Remuneration Policy
Babcock & Brown determines its total annual remuneration each year by reference to the Key Performance Indicators (KPIs) outlined in the IPO Prospectus issued in 2004. These KPIs are Return on Equity, Earnings Per Share Growth and Profit Before Bonus and Tax. In determining total annual remuneration, Babcock & Brown’s performance against these KPIs in any given year are compared to the results of a peer group of international companies.
The remuneration practices of the Group have been structured to be competitive in the industry and global marketplace in which the Group operates and to ensure that the Group can attract and retain the talent needed to achieve both short and long term success, while maintaining a strong focus on team work, individual performance and the interest of shareholders.
The policies and principles which are applied to determine the nature and amount of remuneration paid to the Directors and employees of the Group are set out in detail in the Remuneration Report in the Annual Report. Please click here to access Babcock & Brown Limited's latest annual report. The Remuneration Report also provides details of the nature and the amount of remuneration paid to Directors and Executives of the Group.
Remuneration Committee
The Remuneration Committee assists the Board in achieving fairness and transparency in relation to remuneration issues whilst overseeing the remuneration and human resources strategies of the Group. The Remuneration Committee endeavours to ensure that the Group’s remuneration outcomes strike an appropriate balance between the interests of the Company’s shareholders and rewarding and motivating the Group’s Executive Directors, Executives and employees.
The responsibilities of the Remuneration Committee pursuant to its Charter include:
- making recommendations to the Board in respect of the general remuneration strategy for the Group so as to motivate Executive Directors, Executives and employees whilst establishing a fair and transparent relationship between individual performance and remuneration;
- reviewing and making recommendations to the Board on the terms of remuneration for the Executive Chairman, Managing Director and other senior management of the Group, including the criteria for assessing performance;
- establishing and recommending to the Board, criteria to be used for assessing the total annual remuneration and determining the actual total annual remuneration allocation having regard to how those criteria are met in the relevant year;
- monitoring and reporting to the Board on the outcomes of remuneration reviews for Executive Directors and Executives collectively and the individual reviews for the Executive Chairman, Managing Director and other Executive Directors and senior management;
- considering and making recommendations to the Board on employee equity plans and allocations under those plans as part of the short-term and long-term incentive plans; and
- reviewing and making recommendations to the Board on the level of remuneration for Non-Executive Directors.
Since the Company’s IPO in October 2004, the Remuneration Committee has continued to review and amend the Company’s remuneration structure to ensure that employee rewards drive the desired behaviours and that a robust link exists between pay and performance. The Remuneration Committee also seeks to ensure that the remuneration structure is consistent with market expectations for listed entities and stakeholder body guidelines. In doing this, the Remuneration Committee seeks advice from independent remuneration advisors. In 2007 PricewaterhouseCoopers were Babcock & Brown’s advisors.
Remuneration Strategy
The board recognises that the company operates in a global market place and its success is ultimately dependent in its people. In light of this, the Company aims to attract, retain and motivate highly-specialised and skilled employees from a global pool of talent who have expertise to operate internationally.
The remuneration strategy of Babcock & Brown is critical to achieving the Group's overall objective of producing exceptional performance and growth through a strong performance culture. Babcock & Brown's remuneration strategy is designed to reward Group, Business Unit and individual performance and closely align the interests of executive Directors, Executives and employees to those of shareholders through the use of short-term and long-term incentives. The Company's remuneration strategy focuses on:
- driving performance over and above shareholder and market expectations;
- ensuring incentive remuneration is very directly linked to the Group's performance and that individuals who contribute to this performance are rewarded;
- ensuring pay structures are commensurate with global investment banking peers and ASX 100 companies as benchmarks; and
- ensuring key employees have a personal interest in the Company through equity ownership.
Non-Executive Directors’ Remuneration
Whilst the remuneration of Executive Directors is determined in accordance with the principles outlined in the Remuneration Report, Non-Executive Directors are paid an annual fee for their service on the Board and all Committees of the Board. The maximum aggregate sum payable to such Directors is approved from time to time by shareholders. The current maximum aggregate sum is $1.5 million per annum. Non-Executive Directors are not provided with retirement benefits other than statutory superannuation and do not receive bonus payments.
Further information on Babcock & Brown's Remuneration Strategy and Remuneration Structure can be found in the latest Annual Report.