Analysis of Corporate Governance and Ethics at CIMIC Group

This report provides an analysis of the corporate governance and ethics practices of CIMIC Group, focusing on executive remuneration. It examines the compensation structures and key terms for the Executive Chairman, CEO, and Deputy CEO, as detailed in the company's annual report. The report discusses remuneration principles, performance-based incentives, and the roles of the Remuneration and Nomination Committee. It highlights specific remuneration details for Mr. Fernandez Verdes (Executive Chairman), Mr. Sharp (CEO), and the Deputy CEO, including termination clauses, bonuses, and the influence of environmental regulations. The report also references relevant sources to support its findings.

Running head: CORPORATE GOVERNANCE AND ETHICS
Corporate Governance and Ethics
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a. Executive Chair
A company’s details the key remuneration of different policies and practices. The
executive remuneration and the terms related to employment of the executive remuneration
and the terms of the executive key management are generally discussed in the Annual
Remuneration Report. Remuneration and Nomination Committee helps the Board who is
responsible organizing and reviewing the policies of remuneration that align the remuneration
of executives having a control of the long term interests of shareholders (Seipel 2015). The
Board had accepted Mr. Fernandez Verdes as an Executive Chairman of CIMIC. It is observed
from the Annual Report that he received his remuneration from HOCHITIEF AG. For the
previous three years, he has been receiving a remuneration of 518,124 in an average. The
Report also lays down a few remuneration principles. It helps to align with group principles and
business needs, links the performance to reward and helps in the promotion of the behavior
that delivers Group sustainability and aligns with the interests of the shareholders. An one-off
award of 1,200,000 SARs was granted to Mr. Fernandez Verdes in 2014. Any advisor provided
no recommendation on remuneration (Dai 2017). Mr. Fernandez did not receive any kind of
extra remuneration from the fee pool for carrying out his responsibilities as an Executive
Chairman. The average annual fees that are payable to the Directors are restricted to the highest
annual amount that are sanctioned by shareholders in the general meeting. Mr. Fernandez had
his key points for the ESA. HE stated that an annual allowance as a way of contributing to his
living expenses. He had also negotiated with his remuneration in the past few years for the exact
reasons and conditions. This was because he wanted to reflect alteration in his roles of both a
CEO and the Executive Chairman.
b. CEO
As the CEO of a the Executive Remuneration Report of CIMIC Group Limited in their
2017 Annual Report, Mr Sharp was an employee at the Reliance Worldwide Corporation. His
period was terminated without any cause. Mr. Fernandez terminated his employment with good
cause by giving a written notice period of 90 days allowing a subsequent. If he had terminated
his employment without any good cause then a written notice of 12 months (Berhad and S.T.M
2014). The remuneration structure of termination period depends on the termination of the
employment. He will be entitled to receive the amount before serving the written notice. A
notice of non-renewal was being produced by Mr. Sharp who was the CEO of the company had
produced since he was bound to collect his expected entitlements which did not include unpaid
performance bonus and health benefits. Incentives should also be granted to the CEO before his
termination. However, being the Managing Director of a company, the annual report of the

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company must show and state his grant amount. The remuneration of the CEO is determined at
the fair value of the consideration. Revenue is decreased for approximated returns of the
customer, rebates and other allowances (Seipel 2015). A cash flow statement is prepared to
showcase the revenue income of the CEO. Therefore, the remuneration is consulted with
advisors as to how and when to make the payment to the CEO of CIMIC Group Limited.
c. Deputy CEO
The Annual Report shows the details of the remuneration framework and governance of
the Deputy CEO. The duty of the Board is to believe in the prosperity and success of the
company, which entirely depends on the performance of the Managers and the employees. The
remuneration policies must be structured in a way that delivers positive benefits for the
employees. The calculations of the basic earnings per share are made on the performance of the
Deputy CEO. Similarly, just the way the CEO receives the remuneration, the Deputy CEO of the
company will be entitled to receive the same. Once the remuneration is received by the Deputy
CEO, he will be liable to pay the income tax expense that contains deferred tax expense. Income
tax includes both current and deferred. The performance of the Deputy CEO was also measured
in the CIMIC Group (Bazin 2015). The environmental regulation and performance also affects
the work of the employees as well as managers. Financial statement of the remuneration of the
Deputy CEO is also recorded in the books of the company. The Annual Report of remuneration
is made every year on March 31. The Constitution of the Company gives that the Company may
identify any present or former Director, Secretary or executive officer of the Company or of a
subsidiary of the Company. Out of the property of the company, it exists against every liability
incurred by an individual depending on whether civil, criminal, administrative nature, in which
the individual usually gets involved due to the capacity.

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References:
Bazin, Y., 2015. On the issue of stability of wall street CEOs, while hoping for cultural changes in
the financial sector. Society and Business Review, 10(1), pp.91-98.
Berhad, S.T.M., 2014. Corporate Profile. Online: http://www. airasia.
com/ot/en/about-us/corporate-profile. page (Stand 15.06. 2014).
Dai, M., 2017. 48. Audit Risk Research-The CIMIC Group As An Example. Boletín Técnico, ISSN:
0376-723X, 55(9).
Seipel, M., 2015. Defective Design: Checking Executive Compensation by Empowering the
Worker.