Director Remuneration - 3629 Words

Company Law Assignment â€Å"The global financial crisis in late 2007 and in 2008 increased public disquiet about the high level of executive remuneration† Lipton Herzberg p 316. Outline the laws, rules and principles governing payment and disclosure of remuneration to directors and senior executives in Australia. Explain how and why this is important in corporate governance. Compare the Australian provisions with those in other countries. Introduction: The remuneration of company directors and executives is a subject which has attracted substantial interest from shareholders, business groups, press and at the same time invoked public fury since the commencement of the economic crisis . There has been a great deal of debate†¦show more content†¦It should be noted that public companies have more stringent disclosure and reporting requirements than private companies. The Act plays a significant role in controlling disclosure through remuneration report and voting on remuneration for listed companies. Moreover, the Act also has provisions relating to the role, responsibilities and structure of boards and termination payments. Under the Act, the managing director is appointed by the board of directors and the composition of the managing director’s remuneration package is also decided by the board of directors. The disclosure of executive remuneration helps in reassuring investors that the board is negotiating with executives at ‘arm’s length’ which means that all documentation, terms and other arrangements associated with the transaction are as if they would be had an external unrelated party been involved in the transaction. The disclosure of remuneration packages makes the investors aware about the incentives being laid down for the executives, which in turn could assist them assess the company’s prospects and risk profile, such that the share price more accurately signals the market’s assessment of the stream of expected profits. Thus, an increase in confidence of investors and the proper disclosure of all the relevant information would be beneficial to the company and hence would result in greater market efficiency. According to OECD’sShow MoreRelatedExecutive Compensation Is A Controversial Issue1379 Words   |  6 PagesAccording to business dictionary (2014), Corporate Governance means â€Å"the framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company s relationship with its all stakeholders (financiers, customers, management, employees, government, and the community)†. Executive compensation contains the salary, bonuses, welfare, allowance and so on. It plays an important role in Corporate Governance. After reading some news about shareholders andRead MoreThe Us And Australian Corporate Backgrounds1285 Words   |  6 Pages Schultz et al. (2013) note that board of directors are normally both smaller and have a lower fraction of non-executive directors. Thus, many small resources companies listed on ASX are interested in hiring directors based on their skills and experience rather than their independence (Sc hultz et al., 2013 and ASX, 2009). However, despite the fact boards of directors in Australian companies are characterized by a larger share of non-independent directors and the frequency with which the CEO alsoRead MoreA Report On The Remuneration Committee Essay1266 Words   |  6 PagesIII. 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(a) Executive Remuneration ââ€"  Fixed Remuneration The fixed remuneration is set for attracting, motivating and retaining highly skilledRead MoreOrganizational Description Background And Industry1521 Words   |  7 Pagesshareholders where shareholders elect board members to represent the shareholders’ and their interests through continuous and effective monitoring by the board of directors (Telstra.com.au, 2015). Moreover, the board directors nominate the Chief Executive Officer (CEO). However, with the traditional nomination and renomination process in place, directors can be co-opted by the CEO, which compromises their ability to monitor effectively (Campbell et al., 2012). Although the Agency theory is founded on the basisRead MoreData Analysis Project Example1174 Words   |  5 Pagesfirms’ data and internal control information from the financial year of 2007 to 2015, which include one dependent variable, which is audit fees and two main independent variables, including the percentage of non-executive director and total amount of remuneration of board director. There are also four control variables, which are total assets, current ratio, earnings before interest and tax and the number of subsidiaries respectively. Due to the reason that there are some data missed in 85 research