In its first study of remuneration for senior super fund executives, start-up research firm Open Director has attempted to analyse correlations between fund performance and total executive pay packets. The good news is the highest paid tend to be among the best-performing funds. The bad news is that there are some outliers.
Open Director founder Donald Hellyer, who launched financial education and advice site Big Future in 2014, said that looking at the fund data, you’ll see that a lot of the people running big super funds are not as well remunerated as those in the private corporate sector.
For instance, the top paid fund executive, John Pearce, the CIO of UniSuper and one of the consistently best performers, is paid the same remuneration as the ‘managing director for wagering and media’ at Tabcorp – $1,728,817, in the year to June 2019.
The top four are all CIOs: Pearce, Mark Delaney at Aussie Super, Damien Graham at First State Super and Alison Tarditi at Commonwealth Superannuation Corporation (see tables here).
The top among chief executives is David Elia at HostPlus, with $1,185, 209, who receives more than Ian Silk, the chief executive of Australia’s largest fund. In fact, three people at Aussie Super are paid more than Silk: Delaney, Jason Peasley, the head of ‘mid risk’ and Peter Curtis, group executive of finance and operations.
“But some are paid a lot, even though their funds have not performed particularly well,” Hellyer said. Harry Mitchell at Mine Super was a recent example, drawing an estimated total pay of $919,000 including incentives.
Hellyer started the business studying ASX 300 companies for board and management performance and moved into super funds because that was an area of keen interest for him, he said. He pointed out that the correlations were not necessarily causal. Also, most CIOs are incentivised through their fund returns, while not all other executives are – including Ian Silk. Market returns therefore have an influence on CIO remuneration.
Hellyer admits that the total remuneration numbers are not easy to find. “A lot of information is not in their annual reports,” he says. “The only one that’s doing a good job on disclosure is QSuper. They get the gold star.”
ASX 300 companies, by comparison, tend to have better disclosure and are also more widely analysed by market participants, leading to more and better information for investors. Given the heightened interest in board and management diversity by big super funds and a lot of ASX 300 companies too, an interesting observation is the relative performance on boards of men versus women.
Hellyer seemed a little nervous to point this out: but women directors, at first glance, seem to underperform. That is, they are more represented on ASX 300 companies that underperform the market in terms of returns. This tends to fly in the face of all the evidence that greater board diversity is better for a company’s medium-long-term returns in both earnings and share price metrics.
“The thing is,” Hellyer said, showing why figures and their possible causal nature should be treated with caution, “women directors tend to be on multiple boards, especially as ASX 300 companies aim to broaden diversity. Women are more often on blue-chip companies, rather than the tech-orientated growth companies that have outperformed certainly in the past few years.”
Open Director (www.opendirector.com.au) is a subscription service. One of its first subscribers was the Australian Institute of Company Directors. Hellyer said he was also considering opening the company’s register to some extra shareholders to speed up the research firm’s growth prospects.
Before going out on his own, Hellyer spent more than 10 years at National Australia Bank, most recently, prior to leaving the bank in 2011, as global head of financial institutions, funds and insurance.
Greg Bright is publisher of Investor Strategy News (Australia)