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Functional Domains: Remuneration

Trusted Advice ... a Key Success Factor

The governance and strategy around remuneration has become a critical issue for organisations globally. Key stakeholders are looking for well-substantiated remuneration strategies and executive contracts - striking a balance between sufficient rewards to drive success and retain key executives, whilst avoiding excessive payments. Equally, stakeholders have a strong expectation that variable rewards will fluctuate commensurate with different levels of performance. As experienced and trusted advisors, we are well able to propose remuneration strategies and practices that meet these various stakeholder expectations.

APRA Prudential Standards - Governance of Remuneration

Advice on Implementation

OPPEUS International can provide advice to institutions that require external assistance in the development or review of one or more of the matters listed below.

In addition, where an institution has used internal resources to develop or review the matters listed below, OPPEUS International is able to provide an independent “second opinion” on the gap analysis conducted and on any changes made to ensure compliance with the Prudential Standard.

Importantly, any advice provided to your Board or your Remuneration Committee would meet the tests in relation to the independence and potential conflicts of interests of external advisors as specified in the Prudential Practice Guide on Remuneration.

An Overview of the changes

OPPEUS International is well equipped to provide comprehensive independent advice to the Board of APRA-regulated institutions. These institutions are required to comply with APRA Requirements in relation to remuneration in Authorised Deposit-taking Institutions:

 

Prudential Practice Guide – PPG511 – Remuneration

These revised standards will come into effect on 1 April 2010.

By this date, APRA requires that a Board Remuneration Committee, with appropriate composition and charter, be established and that a suitable Remuneration Policy be in place.

If, however, an institution is unable to comply with the new Prudential Standard by the commencement date, APRA has advised some institutions that they must advise APRA by
28 February 2010 of this, outlining the reasons and the expected time-frame for compliance.

In addition, if an institution wishes to seek transitional relief or to be excluded from specific requirements under the Prudential Standard, the rationale for such requests must be made formally to APRA before the commencement date of the Prudential Standard on 1 April 2010.

Our Scope of Work

Advice can be provided on compliance in regards to the following matters included in the Prudential Standard and Prudential Practice Guide:

Board Committees

Remuneration Policy

Design of Incentive Plans Including Adjustment for Risk

Review of Individual Contracts of Employment

Rationale for Compliance Relief

OPPEUS International is able to provide an assessment of the rationale and reasons for the delay and the expected time-frame for compliance.  This assessment could be used in the advice to APRA that would be required by 28 February 2010. In addition, OPPEUS International can provide support for the rationale for institutions wishing to seek transitional relief or to be excluded from specific requirements under the Prudential Standard.

Ongoing Advice

On an ongoing basis OPPEUS International has expertise in providing independent advice to the Board Remuneration Committee on all aspects of the matters covered in the Remuneration Policy. In addition, we can provide advice and assessments in regards to the ongoing compliance with the Prudential Standard.

Advice on Legal Matters

As there may be legal matters that require review as part of the APRA remuneration compliance process, we are pleased to advise that advice on such matters can be provided by Freehills. Examples of advice that can be provided by Freehills are:

If you have a need for advice on any of these matters, we would be pleased to introduce you to the appropriate person in Freehills.  See www.freehills.com for additional information.


Where an institution is unable to comply with the new Prudential Standard by the commencement date of 1 April 2010

Such requests must be made formally to APRA before the commencement date of the Prudential Standard.

Active IntegrationActive Integration

OPPEUS advisors have worked with organisations at all stages of development and bring a depth of remuneration expertise, balanced by a breadth of experience in Australia and globally.

We believe that the quantum and mix of remuneration needs to be varied according to the different stages of a Company Lifecycle (Figure 1). The rewards for executives and directors should be different at the start-up and development phases versus growth and consolidation phases.

At the same time, remuneration strategies and practices cannot be determined in isolation from broader business and HR objectives. An integrated approach to attraction, motivation and retention is emphasised as we advise on the development of your remuneration plans. This is enhanced by our experience across the OPPEUS domains of Talent, Organisation, Governance and Remuneration.

Meeting your needs

Our specialists provide experienced, trusted advice on remuneration regarding:

 

Click here to download our Remuneration flyer (PDF 259KB).

 

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