Financial Accounting Issues: Executive Compensation at Commonwealth Bank of Australia

Running head: FINANCIAL ACCOUNTING ISSUES
Financial Accounting Issues
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1FINANCIAL ACCOUNTING ISSUES
Table of Contents
Introduction:...................................................................................................................................................2
Literature review:...........................................................................................................................................2
Discussion and analysis of the issue:.............................................................................................................3
Recommendation:..........................................................................................................................................4
Conclusion:....................................................................................................................................................5
Reference:......................................................................................................................................................7

2FINANCIAL ACCOUNTING ISSUES
Introduction:
There is a long standing debate that whether the remuneration has wide spread effect on
the corporate culture or not. For this purpose understanding the reward system of the top
personalities of a firm possess paramount importance. According to the (CBA Annual Report
2017, 2018), data regarding the remuneration of the business executives entails the auditors what
amount of return the board of directors expect from the trade-off between the various financial
metrics along with the other metrics like community, safety, environment and others. However,
it has also been observed that, if the incentive of the business executives has increased
exorbitantly, then it generally attracts rejection from the employee of the lower levels (O’Reilly
et al., 2014). As the practical instance of the same, case of the Commonwealth Bank of Australia
(CBA) can be considered that faced large amount of revolt during 2016.
CBA with the target to achieve higher transparency in the business and in the case of the
executive compensation enhanced the compensation of the business executives (CBA Annual
Report 2017, 2018). It attracted the revolt from the lower segment employee of the firm to roll
back the same in front of the force. Under this situation, this business report is aimed to research
and provide comprehensive analysis of the compensation package of the executives of the CBA
that took place during the 2016-2017 financial year. In addition to this the report is aimed to
provide recommendations to gauge the present situation and doing same it will provide a
summarized overview regarding the finding of the analysis.
Literature review:
According to the research of the Australian Human Resource Institute it can be seen that,
there are three components that determine the executive pay structure, which are short term
incentive, long term incentive and the fixed remuneration (Dyballa & Kraft, 2016). As the three