Vector Annual Report 2021

Creating a new energy future – a bold vision

Remuneration framework Vector’s remuneration framework is designed to attract and retain high- performing individuals, to support the delivery of the company’s strategy and vision, and reward our people appropriately and competitively. The Remuneration Committee assists the Board in overseeing the Remuneration Policy. Vector’s Remuneration Policy is that of a total remuneration framework which comprises fixed remuneration, plus an at-risk component in the form of a Short- Term Incentive (STI). STI is a variable element of remuneration and is only paid, at the Board’s discretion, if financial and health and safety gates are met, and company performance goals have been achieved. From FY22, the STI will only apply to executive teammembers and their direct reports. Employees who were previously eligible for STI have received an adjustment to their fixed remuneration based on historic STI performance. Vector has not provided any joining bonus to Executives in the last financial year. Vector does not provide “termination payments” to outgoing Executives, nor does it provide retirement payments at greater rates for Executives than other staff (if any at all). Fixed remuneration Fixed remuneration is reviewed annually based on data from independent remuneration specialists. Employees’ fixed remuneration is based on a matrix of their own performance and their current position in their salary band

when compared with Vector’s internal role bands and the market. Short-Term Incentive Prior to any STI payment being available to eligible employees the conditional gateway goals (Health and Safety – no fatalities; Financial – achieving at least 95% of budget) must be met. The STI Scheme for FY21 recognises Group and business unit-level achievement of financial, customer, operational, health and safety and sustainability performance outcomes remuneration for the FY21 STI Scheme ranges from 5% to 50% of base salary depending on the complexity of the role. Company performance goals are set and reviewed annually by the Board to align with business and financial objectives. The percentage split applicable to performance goals can vary by business unit. For this financial year, Vector’s group goals were: ‒ 40% Financial; ‒ 40% Customer; ‒ 10% Health and Safety; and ‒ 10% Decarbonisation. Customer goals include measures of customer satisfaction, as well as operational performance such as electricity network standards as set by the Commerce Commission (SAIDI/ SAIFI), gas response to emergency and within the at-risk component of employees’ remuneration. The STI Scheme does not reward individual performance. The at-risk percentage of fixed

the achievement of customer service level agreements. STI payments are determined following a review of company performance and paid out at between 0% and 100% for the Group Chief Executive, executive leadership team, and all eligible employees. Performance against the at- risk STI element is capped at 100%. As an example of how STI is calculated, an employee with fixed remuneration of $80,000 and an STI element of 10% may receive between $0 and $8,000 (0% to 100% of their STI) depending, at the Board’s discretion, on the level of company performance once the gateways have been achieved. STI Scheme payments relating to the financial year ended 30 June 2021 are delivered as a taxable cash payment and are payable on completion of the annual audited financial statements. Payments relating to the 2021 financial year are therefore paid in the 2022 financial year. Group Chief Executive remuneration The Board rewards the Group Chief Executive with fixed remuneration and an at-risk component in the form of a Short-Term Incentive. There are no long-term incentive or any share option schemes available at Vector. The Group Chief Executive’s fixed remuneration is reviewed periodically by the Board, by external remuneration specialists using relevant market peer benchmarks, as is the case with the executive leadership team and all senior leadership roles.

The Group Chief Executive’s STI and fixed remuneration are set out below. GROUP CHIEF EXECUTIVE REMUNERATION

TOTAL REMUNERATION

FIXED REMUNERATION

AT-RISK REMUNERATION

SALARY

BENEFITS

SUBTOTAL

STI

SUBTOTAL

FY21 FY20

$1,430,550.00 $1,402,500.00

– –

$1,430,550.00

*

$1,430,550.00

$1,402,500.00 $481,758.75

$1,884,258.75

* STI will be paid September 2021 for FY21.

DESCRIPTION OF THE GROUP CHIEF EXECUTIVE STI SCHEME FOR PERFORMANCE PERIOD ENDING 30 JUNE 2021

Scheme Description

Performance Measures

Percentage of Maximum Awarded

STI

Set to a maximum of 50% of f ixed remuneration for FY21 on-plan performance where the highest levels of company performance measures are achieved.

Company Performance measures: 40% Financial 40% Customer

If met, will be paid in September 2021.

10% Health & Safety 10% Decarbonisation

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