Management Accounting Remuneration Report (Audited)

Question: Discuss about the Management Accounting for Remuneration Report (Audited). Answer: Introduction The remuneration report for the period of 1st July 2015 to 30th June 2016 is needed to be presented within a specific time. The Company, Amaysim Australia Limited, has requested the Directors to allow such remuneration report to be broadcasted. The report includes the description of the Key Management Personnel (KMP) who ought to take the responsibility of planning, directing, and controlling the management functionalities of Amaysim. In fact, these personnel have the full authority on the internal management activities. This personnel panel includes the Executive Director, Non-Executive Directors, and other Senior Executive Directors. This particular panel of the directors is considered as the Executive KMP. The report is formulated by maintaining the section 300A of the Corporations Act 2001. The directors are instructed to follow such act in order to present a structure remuneration report considering the proper regulation. The associated data in this report is observed through the proper auditing process verified by the section 308(3C) under the Corporations Act. The major sections included in this report are as follows: Remuneration Governance Key management Personnel Plans for Legacy Equity Executive Remuneration policy and structure Remuneration of Executive Statutory Fees of the Non-Executive Directors The remuneration outcomes of Executive KMP for FY16 Agreements for Executive employment Disclosures for additional requirements Key Management Personnel The KMP of Amaysim during the financial year of 2016 is listed below in a tabular form. Executive KMP Julian Ogrin Chief Executive Officer and Executive Director Full Year Leanne Wolski Chief Financial Officer Full Year Julian Dell Chief Operations Officer Part year appointed KMP 15 October 2015 Andrew Balint Chief Commercial Officer Part year appointed KMP 15 October 2015 Remuneration Report 1) In 14th July, 2015, Rolf Hansen was the Executive Director and eventually he became a Non-Executive Director on listing Date. 2) In the year of 2015, Peter OConnell was selected as an Executive director and later he was appointed as a Non-Executive Director. 3) Julian Dell was an IT Executive at Amaysim and became the Chief Operations Officer there. 4) Andrew Balint was the Marketing Executive Director at Amaysim and later was appointed as one of the Chief Commercial Officer. Remuneration Governance The Committee of Nomination and Remuneration The Committee of Remuneration and Nomination was formulated before listing the report. The committee was involved to review and present preferable recommendations to the Board members. The recommendations are based on the following considerations: The recommendations include the succession of the planning process executed by the Executive KMP and Board of Directors. The aggregate fee pool and the fees of the Non-Executive Directors are needed to be recommended. The recommendations will include the equity-based incentives and the remuneration arrangements of the Executive KMP. It is required to present the recommendation regarding the remuneration, recruitment, retention, termination, and other policies associated with the company. The annual assessment based on the performance parameter of the Board members and the KMP Executives will be recommended. The recommendation will include the complete assessment of the skills, competition, and the size of Board panel. Remuneration Consultants The committee sometimes need to take the advice and assistance from the external remuneration consultants by considering the provisions of Committees charter. Such recommendations should be free from all influences of the Executives. Hence, these eternal consultants directly communicate with the committee members. However, it was seen that during the FY16, there are no such recommendations provided to the committee by the external consultants. It was noted that Mercer Australia was aligned with Committee for providing the proper remuneration report and market data related to the fees of directors. This remuneration framework structures the STI and LTI plans before listing up the proper report. However, it was observed that during FY16, the remuneration framework advice was not required. Remuneration Hedging The provision of Corporations Act refers that the employees and the KMP of Amaysim are completely excluded from the hedging unvested equity based remuneration. This prohibition rule is clearly mentioned in the Security policy, Remuneration Policy, and the Trading policy included in the website of the Company. The Structure and Policy of the Executive Remuneration The company is much focused on recruiting and retaining the skilled people of the organisation. In order to achieve such determined objectives, the required talents are listed further. Vision and Strategy of the Company: Amaysim Group is considered as one of the leading mobile service providers in Australia. The company is much committed to provide the quality services, competitive products, and the remarkable customer service experiences. The company has been considering the dual brand strategy and product diversification into a fixed broadband. With the help of such strategic implementation, the company will be able target a wide range of the market. It is even helpful enough in considering the growth of the profitable subscribers and creating the shareholders value. Reward Strategy: Amaysim believes in efficient performance skills. Therefore, the company is much committed to attract and retain the skilled associates including the senior management. Hence, the company needs to reward the skilled people in order to achieve the determined objectives. Amaysim has implemented the reward strategy for the Executive KMP and it initiates the opportunities for providing the competitively positioned remuneration. The remuneration framework for the Executives highlights the risk components. For instance, STI is focusing on the performance of the Executives that is associated with the customers experiences. On the other hand, LTI is suggesting the EPS Compound Annual Growth Rate (CAGR) for providing values to the Executives performance. Remuneration Framework of Executive KMP Some of the fixed and variable remuneration is structured further: Fixed Remuneration Superannuation Base Salary Non-Monetary Benefits (Structured positioning for the competitive market) Variable at risk remuneration STI Cash Delivery Measurement of the Annual performance is based on the financial and non-financial KPI. LTI Optional delivery Awards are based on the EPS growth performance measurement Over three, four, and five year performance period, the measurement process takes place. Remuneration Mix The remuneration chart will be including the remuneration mix of the Executives performance measurement. The fizzed remuneration indicates the contractual amount invested for FY16. The description of the fixed remuneration is provided further: Fixed Remuneration It is to be indicated that the fixed remuneration is associated with base salary, non-monetary benefits, and superannuation. It is even required to ensure the competitive position that is relative to the current market. Following factors are needed to be taken into account during the implementation of the fixed remuneration The skills and the experience of the executives Performance of the individual Labour market conditions Size and complexity of the role Measuring performance and scheduling vests The compound annual growth rate of EPS target is measured over three, four, and five year performance period. The awards are based on the achievements of such target. The underlying profits and loss are needed to be calculated to set the proper target. The associated EPS is considered as the key financial metric of the business strategy. The Board usually determines the KMP interests in order to create the long term value. The maintenance of the long-term sustainability is necessary. The structured outline of the LTI award percentage is presented further: EPS CAGR over the performance period Vesting % Less than 80% of target EPS CAGR Nil Equal to 80% of target EPS CAGR 50% Between 80% and 100% of target EPS CAGR Straight line vesting between 50% and 75% Equal to 100% of target EPS CAGR 75% Between 100% and 125% of target EPS CAGR Straight line vesting between 75% and 100% Equal to or greater than 125% of target EPS CAGR 100% Forfeiture and Termination The unvested LTI awards will lapse during the event of dismissal or resignation. However, the Board needs to determine the absolute discretion. It is noted that the pro-rated unvested options is somewhat associated with vesting condition and performance measurement. The pro-rata based portion is generally based on the fixed time that has been ensured for unvested LTI awards. If the directors opinions indicate any of the fraudulent or dishonest activities of any candidate, the LTI awards will be lapsed automatically. Hence, monitoring the exact criteria to achieve LTI awards is essential. Changing controls In the absolute discretion, the Board will determine the elimination of the unvested LTI awards. Such initiatives will be considered as the changing controls of the powers.