Reference no: EM132823855

All public companies in Australia are required to provide shareholders with details of how they assess performance and allow shareholders to vote for or against their remuneration plans. Although these reports only usually cover the Key Management Personnel (e.g., the 'top' Executive Managers such as the CEO and CFO), they are designed to align the manager's rewards with performance aligned with shareholder interests. Companies have the majority of their short-term performance measures focused on financial measures linked to 'profit' however some companies link up to half of managers' short-term incentives to other non-financial measures of performance.

Problem 1: Explain why it is important for non-financial measures to be included in these performance measurement systems for both 'top' managers and other executive managers within an organisation. Include at least two examples of non-financial performance measures that may be linked to operational targets and explain the application of such measures may improve control within an organisation for the benefit of shareholders.