Stockland is committed to an executive remuneration framework that supports Stockland’s objectives. These are to deliver growth in EPS and total risk-adjusted securityholder returns above the average Australian Real Estate Investment Trust index, to create quality property assets and to deliver value for our customers.




Our remuneration framework

Stockland’s remuneration policies are framed around several key principles, including:

  • Fixed Pay should be fair, competitive and regularly benchmarked against market practice;
  • A significant portion of executive remuneration should be ‘at risk': that is, awarded only if clear performance criteria set in advance are achieved;
  • ‘At risk’ or variable pay should be aligned to securityholder interests;
  • Variable pay as a portion of total remuneration should be higher for more senior executives;
  • Short term incentives (STI) must be affordable and funded from annual earnings;
  • STI awards should be based on a mix of individual and company performance measures that reflect progress against a Balanced Scorecard (see below);
  • A portion of performance-based pay for Executives should be awarded as Stockland securities with deferred vesting;
  • Vesting of LTI should be dependent on achievement of long-term goals;
  • LTI should not only help motivate and retain key Executives but also build a sense of ownership of business performance that benefits all stakeholders;
  • Remuneration policies and decisions must reflect prudent risk and capital management considerations; and
  • Unvested equity awards should be forfeited if employees resign during the applicable vesting period and should be subject to a broadly framed clawback policy which gives the Board discretion to adjust or forfeit these awards in certain circumstances.

Stockland Corporate Reporting 2016




Remuneration outcomes

In FY16 there was no change to the remuneration arrangements for the Managing Director nor the remuneration framework for the other senior executives who are Stockland’s Key Management Personnel (Senior Executives). During the year, three of our nine Senior Executives were awarded modest increases in their Fixed Pay to reflect increased scope of responsibilities and market relativities.

Following the strong financial and operational performance delivered by the executive team in FY16, as reflected in the Corporate Balanced Scorecard in our Financial Report, the aggregate short-term incentives paid to our Senior Executives was marginally higher than in the previous year. Under our remuneration policies, the greater part of the increased STI awards was made in the form of Stockland securities with deferred vesting. The approved STI pool for all employees in FY16 was $37.0 million, of which $8.9 million (or 24% of the pool) was awarded in Stockland securities with deferred vesting and is subject to the risk of forfeiture until vesting dates at the end of FY17 and FY18. For the first time in five years, a portion of the LTI awards available to our Senior Executives vested as relevant hurdles were achieved in the three years to 30 June 2016.

In FY16, the Board decided to increase the annual base fees for Non-Executive Directors by $5,000 to $175,000 (an increase of 2.9%). This is the first increase in base fees since July 2011. Board Committee fees remained unchanged in FY16 except for a reduction in the fees paid to the independent Director on the Stockland Capital Partners Limited (SCPL) Board (reduced to $30,000 from $45,000), reflecting the reduced number of managed funds and workload. In FY17, in line with our prudent approach to remuneration, there will be no changes in the base fees for the Chairman and Non-Executive Directors or for Board Committee fees.




Corporate Balanced Scorecard

At Stockland, STI awards are dependent on Group, business unit and individual performance measures based on a Balanced Scorecard approach, which the Board uses to set financial and non-financial KPIs that are aligned to overall business strategy and priorities. The Corporate Balanced Scorecard is used by the Board to determine the size of the overall STI pool.

The Board’s assessment of performance against the Corporate Balanced Scorecard in FY16 is provided in the following table.

Performance Measure  Commentary Overall Rating
Business and Financial Performance (75%)
Underlying Profit Performance    
  • EPS growth target if 5% to 6% (27.4-27.6cps)
  • ROE of 93.5%-9.8% 
  • Actual underlying EPS growth was 7.3% to 27.8cps
  • ROE was 11.0%1
Above Target
Above Target
 Business Performance    
  • Operating business performance in line with plan  
 

Profitability of all business units was at or above plan:

  • Commercial Property profit of $524m was up on FY15 and in line with plan
  • Residential profit of $230m was well up on FY15 and significantly above plan
  • Retirement Living profit of $57m was up on FY15 and above plan
Above Target
  • Maintain conservative debt profile and remain within policy limits for gearing, interest cover, asset mix, credit rating and debt profile:
    • Credit Rating Maintain A- rating
    • Debt Maturity profile >5 Years
    • Liquidity Buffer 10% above committed and undrawn facilities
    • Gearing within range 20-30%
  •  Average Debt Maturity was over 5 years and A- Credit Rating was maintained, liquidity buffer increased, and gearing and interest cover were all within guidelines
On or Above Target
  • Deliver against Key Business Priorities 
  • Good progress
On or Above Target
Customer, Stakeholder and Sustainability Performance
  • Achieve independent customer satisfaction goals for each business unit
  • The customer satisfaction scores were above or at target for Commercial and Retirement Living but below target for Residential 
On Target
  • Embed sustainable business practices across Stockland and make good progress towards environment improvement goals
  • The Leading Global Real Estate firm in DJSI Sustainability Survey. Continued progress across our GHG measures and other sustainability targets 
On Target
 
Organisational Performance (25%)
   
 People Management    
  • Maintain employee-initiated turnover (employees rated good and above) to 12.0% or less
  • Turnover was 11.8%
On Target
  •  Achieve Employee Engagement target of 80%
  • Employee engagement score was 83% 
 Above Target
  • Maintain women as percentage of total management at 45% or better
  • Increase women as percentage of total senior management to 34.5% or better
  • Women in management was 45%
  • Women in senior management was 35%
 On Target
  • Progress longer term diversity and inclusiveness objectives
  • Good progress made including again being recognised as a WGEA Employer of Choice for Gender Equality
On Target
Operational Excellence & Risk Management     
  • Continued process improvement and enhanced innovation 
  • Good progress with introduction of Stockland Support Centre and commencement of Core Systems upgrade program
 On Target
  • Embed strong risk compliance and safety management practices 
  • Excellent safety record with no major preventable injuries, and with continued embedding of the risk and compliance framework
 On Target



Gender pay equity ratio

The limitation of measuring pay equity based solely on average Fixed Pay by job band is that it ignores different market values placed on different jobs. Stockland aims to achieve gender pay equity within roles by considering an individual’s positioning against the relevant market benchmark and comparing gender outcomes. This analysis is shown in the gender pay equity ratio table below. Our target is for a gender pay equity ratio of 100% plus or minus 3.0% across the company. This means that males and females would be paid the same for performing similar roles, with a small variance to allow for different levels of experience and other factors.



 FY16  FY15  FY14
 Stockland1
97.4%  97.2%  96.9%
1 A gender pay equity ratio that is less than 100% suggests that males are better positioned against market in comparison to females, whereas a gender pay equity ratio that is 100% or higher suggests that females are equally or better positioned against market in comparison to males.



Average fixed remuneration ratio by job band

The average fixed remuneration ratio looks at the ratio of the average female fixed pay to the average male fixed pay by job band. This does not necessarily measure whether Stockland pays males and females similar rates for the same role, as job bands cover a broad range of diverse roles. The ratios below in part reflect the under participation rates for females in management and certain job families where market benchmarks are higher.

 
Job Band FY16 FY15 FY14 FY13 FY12  FY11  FY10
Executive  0.59 0.60 N/A N/A
0.51 0.51 0.43 
Senior Management 1 0.85 0.93 0.89 0.88 0.85 0.83   0.78
Management 0.83 0.85 0.83 0.84 0.84 0.86   0.81
Employee / Professional technical 0.86 0.86 0.86 0.86 0.83 0.84   0.77
Stockland 2 0.64 0.66 0.65 0.64 0.64 0.63   0.57

1 Senior Management includes Senior Manager and General Manager job bands.
2 The ratio is a function of total pay and employee number by gender. Refer to page 44 for the breakdown of our workforce by gender. 




Executive remuneration

The table below outlines the cash remuneration that was received in relation to FY16 which includes Fixed Pay and the non-deferred portion of any FY16 short term incentives (STI). The table also includes the value of Deferred STI awards from FY14 and FY15, which vested during FY16 and long term incentives (LTI) awards from FY14 which vested during FY16.

Stockland Corporate Reporting 2016