How the executives are having performance measured

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Reference no: EM131808906

Assignment Task

Specification

Group Report: How do Australian Public Companies measure and reward the performance of its executive teams?

The Boards of Australian public companies are under an obligation to hire the best executives to run their companies. To attract the best executives, they have to offer competitive salaries and to motivate performance offer bonus schemes for outstanding performance. Short Term Bonuses (STIs) are designed to reward achievement of various levels of success usually year by year basis and also seeking to balance that with achieving long-term earnings for the shareholders with Long-Term Bonuses (LTIs).

How do companies measure and reward performance of their executive team?

Over the past decade publicly listed companies have been required to report in more detail, how their highest paid executives are being rewarded. This became enshrined in the Corporations Act 2010 in Section 300A which details what declarations are required.

If 25% or more of ordinary shareholders vote against the remuneration proposed by the Board, then that Board is obliged to reconsider their proposal. If again rejected in the following year, it is suggested that the Board should resign their positions to allow a vote for new candidates to take place. (This is not binding on a Company in Australia however if they ignored the will of the shareholders, then it is likely that investors would leave and the value of the shares would fall.

Some of the executive performance measurement information used by the Remuneration Committees of the Boards of public companies is from the Financial Accounting records however given the specific nature of each industry, much of the information required is produced by the Management Accountants in these companies.

In addition, over the past two years, quite a few companies have had a „first strike? (where more than 25% of shareholders have voted against the remuneration policy presented and have demanded more „objective? measurements of performance. This often indicates a swing? back to more financial measures as some non-financial measures have been considered too subjective or are rewarding the executive team with excessive bonuses for simply „doing their job?.

Task:

The group is to review the literature available (30% of your report mark) on executive pay and remuneration and present the arguments for using either financial and/or non-financial measures of performance AND explore the research on the motivational effects of different remuneration/executive pay measures.

Then, READ the Remuneration Report of an Australian Publicly Listed Company (Company will be allocated) 2017 ONLY. This review must be specific to this company and in detail, not simply a reporting of the amounts paid to the top executives as follows:

1. Summarise the Remuneration Report of the 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.

2. 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?

3. From media reports (analysts, commentators, journalists and regulators (ASX, ASIC, ACCC and ATO etc.) 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

1. 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.

2. 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.

3. 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.

4. Analyse whether you believe the company has an effective remuneration scheme from both the perspective of the return to shareholders AND the motivational impact on the executive team. Support your findings with reference to the literature you researched.

5. From your analysis, present some recommendations that you believe could improve the remuneration methods of the company studied. Given we are not experts in any of these industries, you should base these recommendations ON THE LITERATURE 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?

Verified Expert

This assignment was prepared on the topic company of Westpac Bank as it was given by the student. The remuneration report of the bank for 2017 was downloaded and analysed for the purpose of this paper. All the requirements were fulfilled. There was two set of requirements, one were the task requirements and the other was group report requirements. Both has been addressed and the referencing has been done in Harvard Angelia style along with the in-text.

Reference no: EM131808906

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Reviews

len1808906

1/11/2018 1:35:51 AM

Many articles you will find will be several pages long – this is quite normal for academic research papers as they are required to explain in detail the research methodology and results. These details are necessary to support and validate the findings. Do not let this concern you, as, for the purposes of your research for this, and most other assessment tasks, you do not need to read the detail about the research methodology and results. What you need to find out is the purpose of the research: what question they are trying to answer; any context considerations; the findings – i.e. the answer to the question; and any comments about future directions or the application of the findings

len1808906

1/11/2018 1:35:42 AM

Remember, you are looking for additional academic articles and information to support your Report. You should try to find current articles written between 2010 and 2017. Earlier articles may be OK but you need to think as to whether they are still relevant given today?s circumstances and they MUST BE AVAILABLE I you are to quote them in your Bibliography. Finding articles: 1. Type the term into the Library database or EBSCO 2. Add a second search term such as “Shareholder Value” if you don?t get any results 3. Still no results that you can use? Try to use a different term that means the same thing.

len1808906

1/11/2018 1:35:27 AM

Summary The written report component will be marked and then scaled to a mark out of 20 subject marks. While a group mark will be awarded, each student must be able to show evidence of their contribution to the overall success of the group?s efforts and submission. The presentation will be made in weeks 10-12 in tutorials and each students will be given and individual score which will be scaled to a mark out of 10 subject marks. 3. Referencing: Referencing is required. Ensure that you fully reference ALL material that is directly copied and enclose direct quotations appropriately with full references. Also ensure you have referenced and cited all ideas, words or other intellectual property from other sources used in the completion of your assignment.

len1808906

1/11/2018 1:35:09 AM

Conclusion – Here NO NEW IDEAS should be introduced. Only a conclusion of your findings and perhaps your group?s nomination of which company has the best remuneration system and what your group believes can be learned from the report and the method of remunerating manager?s in organisations. i.e. „Remind? the reader, why you undertook the report (no – not because you HAD TO DO IT!) and the purpose of remuneration systems. It should LINK with the Introduction! Bibliography – Full Harvard Anglia referencing should be undertaken for this report.

len1808906

1/11/2018 1:35:01 AM

Summary of findings – Bring together the findings of the group members about the company and a discussion about how effective (or ineffective) the company?s remuneration program appears to be in improving company performance. Analysis of remuneration methods used – Ensure you consider how well the company?s approach worked in encouraging higher performance by the executive team and consider if this translated to higher COMPANY PERFORMANCE. (Note it may be difficult to separate executive performance from overall company performance – say by considering the share price – as other market and industry factors may also influence share price.) Recommendations – present any recommendations you may have, SUPPORTED BY THE LITERATURE, on how the companies may improve the reporting or broaden their performance measures.

len1808906

1/11/2018 1:34:55 AM

Review of Topic and review of Literature – Present a summary of the literature researched on the topic of executive performance evaluation and remuneration in public companies. Creating this section allows your group to develop your knowledge on the topic to enable a better-informed consideration of the individual company?s remuneration reports. Include a discussion on the effectiveness of control systems within companies, in particular focussing on management/executive performance and reward systems. Company review – This includes the investigative report answering the questions about the remuneration report as required in the task requirements above.

len1808906

1/11/2018 1:34:48 AM

Executive summary – This is a ONE PAGE review of ALL of the report. This should be a stand-alone document which could be read by the CEO (for example) to find out what the report was about AND what was found in conclusion. Introduction – This is an introduction TO THE REPORT NOT an introduction to the specific companies being studied. It introduces WHY the report exists, what it is examining (see the topic and tasks notes above for guidance) and how it is laid out. (Include a short summary of the aims and scope of the report in this section.)

len1808906

1/11/2018 1:34:42 AM

To help you understand how to go about evaluating the Remuneration Report, I have posted an academic article by Clarkson, P., Lammerts Van Bueren, A. and Walker, J. (2006) Chief executive officer remuneration disclosure quality: corporate responses to an evolving disclosure environment Accounting and Finance, 46, pp. 771-796. Please note that you do NOT have to summarise this article (or even read all of it), however please see Table 5 on page 785 to and review the 10 items this study looked at to review the openness of the reporting of each company. YOU MAY FIND IT VERY USEFUL TO MAKE A TABLE USING THESE 1O POINTS AS A STARTING POINT TO REVIEW YOUR COMPANY?S REMUNERATION REPORT! Headings and layout questions often arise and for this report, it is suggested the following headings would make the work more readable:

len1808906

1/11/2018 1:34:32 AM

I have an assignment of 3500-4000 words. I want this assignment within next tuesday. It is a very complicated assignment. You need to read out the whole assignment description. There is no chance of mistake because it is a 30% assignment. Please find the articles from EBSCOHOST. If you want i can give you access to it. This section has been provided to assist and guide students in creating your report, the things that may be useful to include, more detail on how marks will be awarded and tips on working in groups.

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