Reserve Bank of Australia Annual Report – 2013 Financial Statements Note 12 – Key Management Personnel

The key management personnel of the Reserve Bank are members of the Reserve Bank Board, members of the Payments System Board and senior staff who have responsibility for planning, directing and controlling the activities of the Bank. This group comprises the Governor and Deputy Governor, up to seven non-executive members of the Reserve Bank Board, up to six non-executive members of the Payments System Board and six Assistant Governors. No new positions were added to this group in 2012/13. A total of 21 individuals occupied these positions over the course of 2012/13, compared with 23 in 2011/12.

Remuneration of the Governor and Deputy Governor, and fees of non-executive members of the Reserve Bank Board and the Payments System Board, are governed by the Remuneration Tribunal. The positions of Governor and Deputy Governor are Principal Executive Offices (PEOs) within the jurisdiction of the Remuneration Tribunal. As the employing body of the Governor and Deputy Governor, the Reserve Bank Board sets their remuneration following a recommendation of the Remuneration Committee (comprising three non-executive directors). No adjustment was made to the remuneration of the Governor or Deputy Governor in 2012/13. Total remuneration (and salary) for these positions in 2012/13 was $986,773 (including salary of $842,285) and $700,000 (including salary of $593,782). These rates are consistent with those declared by the Remuneration Tribunal.

The Governor, in consultation with the Board Remuneration Committee, determines the remuneration of Assistant Governors. For staff generally, remuneration is market competitive and designed to attract and retain appropriately skilled people. Remuneration levels for employees are externally benchmarked.

The RBA discloses remuneration of directors, executives and management in terms of both AAS and the FMOs.

Disclosures under AAS

Under AAS, disclosure of remuneration of key management personnel is based on AASB 124 – Related Party Disclosures. The required disclosures are shown in Table A below. The figures are on an accruals basis and show the full cost to the Bank; they include all leave and all fringe benefit tax charges.

Under AASB 124, short-term benefits include cash salary and, where relevant for executives, lump sum payments, annual leave, motor vehicle benefits, car parking and health benefits and the fringe benefits tax paid or payable on these benefits. Post-employment benefits include superannuation benefits and, in the case of staff, health benefits. Other long-term benefits include long service leave. The reduction in short-term employee benefits reflects the effect of turnover in key management personnel in 2011/12. The reduction in other long-term benefits reflects leave taken and the revaluation of the provision for long service leave. In 2011/12, the high level of other long-term benefits reflected adjustments to the provision for long service leave arising from the appointments of the Deputy Governor and an Assistant Governor in that year.

There were no loans during 2012/13 and 2011/12 by the RBA to key management personnel.

There were no related party transactions with Board members or executives. Transactions with director-related entities which occurred in the normal course of the RBA's operations were conducted on terms no more favourable than similar transactions with other employees or customers; such transactions were incidental and for small amounts.

Disclosure under FMOs

The disclosures on remuneration required in terms of Division 23 of the FMOs are shown in Tables B to E below. Table B shows similar aggregates to those in Table A above which are based on AASB 124. The corresponding figures are lower in Table B because the FMOs require that non-executive directors be excluded from this Table (shown separately in Table E).

As required by the FMOs, the figures in Tables C and D below are on a cash basis. Any differences between figures in Table C for remuneration of the Governor and Deputy Governor and remuneration determined by the Remuneration Tribunal reflect that the FMOs require measurement of remuneration on a different basis from the Remuneration Tribunal. There was no increase to the gross salary paid to the Governor and Deputy Governor in 2012/13. The average adjustment to gross salary for other senior staff included in Table C was 3.8 per cent in 2012/13; these staff were eligible for lump sum performance-related payments in 2012/13 and 2011/12. The positions of Governor and Deputy Governor were not eligible for performance-related payments in 2012/13 and 2011/12. The figures for reportable salary in 2012/13 and 2011/12 include all salary sacrificed amounts.

Table D includes disclosures for RBA and NPA staff. The increase in the number of staff in 2013 in the remuneration bands ‘$180,000 to $209,999’, mainly reflects that normal salary increases resulted in more RBA staff being remunerated at a level above the reportable threshold; it does not reflect the creation of new management positions. The average salary increase for the group of RBA staff shown in Table D was 3.9 per cent in 2012/13. Lump sum performance-based payments and modest career increments were also paid to some individuals within this group. NPA staff are not employees of the RBA and are employed on terms and conditions determined by NPA. Lump sum performance-based payments are available to NPA staff.

Table E includes total remuneration received (or due and receivable) by non-executive directors who are members of the Reserve Bank Board, the Payments System Board and the NPA Board. Executives of the Reserve Bank who are non-executive directors of NPA are paid no fees as directors.