A boss of an ASX-listed insurer said the company plans to adopt a more transparent executive remuneration scheme, saying short termism can “pollute” incentive programs in the financial services sector.
IAG is currently reviewing its executive remuneration framework, following AMP’s announcement that it will overhaul its policies and scrap short-term bonuses for its senior executives.
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IAG chief executive
Peter Harmer said the old-fashioned approach to compensation no longer works, as he spoke on a panel at the Australian Securities and Investment Commission dinner.
“For me the jury is out on that – I’d be horrified if there was anyone in my team or anyone on their teams who would actually be motivated to do the right thing because of an incentive at the end of the year,” he said, as quoted by the Australian Financial Review.
“I think the basic remuneration frameworks aren’t really connected to the needs of today, of our people, of our customers, or of our regulators.”
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