APRA Remuneration Disclosures
Disclosure of Prudential Information
For the Year Ended 30 June 2024
APS 330 Remuneration Disclosures
| Qualitative Disclosures |
| (a) Information relating to the bodies that oversee remuneration: |
| the name, composition and mandate of the main body overseeing remuneration; |
NGM Group’s People, Culture and Remuneration Committee (PCR Committee) oversees NGM Group’s remuneration frameworks, policies and practices. The PCR Committee is a committee of the NGM Group Board. PCR Committee members must be Non-Executive Directors of NGM Group. The PCR Committee must consist of no less than 3 members, all of whom must be independent. At least one PCR Committee member must be a member of the Board’s Risk Committee. In this reporting period, the members of the PCR Committee were:
The purpose and responsibilities of the PCR Committee are outlined in its Charter. The PCR Committee’s primary role is to assist the Board by providing objective review and oversight of people and remuneration related frameworks, policies and practices so that they:
The PCR Committee also assists the Board by overseeing and reviewing succession planning for NGM Group. Key remuneration related responsibilities of the PCR Committee include: People
Remuneration strategy
Remuneration Policy
Remuneration arrangement and outcomes
Performance framework, variable remuneration and benefits
Recognition
Remuneration disclosures
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| the name of external consultants whose advice has been sought, the body by which they were commissioned, and in what areas of the remuneration process; | During the reporting period, NGM Group did not engage any consultants to provide remuneration advice. |
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a description of the scope of the ADI's Remuneration Policy (e.g. by regions, business lines), including the extent to which it is applicable to foreign subsidiaries and branches; and |
The Remuneration Policy applies to NGM Group and the Level 2 group (as defined by Prudential Standard APS 001 Definitions).
The Remuneration Policy also applies to persons who are:
The Remuneration Policy applies in determining fixed and variable remuneration arrangements. The Remuneration Policy applies to third party service providers in respect of the process to manage and oversee material conflicts between their compensation arrangements and the objectives of the remuneration framework. The Remuneration Policy does not extend to Non-Executive Director remuneration, which is separately outlined in the NGM Group Constitution. NGM Group does not have any foreign subsidiaries or branches. |
| a description of the types of persons considered as material risk takers and as senior managers as defined in paragraph 23 of APS 330, including the number of persons in each group. | NGM Group’s "senior managers" and “material risk takers” as defined in paragraph 23 of APS 330 comprised the following 12 employees:
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(b) Information relating to the design and structure of remuneration processes: |
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an overview of the key features and objectives of remuneration policy; |
The principal objective of the NGM Group Remuneration Policy is to support appropriate levels of remuneration necessary to attract, retain and motivate high quality people required to lead and manage the organisation, while adhering to sound risk management and governance principles.
NGM Group’s remuneration frameworks, policies and practices are guided by and designed to:
NGM Group’s remuneration framework consisted of the following components:
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whether the Remuneration Committee reviewed the ADI's Remuneration Policy during the past year, and if so, an overview of any changes that were made; and |
The PCR Committee and NGM Group Board reviewed the Remuneration Policy in February 2024, with minor changes made, including:
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| a discussion of how the ADI ensures that risk and financial control personnel (as defined in CPS 510) are remunerated independently of the businesses they oversee. | NGM Group risk and financial control personnel are defined in the Remuneration Policy as personnel whose primary role is in risk management, compliance, internal audit and financial control.
These personnel were entitled to participate in the NGM Group Staff Incentive Scheme, however, their key performance indicators (KPIs) and proportion of fixed to variable remuneration were structured so as not to compromise the independence of these individuals in carrying out their roles. This independence was also supported by the involvement of the relevant Committees and the Board in setting the objectives for, and assessing the performance of, these personnel. Variable remuneration for risk and financial control personnel was paid where a clear contribution to successful outcomes for NGM Group was demonstrated and the individual attained and excelled against pre-agreed KPIs (financial and non-financial) during a performance cycle. |
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( c ) Description of the ways in which current and future risks are taken into account in the remuneration processes: |
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| an overview of the key risks that the ADI takes into account when implementing remuneration measures; | NGM Group took into consideration the key risks assessed and articulated in its organisational risk profile, Strategic Plan and Risk Appetite Statement when setting performance targets for the Organisational Performance Scorecard (which is also the CEO Scorecard) and the Executive Performance Scorecards, and measuring and assessing organisational and individual performance during the reporting period. |
| an overview of the nature and type of the key measures used to take account of these risks, including risks difficult to measure (values need not be disclosed); |
Effective risk management and compliance management was assessed in the Performance Scorecards of the CEO and Executives for the reporting period, as a Values and Risk modifier, by reference to the following quantitative and qualitative measures and taking a ‘behaviours first’ approach to the assessment of performance:
Effective risk and compliance management is a gateway characteristic for a “Meets Expectations” performance rating (and any associated incentive payment) for all staff across the organisation. This recognises the importance of risk and compliance management within every role, to support customer and industry expectations, long-term financial outcomes and the risk management framework (including expected risk culture). Additionally, individual personnel throughout the organisation may have specific risk and compliance goals and measures incorporated in their personal KPIs as directly relevant to their area of responsibility. |
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a discussion of the ways in which these measures affect remuneration; and |
For the CEO and Executives, the above-mentioned Values and Risk modifier was applied through a mix of quantitative and qualitative assessments by the PCR Committee. Based on the recommendations of the PCR Committee and the decision of the Board, the CEO and Executives may receive all, part or no incentive payment.
The PCR Committee considered information from the Audit Committee and Risk Committee regarding audit items and risk and compliance items respectively, arising during the reporting period that may be relevant to the assessment of the CEO and each Executive’s performance and management of key risks. Employees would be excluded from participating in the Incentive Schemes or from receiving an incentive payment (as per the relevant scheme rules) where they failed to comply with risk management and compliance requirements measured by:
Where an individual’s performance objectives also included a specific risk or compliance KPI a weighting was attributed to that objective which, combined with the risk and compliance gateway, contributed to the outcome of the annual performance assessment process and calculation of any incentive payment. Ultimately, the CEO and/or the Board also retained the discretion to adjust the performance-based components of remuneration downwards, including to zero if appropriate, if such adjustments were necessary in certain situations including but not limited where an adjustment was required to:
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| a discussion of how the nature and type of these measures has changed over the past year and reasons for the change, as well as the impact of changes on remuneration. |
As discussed above, NGM Group employed a Values and Risk modifier to the performance assessment process for the CEO and Executives and a Risk and Behaviours gateway for all other employees. The Values and Risk modifier was used to modify the incentive outcomes for the CEO and Executives either upwards or downwards based on the degree to which risk objectives are met and their risk behaviours. The Values and Risk modifier (for CEO and Executives) and Risk and Behaviours gateway for all other staff reflected the strategic importance of risk management for NGM Group, as well as recommendations flowing from various industry and regulator reports, and were expected to encourage and incentivise positive risk behaviours and discourage poor risk behaviours through the adjustment of variable remuneration outcomes. |
| (d) Description of the ways in which the ADI seeks to link performance during a performance measurement period with levels of remuneration: | |
| an overview of the main performance metrics for the ADI, top-level business lines and individuals; | The purpose of the NGM Group’s Staff Incentive Scheme, Lenders’ Incentive Scheme and Executive Incentive Scheme (Incentive Schemes) was to reward actual achievement of an individual’s Balanced Scorecard outcomes (individual performance objectives) and for materially improved organisational performance.
Performance-based variable remuneration (defined as incentive payments, retention payments and any other performance-based remuneration) under the Incentive Schemes was paid to eligible staff, Executives and the CEO where there was a clear contribution to successful outcomes for NGM Group and where the individual attains and excels against pre-agreed individual performance objectives (both financial and non-financial) during a performance cycle (as defined in their Balanced Scorecard). The employee must also comply with the risk management and compliance requirements and disciplinary requirements and must not engage in conduct that is contrary to the organisation’s values or risk appetite. For the reporting period, the key KPIs cascaded through the CEO, Executive and individual performance objectives were broadly categorised into the following areas:
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| A discussion of how amounts of individual remuneration are linked to institution-wide and individual performance; and |
NGM Group’s organisational performance was assessed by reference to objectives set as part of the Strategic Roadmap and associated strategic and operational plans, which were incorporated into the Organisational Scorecard as qualitative and quantitative measures and covered the broad categories referred to above. The Board assessed the organisation’s performance against this balanced scorecard, and on this basis, determined the maximum amount of the Incentive Scheme payment pool that would be made available. If organisational objectives are not met the Board could reduce the amount available for Incentive Scheme awards. Individual incentive amounts paid out of the Incentive Scheme payment pool were determined by reference to a matrix which considered NGM Group’s performance and individual performance outcomes as measured through the annual performance review process and calculated as a percentage of base salary. |
| A discussion of the measures the ADI will in general implement to adjust remuneration in the event that performance metrics are weak. |
The Board retained discretion to adjust the performance-based components of remuneration downwards, including to zero if appropriate, if considered necessary in certain situations including but not limited to situations where an adjustment was required to:
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| (e) Description of the ways in which the ADI seeks to adjust remuneration to take account of longer-term performance: | |
| a discussion of the ADI’s policy on deferral and vesting of variable remuneration and, if the fraction of variable remuneration that is deferred differs across persons or groups of persons, a description of the factors that determine the fraction and their relative importance; and | Variable remuneration for the following categories of employees is subject to deferral conditions (subject to any applicable de minimis conditions under the Banking Executive Accountability Regime (BEAR) and Prudential Standard CPS 511 Remuneration (CPS 511)):
Relevantly, the above comprise NGM Group’s CEO and other Executives and the Head of Internal Audit (Relevant Senior Managers). Refer to a) above in this regard. NGM Group’s Directors do not receive variable remuneration. NGM Group concurrently applies the BEAR and CPS 511 variable remuneration deferral conditions to the CEO and other Relevant Senior Managers, which are embedded in remuneration frameworks, policies and practices. The BEAR remuneration deferral conditions include a minimum deferral amount (i.e. deferred variable remuneration) that is the lesser of:
The minimum period of the deferral under the BEAR is 4 years. The CPS 511 remuneration deferral conditions include a minimum deferral amount (i.e. deferred variable remuneration) that is: 60% of the CEO variable remuneration for the financial year / 40% of other Relevant Senior Managers variable remuneration for the financial year. The minimum period of the deferral under CPS 511 is 6 years for the CEO and 5 years for other Relevant Senior Managers, with release on a pro-rata basis possible after 4 years. Where there are inconsistencies in the outcomes under the two regimes, the higher deferral amount/ longer deferral period applies. Both the BEAR and CPS 511 remuneration deferral requirements are subject to certain de minimis conditions (i.e. where the deferred variable remuneration would otherwise be less than $50,000 in the financial year). NGM Group also ensures that, if variable remuneration becomes payable to an Accountable Person of a subsidiary, the subsidiary complies with deferred remuneration requirements as if the subsidiary was an ADI. No remuneration was paid by NGM Group’s subsidiaries to officers or employees during the reporting period. |
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A discussion of the ADI’s policy and criteria for adjusting deferred remuneration before vesting and after vesting through clawback arrangements.
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Payment of deferred remuneration is at the sole discretion of the NGM Group Board. The PCR Committee and Board undertake an assessment with respect to deferred remuneration just before the time of its proposed payment. NGM Group’s consequence management framework under the Remuneration Policy is designed to assist NGM Group with aligning remuneration with risk and conduct matters/ outcomes. Certain relevant situations and matters, as outlined in the Remuneration Policy and consequence management framework, (Relevant Matters) are considered for remuneration adjustment or clawback. Once a Relevant Matter has been identified, it will be assessed and considered as to whether a remuneration adjustment or clawback is appropriate. NGM Group assesses Relevant Matters in terms of High, Medium and Low impact on two scales: the severity of the impact and the individual’s degree of accountability /responsibility for the Relevant Matter. Relevant Matters may include, but are not limited to, significant:
An employee to whom deferral has been applied and who is no longer employed or engaged by NGM Group is subject to the same deferral requirements and vesting conditions as those for an employee still employed or engaged by NGM Group. On termination, entitlement to deferred variable remuneration for an Executive will be assessed by the Board in accordance with the reason for termination (including whether the employee is considered an ‘eligible leaver’ or ‘ineligible leaver’), the relevant incentive scheme rules, and any other relevant terms set out in the Remuneration Policy or the contract of employment. Employees determined by the Board to be ‘eligible leavers’ will be entitled to receive any deferred variable remuneration payments at the end of the relevant deferral periods. Adjustment and clawback provisions will continue to apply. Employees who are determined to be ‘ineligible leavers’ will forfeit any unpaid deferred variable remuneration. Clawback provisions may also still apply to variable remuneration paid to the employee before termination. NGM Group also ensures that, if variable remuneration becomes payable to an Accountable Person of a subsidiary, the subsidiary complies with deferred remuneration requirements as if the subsidiary was an ADI. No remuneration was paid by NGM Group’s subsidiaries to officers or employees during the reporting period. |
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(f) Description of the different forms of variable remuneration that the ADI utilises and the rationale for using these different forms: |
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| an overview of the forms of variable remuneration offered (i.e., cash, shares and share-linked instruments and other forms); and | NGM Group is not able to issue any shares or share-linked instruments. All variable remuneration is in the form of cash benefits. |
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A discussion of the use of the different forms of variable remuneration and, if the mix of different forms of variable remuneration differs across persons or group of persons, a description of the factors that determine the mix and their relative importance. |
The only variable forms of remuneration during the reporting period were the:
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Quantitative Disclosures |
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(g) |
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Number of meetings held by the main body overseeing remuneration during the financial year and the remuneration paid to its members. |
During the year, the PCR Committee met 3 times. The total remuneration paid to Directors who were members of the PCR Committee for part or all of the financial year is as follows:
* The total remuneration amount includes each Committee member’s annual Director fee and remuneration for all other roles, paid to them during the whole of the financial year. This is regardless of whether a Director was a member of the Committee for the whole or part of the financial year. The remuneration paid to the Committee members in the 2024 financial year included: – the base annual Director fee paid to each Director who was a member of the Committee; – specific fees paid to those Directors with respect to their role as Chair or members of the Committee; and – specific fees paid to those Directors with respect to all other roles, including as Chair of the Board and Chair/members of other Board Committees. |
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(h) |
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The table below presents the number of senior managers/ material risk takers who received a variable remuneration award, guaranteed bonuses, sign-on awards or termination payments during the financial year.
^ Amounts in the table above are disclosed in the financial year that the payment was received, and do not include deferred amounts which are disclosed in section (j) of this report. |
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(i) |
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Breakdown of the amount of remuneration awards for the financial year in accordance with Table 22A of APS 330.
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The table below presents the total value of remuneration awards for senior managers/material risk takers: |
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Table 22A: Total value of remuneration awards for the current financial year
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(k) |
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Quantitative information about persons' exposure to implicit and explicit adjustments of deferred remuneration and retained remuneration. |
Refer to e) and i) above. NGM Group has no issued shares or share-linked instruments. During the reporting period, no relevant matters arose to require implicit or explicit adjustments to any person’s deferred or retained remuneration. |
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