AustralianSuper’s investment chief Mark Delaney received more than $2 million it total remuneration in the 2023 financial year, as the mega-fund whose investments he oversees returned 8.2 per cent over the period for its 3.3 million members.
Delaney edged out UniSuper’s John Pearce, whose remuneration package totalled $1.7 million.
The latest Investment Magazine Salary Survey found that the top 10 chief investment officers of super funds were each paid more than $1 million in the 2023 financial year.
Three women were included among the top 10 – Commonwealth Superannuation Corporation (CSC)’s Alison Tarditi, CareSuper’s Suzanne Branton, and HESTA’s Sonya Sawtell-Rickson.
CareSuper was also the only non-large fund (under $50 billion in assets under management) whose CIO was paid more than $1 million, having returned 8.3 per cent in the 2023 financial year. Branton’s reported total remuneration included more than $132,000 in accrued long-service leave (she has been with the fund for more than 10 years), and deferred incentives of more than $89,000 – both of which are reported in a total remuneration figure, but not actually paid.
The Salary Survey methodology takes into account executives’ cash salary, short-term incentives (STI), deterred incentives, shares, options and rights, one-off payments, non-monetary benefits and super where data is available. The total remuneration package reflects all the categories combined.
Table 1: 2024 CIO remuneration and fund assets
Alpha generators
But while it’s easy to focus on remuneration in isolation, as other analyses of CIO pay have tended to do recently, the key question is whether the individuals who command these significant incomes are worth the money they’re paid.
Investment Magazine analysis of the APRA-sourced salary data has found that there is a correlation, albeit loose, between CIOs’ total remuneration and outperformance, and between their short-term incentives and performance, as demonstrated by the charts below.
The outperformance metric is created from a 50/50 blend of the two three-year outperformance metrics used in the APRA Heatmaps: Net Investment Return (NRI) relative to Simple Reference Portfolio; and Net Investment Return relative to SAA Benchmark Portfolio).
Only CIOs who had been in their roles for the whole of the three years to 30 June, 2023, are included in the remuneration sample.
It appears that outperformance has a better alignment with STIs than it has with total remuneration. This could be explained by the fact that total remuneration takes into account – through salary and long-term incentives – factors such as fund size and management complexity for CIOs, in aspects including internal asset management, asset allocation frameworks, unlisted asset strategies and overseas offices.
Table 2: 2024 CIO remuneration and fund returns
Source: APRA data (both tables)
Notes (both tables):
(#) Total rem derived from published remuneration reports including super, long service and leave accrual. Excluding non-monetary benefits
(*) Only range provided, assumed mid point
(**) Rem based on Victorian Public Sector top band, mid point assumed
* In role for less than one year
** Rem included as acting CIO from 21 June – 2 Aug 2023
*** CIO from 1 July 2022 – 30 Mar 2023. Acting CEO from 30 Mar 2023 – 12 June 2023
## As at FY Dec 2022
### Rem estimated based on previous CIO 2021 reported compensation
#### Executive manager – finance & tax. No CIO
^ Rem is for role in OnePath Custodian only
^^ Rem is for role in Nulis Nominees only
% In CEO and CIO roles
(~) As at June 2022
+ 3 year NIR relative to Simple Reference Portfolio p.a.
++ 3 year NIR relative to SAA Benchmark Portfolio p.a.
(1) NIR based on VicSuper Growth
(2) NIR based on ADF MySuper
(3) NIR based on Super Savings 54-yr and under
(4) NIR based on Macquarie Group Super
(5) NIR based on 50-yr and under
(6) NIR based on Equipsuper MySuper
Talent war
There’s no doubt that Australian funds are increasingly outgrowing the domestic market. According to a recent global study by Thinking Ahead Institute, Australia’s super assets grew from 108.3 per cent of GDP in 2013 to 145 per cent in 2023, the fastest among 22 largest pension markets in the world.
As big Australian funds jump on the bandwagon of establishing overseas offices, the question of how they can secure investment talents with little brand recognition emerges.
But according to CEM Benchmarking’s Canada-based HR manager Sadaf Shaikh, pension funds tend to have some unique offerings for investment talents.
CEM Benchmarking offers global institutional investor research and benchmarking in areas such as performance, fees, member service and transparency. Before her current role, Shaikh was HR manager in global asset managers and pension funds including Brookfield Real Estate and OMERS.
Granted, asset managers would be able to offer more attractive remuneration, but she said talents who pivot towards pension funds are usually looking for something different.
“If compensation is the biggest driver for a talent, they won’t succeed the pension environment. Particularly because the investment style at pension fund is generally more conservative too,” Shaikh tells Investment Magazine.
“The personalities are different, people who come and work at pension funds are just a different breed of investors altogether.”
“Then there’s stability in the pension fund – they know that they’re not going to run out of capital, pretty much, especially in defined benefit. Because that population is always going to be there.
“They could be underfunded, and they have to work towards getting back to funded status. But they’re never really going to run out of money, and that’s appealing.”
Michael Swinsburg, managing partner of recruiter Alexander Hughes, says there’s little doubt about the talents of the individuals who lead the investment teams of superannuation funds, but as funds become larger and more complex a lot of time is being taken up being managers of other people, rather than being “on-the-tools” investors.
“Running a large multi-portfolio fund requires a certain amount of business and investor maturity,” Swinsburg says.
“And the best PM that’s running a boutique fund, say, have a pretty narrow focus. The typical PM has a pretty narrow focus of the world.”
Swinsburg says the growing scale and complexity of super funds means CIOs are more reliant than they used to be on the quality of their teams.
“A large part of their KPIs is about the numbers, yes,” Swinsburg says.
“But the numbers are only the end workings [of] building a high-performance portfolio and that takes a high quality team to produce sustainable results over many years.”
“Also scale and complexity has resulted in all the big teams now hiring business managers, or COOs of the investment business, to deal with all the non-investment matters.
“CIOs still have to hire, fire and ensure the quality of their business. They are the conductor of their orchestra!
They’ve got a lot going on, but they’re only as good…as the quality of the various sector PMs that they hire, and the maturity of those folks. And that’s down to them.”
Note: This article was edited on 12 March 2024 to clarify components of Care Super CIO Suzanne Branton’s total remuneration package. In addition, the tables were corrected on March 13 to remove double-counting of short-term deferred remuneration of $89,395.
