Comparative Analysis of Remuneration Methods of Saracen Mineral Holdings and Newcrest Mining Ltd

MANAGERIAL ACCOUNTING 1
MANAGERIAL ACCOUNTING
By (Name)
Name of the Course
Professor
Name of University
City and State
Date

MANAGERIAL ACCOUNTING 2
Executive Summary
Recently, Australian public companies have been required to provide details regarding
remuneration of their senior executive teams and how the remuneration is determined. Every
board of any company which is public is mandated to establish a remuneration committee that
generally comprises of at least two members who are executive, from the board of the company,
and a chairperson. The remuneration committee has a primary role of determining and approving
the approaches as well as amount of remuneration awarded to the company’s executive team.
This includes the base salary and other benefits, the calculation approach as well as limits that
surround the Short-Term Incentives awarded, and the approach of calculating the Long-Term
Incentives as well.
The remuneration scheme details are published in the Remuneration Report within a
Company’s Annual Report and then voted on by shareholders at the AGM. If the remuneration is
voted down by a number of stockholders exceeding 25%, the Board must consider revising the
remuneration plan. If the shareholders still reject the revised plan, the position of the Board is
considered not acceptable to shareholders and must therefore resign from their positions.
For purpose of this assignment, two major publicly listed Australian corporations are
selected and their academic literature reviewed on methods used to evaluate executive
performance and the level of success that is considered to occur from using such methods both
from a shareholder return perspective and a management motivational perspective. These
companies are Saracen Mineral Holdings and Newcrest Mining Ltd.

MANAGERIAL ACCOUNTING 3
Introduction
The paper is mainly purposed for analyzing and comparing methods of remuneration
used by Saracen Mineral Holdings Limited 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. The paper focusses on performance and
remuneration measures for the two companies.
Company Review
a. Remuneration Committee and Its Membership
In accordance with the Saracen Mineral Holdings Limited 2018 annual report of, the
company’s remuneration committee for the financial year 2018 was composed of the following
directors and members:
i. Geoffrey Clifford (Non-Executive Chairman)
ii. Raleigh Finlayson (Managing Director-Executive)
iii. Mark Connelly (Non-Executive Director)
iv. Martin Reed (Non-Executive Director)
v. Samantha Tough
vi. Roric Smith
The company’s Key Management Personnel (KMP) for the year were:
i. Craig Bradshaw
ii. Gerard (Gerry) Kaczmarek

MANAGERIAL ACCOUNTING 4
iii. Morgan Ball
iv. Daniel Howe
v. William (Troy) Irvin
According to the 2018 annual report of Newcrest Mining Ltd, the company had the
following directors in its remuneration committee:
i. Sandeep Biswas, CEO.
ii. Gerard Bond, CFO.
iii. Melanie Allibon, EGM.
iv. Craig Jetson, EGM.
v. Craig Jones, EGM.
vi. Ian Kemish, EGM.
vii. Francesca Lee, EGM.
viii. Michael Nossal, CDO.
ix. Philip Stephenson, EGM.
x. Bonikro, EGM.
b. Allocation of Executive Remuneration (Fixed pay/STIs/LTIs)
For Saracen Mineral Holdings Limited, the base or fixed salary for the Managing
Director and other executives for financial year 2018 was $700,000. The maximum STI that
could be received by the Executive during financial year 2018 ranged between 25% and 40% of
Total Fixed Remuneration and the maximum LTI was 40% of TFR. The TFR consists of base
pay and benefits, which include superannuation. The STI includes cash payments which are a