Remuneration Committee - PDF
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Added on 2021-06-18
Remuneration Committee - PDF
Added on 2021-06-18
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Executive SummaryBHP has appropriately disclosed the remuneration disclosure needs in the annual report. From the annual report and the discussion, it is clear that the remuneration committee of the company was appropriate in nature and that it has catered to the requirements of the shareholders. The view has been backed up by the consultation of the shareholders. Further, the remuneration committee continues to strive for the outcome of the remuneration that reflects the performance.IntroductionThe remuneration part is one of the vital prospects of the company that determines the workforce stability. Compensation can be termed as a tricky game and in order to attract goodmanagement, it is the need of the hour. In this report, the major consideration is on the remuneration and remuneration committee of BHP Billiton. It is the main aim of the organization to offer competitive market awards and thereafter, ensure payment so that the most professional and quality rich individuals can be encouraged and motivated. Further, the company’s remuneration policy is framed in a way that ensures reward to people whose individual and collective contribution has resulted in the company’s achievement of organizational objectives ( Safari et. al, 2016). Nevertheless, the human resource committee of the company also plays a pivotal role in reviewing the remuneration outcomes and annual performances so that any contingencies can be avoided in the future.It is the duty of the board to ascertain the outcomes, as well as targets of the STI after an ascertainment is done for the external advice. The policy has been decided for all the employees in the company stressing on the external, as well as internal relativities. Further, it plays a leading role in the depiction of the individual and business performance that pertains to the current year. On the other when it comes to the perspective of fixed remuneration it is offered by BHP as cash and other benefits in terms of cash (BHP Billiton Ltd, 2017). In addition,these are assessed on a yearly basis by the company depending on the performance, expertise,and experience. Further, for every position, there is a remuneration that is fixed and needs to be delivered by the company where it operates.STIThe company’s remuneration for its executives and CEO consists of fixed and remuneration at-risk. It consists of three major components that are STI, LTI, and fixed remuneration. 1
Besides, the prevalence of at-risk segments is interrelated with the company’s performance incontrast to both non-financial and financial measures (Safari et. al, 2016).Short-term incentives- Both the CFO and the CEO of the company pursue a target STI that must be equivalent as their remuneration which remains fixed in nature. Further, the outcomes of such STI depict the executives’ performance through a balanced scorecard basis and overall company performance as well (BHP Billiton Ltd, 2017). Such outcomes are provided betwixt 0-150% of the CEO’s and executives’ STI depending upon their performance. The short term incentives must be based upon the performance that leads to a better projection of the compensation. Executives attain half of such payments as cash whereas the remaining remains deferred for one year. This helps in proper planning and growth and aims at attaining balanced structure.RecommendationSTI influences and sets the focus on the efforts of the CEO when it comes to the delivery of the strategic priorities of the group for the specific year and this helps the CEO to enhance theobjectives of the performance. It is thereby recommended that the company should choose the performance measures that are apt for the functioning. Moreover, the pay must be in connection with the policies of the organization because it will help in influencing the employee to work and aims at the results. Therefore, it is of utmost importance that the performance measures for each must be selected to have a huge short-term and long-term impact on the company. Going by the profile of BHP it can be commented that it has long-term focus in view and that must be aligned with the shareholders when the remuneration partis aligned with the objectives. BHP has effectively aligned its strategy with the remuneration part and hence, been able to attain a balanced structure.ConclusionIt shows the relationship between executive remuneration, their performances, and shareholders return value. BHP has effectively laid down a perfect compensation scheme thatprovides a balanced view and lead to long term benefits. From the overall discussion, it can be commented that the financial, as well as individual performance measures, rests upon the target and relative weightings. The CEO can enhance the performance with the remuneration part that will lead to wealth creation and builds a strong relationship with the organization. 2
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