Managerial Accounting: Remuneration Approaches

MANAGERIAL ACCOUNTING (REMUNERATION APPROACHES) 1
MANAGERIAL ACCOUNTING (REMUNERATION APPROACHES)
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MANAGERIAL ACCOUNTING (REMUNERATION APPROACHES) 2
Introduction
The main purpose of this paper is to analyze and compare methods of remuneration used
by Saracen Mineral Holdings and Newcrest Mining Ltd. In this report, an analysis of how well
the approaches of each company worked in encouraging higher performance by the executive
teams is given. In addition, this report considers whether or not this performance translated to
higher performance of the companies.
Remuneration Approach of Saracen Mineral Holdings
According to its 2017 financial year annual report, Saracen Mineral Holdings has a
remuneration target positioning which is set at the 50th percentile against the market. The
company’s STI is set at a maximum of twenty-five percent (25%) for its Chief Executive Officer
(CEO), and at forty-two percent (42%) for other Key Management Personnel (KMP) of the
company. The company achieved a hundred percent (100%) of its Long Term Incentive (LTI)
targets that had been set for the past three financial years (Saracen Mineral Holdings 2017, pp.
29).
The company mainly uses performance linked approaches of remuneration such as Long
Term Incentives and Short Term Incentives. For instance, in its Long Term Incentive
remuneration approach, Saracen Mineral Holdings rewards its executive employees and key
management personnel using performance payments and equity payments, for exceedingly
meeting their set targets and objectives. The company also uses other short term incentives such
as cash payments for remunerating its staff (Hilton & Platt 2013, pp. 23). These incentives are
meant for rewarding the key management personnel of the company in order to motivate them in