EXECUTIVE COMPENSATION – Term Paper

Executive Summary

Nine Entertainments Co. Holdings Limited offers a comprehensive executive remuneration package comprising of fixed remuneration, short-term incentives, and long-term incentives. These packages are determined by the board of directors upon consultation with an independent, external remuneration consultant. The purpose of engaging the services of an external remuneration consultant is to ensure that the remuneration packages are in conformance with the applicable legislations such as the two- strike rule and that the packages are capable of promoting a positive relationship between the company’s executives and the shareholders.;;

Introduction

In many countries, the issue of executive compensation has been a very controversial one.; The controversy has widened over the years partly due to increased media scrutiny and decreasing corporate performance. Growing concerns about potential misuse of company resources in the form of excessive and uncontrolled executive compensation have triggered new corporate regulations in many countries (Matolcsy ; Wright 2011, p. 746). Australia is one of the several countries that have enacted laws to regulate executive remuneration in the publicly listed companies. In 2011, the country enacted the two-strike rule to help improve accountability in executive compensation. The aim of this paper is to explore the compensation packages of the executives of a publicly listed company in Australia. The paper will use theoretical frameworks to evaluate the structure and size of the company;s chief executive remuneration.

Analysis of Nine Entertainments Co. Holdings Limited Executive Remuneration;

Nine Entertainments has set a comprehensive remuneration framework for its key management personnel. The company defines key management personnel as individuals having responsibility and authority for controlling, planning and directing major activities of the company. These individuals include the chief executive officer, chief operating officer, group director in charge of sales and marketing, commercial director, and executive and non-executive directors among others. Under the company;s rules and regulations, the board sets remuneration levels of key management personnel in accordance with the aggregate pool limit as agreed by shareholders during the company;s annual general meetings. The company;s Board of Directors approves remuneration packages for the key management personnel following remuneration by the board;s Nominal Remuneration Committee (NRC). In order to determine optimal levels for executive compensation, the nominal remuneration committee engages the services of independent remuneration consultants. The consultants provide crucial information regarding latest trends in executive remuneration, policy development, emerging incentive programs and other crucial strategic pieces of advice (Nine Entertainment Co. Holdings Limited, 2015).

In terms of the structure, Nine Entertainment’s executive remuneration package (as per the 2015 remuneration report) consists of three components: fixed remuneration; short-term incentives and long-term incentives. The table below shows the size of each component as a percentage of total remuneration.