS Super||7,837||Andrew Spence||433,000||174,824||607,824||inc. super|
|Statewide Super||8,000||Con Michalakis||418,345||160,125||602,010|
|Tasplan||8,900||Ian Lundy||305,858||74,195||395,846||resign 3/19|
|Tasplan||8,900||Mark Williams||77,631||87,208||start 3/19|
|TCorp||107,000||Stewart Brentnall||not disc, band $337k-475,150+, avg. $591k|
|VFMC||64,000||Russell Clarke||not disc, top band $970-979k|
|Vision Super||10,000||Michael Wyrsch||339,478||364,478|
|WA Super||3,500||Chris West||192,456||192,456|
Footnote: REM includes non-monetary benefits, other benefits or long-service leave.
The highest paid CEOs
|Australia Post Super||7,800||Stephen Milburn-Pyle||376,778||148,732||549,850||STI granted 9/18|
|Australian Catholic Super||8,500||Greg Cantor||551,003||589,289|
|Catholic Super||9,500||David O'Sullivan||473,379||508,220||start acting CEO 8/18|
|Catholic Super||9,500||Frank Pegan||181,798||196,949||resigned 1/12/18|
|Cbus Super||56,500||David Atkin||713,939||178,178||892,117||STI is FY19, may inc. super|
|Christian Super||1,500||Ross Piper||316,881||336,930|
|Commonwealth Bank Super||11,061||Doug Carmichael||276,680||86,667||54,639||469,343|
|Energy Super||7,058||Robyn Petrou||373,227||45,151||443,378|
|EquipSuper||26,000||Nicholas Vamvakas||482,740||72,000||575,271||STI relate to FY18 target|
|First State Super||98,000||Michael Dwyer||334,354||205,289||962,208||retired 11/18, inc. final pay $408,478|
|First State Super||98,000||Deanne Stewart||513,023||384,091||911,353||start 10/18|
|First Super||3,240||Bill Watson||356,022||381,000|
|Funds SA||32,270||Jo Townsend||not disc, band $511-$531K|
|Future Fund||162,500||David Neal||648,591||770,759||1,467,782|
|GESB||29,000||Benjamin Palmer||366,610||366,610||acting 2/18, CEO 7/18|
|Intrust Super Fund||2,834||Brendan O'Farrell||477,613||502,321|
|Local Govt Super||12,000||Donna Heffernan||429,209||449,740||acting 12/18 to 6/19, deputy 10/17 to 12/18|
|Local Govt Super||12,000||David Smith||295,903||122,992||430,187||resigned 1/19|
|LUCRF||6,750||Charles Donnelly||not disc|
|Maritime Super||5,900||Peter Robertson||539,950||564,950|
|Media Super||5,473||Graeme Russell||320,886||342,973|
|Mine Super||10,769||Harry Mitchell||491,951||162,258||162,259||836,999|
|MTAA Super||11,800||Leeanne Turner||415,246||457,024|
|NGS Super||11,430||Laura Wright||441,307||477,854||acting 2/18 to 9/18, CEO 9/18|
|Prime Super||5,842||Lachlan Baird||454,670||490,000|
|QANTAS Super||7,837||Michael Clancy||419,500||199,263||618,763||inc. super, max bonus up to $360,393|
|QSuper||113,000||Michael Pennisi||557,297||307,943||27,348||982,992||25% of STI deferred 2 yrs, LTI unvested benefits|
|Rei Super||1,509||Mal Smith||287,656||312,652||resigned 9/19|
|Statewide Super||8,000||Richard Nunn||385,281||236,250||649,263||resigned 2/19|
|Statewide Super||8,000||Tony D'Alessandro||271,198||45,950||355,887||start CEO 2/19, GM prev|
|TCorp||107,000||David Deverall||not disc, band $337- $475,150+, avg. $591,325|
|VFMC||64,000||Lisa Gray||not disc, top band $970-$979k|
|Vision Super||10,000||Stephen Rowe||552,469||588,922|
|WA Super||3,500||Fabian Ross||357,223||357,223|
Footnote: REM includes non-monetary benefits, other benefits or long-service leave.
The highest paid chairs
|Australia Post Super||7,800||Mark Birrell||119,863||119,863|
|Australian Catholic Super||8,500||Richard Haddock||89,198||89,198|
|AvSuper||2,600||Ben Firkins||61,673||67,531||start 2/19|
|BUSSQ||4,000||Paula Masters||87,167||94,750||start 6/18|
|CareSuper||17,505||Terry Wetherall||87,959||97,439||start 4/18|
|Catholic Super||9,500||Daniel Casey||100,000||109,500|
|Cbus Super||56,500||Steve Bracks||157,344||172,291|
|Christian Super||1,500||Neville Cox||56,712||62,100|
|Commonwealth Bank Super||11,061||Rosemary Vilgan||91,074||99,726|
|Energy Super||7,058||Scott Wilson||85,215||93,310|
|First State Super||98,000||Neil Cochrane||204,065||210,087|
|First Super||3,240||Michael O'Connor||86,015||86,015|
|First Super||3,240||Lisa Marty||81,594||81,594|
|Funds SA||32,270||Paul Laband||not disc, band $80-99K|
|Future Fund||162,500||Peter Costello||209,791||230,417|
|HESTA||50,000||Nicola Roxon||88,991||97,445||start 1/19|
|Intrust Super Fund||2,834||Gary Bullock||43,800||43,800|
|Local Govt Super||12,000||Bruce Miller||111,405||121,989|
|LUCRF||6,750||Tim Kennedy||not disc|
|Maritime Super||5,900||Paddy Crumlin||111,818||111,818|
|Media Super||5,473||Gerard Noonan||72,249||79,113|
|Mine Super||10,769||Grahame Kelly||201,500||201,500|
|MTAA Super||11,800||John Brumby||140,039||153,343|
|NGS Super||11,430||Dick Shearman||78,363||103,363|
|Prime Super||5,842||Alan Bowman||91,324||100,000|
|QANTAS Super||7,837||Anne Ward||100,457||110,000||left 5/19|
|QANTAS Superannuation||7,837||John Atkin||17,395||19,048||start 5/19|
|Rei Super||1,509||Claire Higgins||74,268||91,178|
|Statewide Super||8,000||Ken Williams||155,872||170,874|
|TCorp||107,000||Peter Warne||not disc|
|Telstra||22,345||David Leggo||188,870||188,870||inc. investment comm chair|
|VFMC||64,000||James MacKenzie||not disc|
|Vision Super||10,000||Geoff Lake||132,180||144,737|
|WA Super||3,500||Tim Shanahan||89,578||96,566|
Footnote: REM includes non-monetary benefits, other benefits or long-service leave.