Analysis of companies’ 2014 annual reports for the 30 June reporting season has highlighted some interesting trends around remuneration.
According to a study of 33 company reports by remuneration consulting firm Egan Associates, board or executive fixed remuneration would remain static or rise by around three per cent in the majority of companies. In outlier cases, there were larger rises of 10 per cent.
On the issue of remuneration framework, the analysis said the songbook for this year reads “no significant changes”. However, when changes have been made they have been in the areas of establishing or increasing short-term incentive (STI) deferrals with decreases in long-term incentives (LTI) often facilitating these increases, in order to keep total reward stable.
Egan Associates found four cases where the board had used discretion to reduce an executive’s reward. There were also two cases where the board had used discretion in the executive’s favour to increase awards or provide the executive with a second chance to meet performance conditions.
Around two thirds of companies examined voluntarily disclosed an extra table noting what executives were actually paid. However, the contents of this table varied. The option that was comprised of fixed remuneration, STI cash earned during the year, STI deferred that vested during the year, and LTI that vested during the year proved the most popular.
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