Magellan has capped the annual pay of its chief executive Hamish Douglass at $7.5 million.
In a statement to the ASX, Magellan Financial Group announced that Mr Douglass’ remuneration structure had been revised.
Under the new Executive Employment Agreement, which kicked in on 1 July for a three-year period, Mr Douglass’ fixed remuneration is at $2.5 million inclusive of superannuation.
Prior to the new agreement, it was an “amount which was calculated as a percentage of 1.5 per cent of the average 3 year pre-tax profits of the funds management business,” the statement said.
Additionally, his variable remuneration has been brought up from 100 per cent to 200 per cent of his fixed remuneration.
This means the most Mr Douglass can earn in a year is $7.5 million for the next three years, “compared with no cap previously”.
“The revised remuneration structure more fully aligns Mr Douglass’ compensation with the interests of clients in the global equity strategy,” the statement said.
It added that the Magellan’s board of directors considers the new remuneration structure to be “fair” and “in the interests of both clients in the global equity strategy and shareholders of the company”.
According to the statement, Mr Douglass’ new fixed remuneration has been “substantially lowered” and more of his total remuneration is “at risk” by the 100 per cent increase in the variable remuneration.
“The revised structure … is expected to reduce the total remuneration payable and also caps the total remuneration amount for the next three years.”
At the end of March, Magellan tore up its three-year sponsorship deal with Cricket Australia following admissions of cheating by captain Steve Smith and vice captain David Warner.