ACC702 Managerial Accounting | Remuneration System Comparison
Questions:
Tasks:
The group is to review the Remuneration Report of Australian Publicly Listed Companies from the same industry. If there are three members in a group, then you will investigate and report on three companies and if four in a group, then four companies are to be covered.
For each company:
- Summarise the Remuneration Report of each company including details of what performance measures are used and in particular report on the use of benchmarking and ‘scorecards’ and the use of any non-financial measures.
- From the Remuneration Reports investigate and review as many aspects of the methods used. For example, can you gather many details about the measures used? Do you think that the shareholders are very well informed on the measures used?
- From media reports (analysts, commentators, journalists and regulators investigate whether there has been any public discussion about the remuneration of the relevant executives and if so, consider whether you believe their remuneration systems are considered ‘successful’.
The Group report requirements
- The overall report should begin with a review of relevant academic journal articles focussing on measuring executive performance. Please ensure you apply what you find to the methods used by each of the companies you review.
- Present the findings of each of the companies’ remuneration report, focusing in particular on the use of STIs and LTIs. Compare the explanatory information given in each of the Annual Reports and how each company approaches their remuneration strategies.
- Create a Summary of Findings, perhaps using tables to compare the approaches used for each company. (To help with the summary, it is strongly suggested that you use the same sub-headings for each individual company so it is much easier to compare findings and it will improve the readability of your report as a cohesive and coordinated group submission.)
- Analyse which company you believe has the most thorough and complete performance measurement and remuneration scheme. Support your findings with reference to the literature you researched.
- From your analysis, present some recommendations that you believe could improve the remuneration methods of any of the companies studied. Given we are not experts in any of these industries, you should base these recommendations researched. You could also consider the level of communication and detail given in their annual reports, i.e. is it satisfactory and is it transparent enough for shareholders to determine how the executives are having their performance measured?
Answers:
Introduction:
This report has been prepared to represent the remuneration system. This report has been prepared to analyze the companies’ remuneration system and how the remuneration of mangers makes an impact over the other aspects of the company. This report has been done after analyzing over the 3 companies remuneration plan. A depth research has been done over the AGL, Santos and Origin limited. This research is conducted to analyze the remuneration strategy of different companies and different impact of this different strategy has been analyzed so that the perfect one could be discussed.
The main aim of this report is to analyze the remuneration strategy and method to analyze the best method of remuneration. The scope of this report is to find out the best strategy of remuneration for the companies to remunerate their and executives in terms of monetary and non monetary remuneration to motivate them to enhance the growth of the company and make better decisions for the growth of the company. Remuneration of and executives are always decided by the shareholder of the company.
Literature review:
Executive’s remunerations are always based upon the performance of theirs. A study depict that the more an executive would perform positively the more remuneration could be get by that executive. In public companies, the remunerations are given according to the stakeholders of the company (Haynes, Thompson and Wright, 2007). In annual meeting, shareholders decide the remuneration of the executives but in most of the cases, shareholders are not even informed properly about the remuneration and and executives themselves decide about the remuneration. Remuneration is of 2 types: monetary and non-monetary. In monetary remunerations, remunerations are given in the form of money whereas in non-monetary remunerations, remunerations are given except the money form such as promotions, shares, bonds etc (Hill, 2006).
The performances of executives are considered according to their performance in the current year (Ferrarini and Moloney, 2005). Performance could be measured according to the growth of the company, market share of the company, diversification and expansion of the company, competitive analysis of the company, strength of the company, captured opportunities of the company etc. remunerations are provided to the executives, , CFO etc to motivate them, retain them and uses their high potential for the favor of the company (Bruce, Buck and Main, 2005).
Balance scoreboard is a metric which is used to identify the performance of an executive in a company (Kulich et al, 2011). This is the metric of day by day performance which is used to analyze that how well performance has been given by the director in a year and the performance is also compared from the last year performance and according to it the remuneration of an executive is calculated. Bench marking is the total payment a company has done to an executive. Benchmarking remuneration includes all the payment, incentives, allowances etc of an executive (Productivity Commission, 2009). STI is known as short term incentives which are offered to the executives according to their performance for a short period. LTI i.e. long term investments are offered to an executive for their continuous great performance (Hill, 2006). Financial and non financial rewards are given to the executives and CEO and CFO to retain them for a long time in the business.
Company review:
AGL:
(This company has been allotted to Arslan Naseer Butt, 11501146)
AGL energy remuneration strategy has been studied and it has been found that the company is offering the best of the remuneration in the form of monetary as well as non monetary terms to keep the executives for a long time in the organization. Company is giving STI, LTI, shares, bonds etc to the executives according to their performance.
Origin:
(This company has been allotted to Student Id – 11600240, Student Name - Rashmi Vaidya)
Origin energy remuneration strategy has been studied and it has been found that the company is offering the remuneration according to the market in the form of monetary terms to keep the executives for a long time in the organization. Company is giving STI, LTI, insurance etc to the executives according to their performance.
Santos:
(This company has been allotted to Student Id – 11600756, Student Name - Purushottam Pahadee)
Santos remuneration strategy has been studied and it has been found that the company is offering competetive remuneration in the form of monetary as well as non monetary terms to keep the executives for a long time in the organization. Company is giving STI, LTI, shares, incentives, expenses, insurance etc to the executives according to their performance.
Remuneration System Comparison:
AGL:
AGL remuneration policies have been analyzed through its annual reports and it has been analyzed that what policies are followed by the company to pay remuneration to its CEO, CFO and other executive members. The chairman message depict that 2016 remunerations would be given to the executives after the acceptance of the shareholders. The remuneration has been provided to the executives and managers for their performance and for retaining them for a long time in the company. The STI objectives of AGL is to expanded the team and enhance the objectives of individual (AGL, 2016). The LTI objectives of AGL are to achieve the goal and implement the strategy.
Market competitive return has been offered by the AGL to its executives so that the talent could be retained and successive pipeline could be build by organization. The below picture of AGL annual reports depict about the executive of the company. This depict that how many executive are in the company and how mush share they have in the company and by what time they are in the company and are they for part time executive post or for full time executive post.
(AGL, 2016)
In 2016, company has enjoyed an 11% increment in profits in comparison of 2015 profits. The below picture depict about the remuneration highlights of AGL. This picture is depicting that company is offering a fixed remuneration, ling term remuneration, short term remuneration and AGL share purchase plan for the executive who has achieved their target as well as who has performed well in the financial year (AGL, 2015). These highlights depict that when an executive becomes eligible for the remunerations in the AGL.
(AGL, 2016)
The below picture depicts about the benchmarking of AGL energy. This depicts that how much remuneration could be earned by an executive and how the total amount earned by the executive would be calculated.
(AGL, 2016)
The below picture depicts the total amount earned by the executives of the company. This depicts that how much amount of cash, LTI, STI, shares has been earned by the executive in 2015. Through the annual reports of 2015 it has been analyzed that the current remuneration is quite higher than last year remunerations.
This picture is depicting about the whole remuneration of executives. This depicts that how much total amount has been paid to the executive in financial year 2016 and financial year 2015. This depict that the remuneration has been enhanced in 2016 due to higher profits and a great performance of the executives.
(AGL, 2016)
Thus after analyzing the annual report of AGL of 2015 and 2016, it has been found that the balance scoreboards are prepared by the company to analyze the performance of every executive director. It has been found that company is offering STI as well as LTI to the The bench marking of the company depict that monetary as well as non monetary remuneration are given by the company to the executives. In non financial terms, shares and bonds are issued by the company for the executives. The remuneration polices of the company are quite attractive and the remunerations are offered by the company to retain the talent for the long time so the competitive remunerations are offered by the company to its executive members.
Origin:
Origin energy remuneration policies have been analyzed through its annual reports and it has been analyzed that what policies are followed by the company to pay remuneration to its CEO, CFO and other executive members. The remuneration has been provided to the executives and managers for their performance and for retaining them for a long time in the company. The STI objectives of Origin is to expanded the team and enhance the objectives of individual (origin, 2015). The LTI objectives of Origin are to achieve the goal and implement the strategy.
Market competitive return has been offered by the Origin to its executives so that the talent could be retained and successive pipeline could be build by organization. The below picture of Origin annual reports depict about the executive of the company. This depict that how many executive are in the company and how mush share they have in the company and by what time they are in the company and are they for part time executive post or for full time executive post.
(Origin, 2016)
The below picture of origin annual report depict about the LTR of the company which is offered to the executives. This depicts that how much % of remuneration would be offered to the executives as long term remuneration. This depict that an executive could earn maximum 70% remuneration as long term remuneration.
(Origin, 2016)
This picture is depicting about the whole remuneration of executives. This depicts that how much total amount has been paid to the executive in financial year 2016 and financial year 2015. This depict that the remuneration has been deducted in 2016 due to lower profits and a bad market condition.
This picture is depicting about the whole remuneration of executives. This depicts that how much total amount has been paid to the executive in financial year 2016 and financial year 2015. The higher remunerations have been gained by the executive due to a great profit and remuneration policies of the company.
(Origin, 2016)
This table depicts the full disclosure of remunerations to the shareholders. The table of full remunerations of the origin is as follows:
Thus after analyzing the annual report of origin of 2015 and 2016, it has been found that the balance scoreboards are prepared by the company to analyze the performance of every executive director. It has been found that company is offering STI as well as LTI to the . The company has disclosed all the remunerations offered by the executives in detail to its shareholders. This depict that the company did not hide anything from the shareholders about the remunerations. The remuneration polices of the company are quite attractive and the remunerations are offered by the company to retain the talent for the long time so the competitive remunerations are offered by the company to its executive members.
Santos:
Santos group remuneration policies have been analyzed through its annual reports and it has been analyzed that what policies are followed by the company to pay remuneration to its CEO, CFO and other executive members. The remuneration has been provided to the executives and managers for their performance and for retaining them for a long time in the company. The STI objectives of Santos is to expanded the team and enhance the objectives of individual. The LTI objectives of Santos are to achieve the goal and implement the strategy.
A good remuneration has been offered by company to its executives so that the talent could be retained and successive pipeline could be build by organization. The below picture depicts the total amount earned by the executives of the company. This depicts that how much amount of cash, LTI, STI, shares has been earned by the executive in 2015. Through the annual reports of 2015 it has been analyzed that the current remuneration is quite higher than last year remunerations.
(Santos, 2016)
The below picture depict about the remuneration highlights of Santos. This picture is depicting that company is offering a fixed remuneration, ling term remuneration, short term remuneration and share purchase plan for the executive who has achieved their target as well as who has performed well in the financial year. These highlights depict that when an executive becomes eligible for the remunerations in the Santos group.
(Santos, 2016)
This table depicts the full disclosure of remunerations to the shareholders. The table of full remunerations of the Santos is as follows:
(Santos, 2016)
Thus after analyzing the annual report of Santos of 2015 and 2016, it has been found that the balance scoreboards are prepared by the company to analyze the performance of every executive director. It has been found that company is offering STI as well as LTI to the . The company has disclosed all the remunerations offered by the executives in detail to its shareholders. This depict that the company did not hide anything from the shareholders about the remunerations. The remuneration polices of the company are quite attractive and the remunerations are offered by the company to retain the talent for the long time so the competitive remunerations are offered by the company to its executive members.
Findings:
Through the annual report of all the three companies it has been found that all of the three companies are paying the best of the remunerations to its executive to retain them for a long time in the organization. It has been found that companies are offering STI as well as LTI to the . The company has disclosed all the remunerations offered by the executives in detail to its shareholders. This depict that the companies did not hide anything from the shareholders about the remunerations. The remuneration polices of the companies are quite attractive and the remunerations are offered by the companies to retain the talent for the long time so the competitive remunerations are offered by the company to its executive members.
Remuneration Methods used:
The executive’s performance has been analyzed through the share pried of the company and dividend offered to the shareholders of the company. Remuneration tools are basically of 6 types i.e. salary, STI, LTI, employee benefits, insurance and paid expenses. These are the basic ways through which the remunerations are given to the executive for being in the organization for a longer period. In AGL, salary, STI and LTI methods has been used to remunerate the executives. In Origin, salary, STI, expenses, employee benefits and LTI methods has been used to remunerate the executives. In Santos, salary, STI, insurance, employee benefits and LTI methods has been used to remunerate the executives.
Recommendations:
All the companies are performing very well and offering a great dividend to its executives. But it is recommended to the AGL to disclose all the remuneration activities properly in the annual reports so that stakeholders could make a better decision whereas Origin energy limited is suggested to offer an audit view too about the remuneration in the annual report. The Santos is recommended to follow a proper AASB to depict the remuneration figures in the annual report.
Conclusion:
Thus it could be concluded that all the companies discussed above are performing very well and offering a great remunerations to its executive . All the remunerations tools are used by the companies very well i.e. salary, STI, LTI, employee benefits, insurance and paid expenses. The executive’s performance has been analyzed through the share pried of the company and dividend offered to the shareholders of the company. Thus it could be said that the remunerations are the utmost element to keep the talent for the long time in the organization.
References:
AGL. 2016. Retrieved from https://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_AGK.AX_2016.pdf Accessed on 16 May 2017
AGL. 2017. Retrieved from https://www.agl.com.au/about-agl. Accessed on 16 May 2017
Bruce, A., Buck, T. and Main, B.G., 2005. Top executive remuneration: A view from Europe. Journal of Management Studies, 42(7), pp.1493-1506.
Ferrarini, G. and Moloney, N., 2005. Executive remuneration in the EU: the context for reform. Oxford Review of Economic Policy, 21(2), pp.304-323.
Haynes, M., Thompson, S. and Wright, M., 2007. Executive remuneration and corporate divestment: Motivating managers to make unpalatable decisions. Journal of Business Finance & Accounting, 34(5?6), pp.792-818.
Hill, J.G., 2006. Regulating executive remuneration: International developments in the post-scandal era. Eur. Company L., 3, p.64.
Kulich, C., Trojanowski, G., Ryan, M.K., Alexander Haslam, S. and Renneboog, L.D., 2011. Who gets the carrot and who gets the stick? Evidence of gender disparities in executive remuneration. Strategic Management Journal, 32(3), pp.301-321.
Origin Energy. 2015. Retrieved from https://www.originenergy.com.au/about/investors-media/reports-and-results/shareholder-review-annual-report-20150918.html Accessed on 16 May 2017
Origin energy. 2016. Retrieved from https://www.originenergy.com.au/content/dam/origin/about/investors-media/FY16%20%20Report.pdf Accessed on 16 May 2017
Productivity Commission, 2009. Executive remuneration in Australia. Inquiry Reports.
Santos. 2015. Retrieved from https://www.santos.com/media/3310/2015_annual_report.pdf Accessed on 16 May 2017
Santos. 2016. Retrieved from https://www.santos.com/media/3525/san675_annualreport2016_fa3_low-res_.pdf Accessed on 16 May 2017
Buy ACC702 Managerial Accounting | Remuneration System Comparison Answers Online
Talk to our expert to get the help with ACC702 Managerial Accounting | Remuneration System Comparison Answers to complete your assessment on time and boost your grades now
The main aim/motive of the management assignment help services is to get connect with a greater number of students, and effectively help, and support them in getting completing their assignments the students also get find this a wonderful opportunity where they could effectively learn more about their topics, as the experts also have the best team members with them in which all the members effectively support each other to get complete their diploma assignments. They complete the assessments of the students in an appropriate manner and deliver them back to the students before the due date of the assignment so that the students could timely submit this, and can score higher marks. The experts of the assignment help services at urgenthomework.com are so much skilled, capable, talented, and experienced in their field of programming homework help writing assignments, so, for this, they can effectively write the best economics assignment help services.
