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Magellan Financial Group has today released details of the MD/CEO's remuneration for FY2016 and beyond. Moving forward, total base salary will be calculated with reference to the performance of the Funds Management operating segment. I take a look at the implications of this approach in this note. (VIEW LINK)


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Patrick Poke

It does seem like a very generous remuneration package, but the amazing performance of MFG over that period seems to justify it in my opinion.

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Kym Sheehan

Thing to remember with fixed pay is that it's paid irrespective of performance for the year, so increasing it annually in line with past performance (because that is what the formula does) also increases the level of STI opportunity (because that's 100% of fixed pay). An alternative might be to keep base modest and up the level of short term incentive opportunity as a percentage of fixed pay. This is the challenge with companies experiencing strong growth.

Medium screen shot 2017 02 28 at 8.02.18 pm

Patrick Poke

Ah ok, I see where you're coming from - it's the way in which it's calculated rather than the absolute figure.

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Kym Sheehan

$1.2 million isn't an issue within the ASX 100 nor probably is $1.8 million (depending on what else is there) but if the rate of growth is high, within 2 years you can more than double fixed remuneration from its FY2015 level. And that becomes an issue.

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