Managerial Accounting: Remuneration and Company Performance

This managerial accounting report comprehensively analyzes the remuneration schemes of SEEK Ltd and its competitor, Fairfax Media Ltd. It examines the structure of the remuneration committees, membership changes, and the alignment of remuneration strategies with company performance. The study delves into the components of executive remuneration, including fixed pay, short-term incentives, and long-term incentive plans, and assesses the mix of performance dimensions utilized. It explores the relationship between remuneration and company performance, utilizing financial performance measures such as EPS, ROI, and ROE, alongside dividend growth analysis. The report compares the financial performance of both companies, offering insights into the impact of remuneration on shareholder value and overall financial health. The report calculates and analyzes the dividend growth rate and EPS of the two firms. The report concludes with recommendations supported by academic literature, suggesting enhancements to reporting processes and performance dimensions.

Running head: MANAGERIAL ACCOUNTING
Managerial Accounting
University Name
Student Name
Authors’ Note

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Introduction
The current study elucidates illustratively remuneration scheme with special reference to the
operations of the firm SEEK. Seek Limited s well as its subsidiary companies, referred to as
the Seek Group, concentrate on helping the match between particularly jobseekers along with
employment chances and assisting hirers get candidates for different roles. This study
presents structure of remuneration committee along with its memberships and delivers
critically analysis of remuneration. This can help in understanding the way approach of the
company helped in inspiring higher performance by particularly the executive team and take
into account if this can be translated to superior performance of the company. Again, analysis
of allocation executive remuneration is also presented for the SEEK that takes in fixed pay,
short term incentive plan as well as the long term incentive plan. The research also explicates
with reference to the operations of the firm SEEK the mix of performance dimensions used.
Particularly, this can again be utilized to take into account the use of financial performance
dimensions as well as non –financial performance dimensions. Moreover, this study also
reports about any kind of alterations in the executive remuneration report of the firm SEEK.
Moving further, the study effectively presents the recommendations supported by the
academic literature on the subject matter under consideration. Also, the study also explains
the way the company might perhaps enhance the process of reporting or else broaden their
performance dimensions.
Summary of findings
Remuneration Committee and its memberships of the firm SEEK
Analysis of the annual report of the firm “SEEK” reveals the fact that objective of the
remuneration framework of the firm is to attract and to same time retain different talented
executives and keep them in line to build long term value of shareholders (Hooghiemstra et

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al. 2017). Evaluation of annual report of the firm reflects the list of key management
personnel that include a list of non-executive directors, executive directors as well as key
management personnel. The list of key members is hereby presented below:
The changes in the remuneration committee can be observed by way of thorough analysis as
presented in the annual pronouncements of the corporation (Scholtz and Engelbrecht 2015). It
can be hereby witnessed that John Armstrong essentially resigned as the chief executive
officer (CEO) of the group during the year 2016 particularly in the role of consultant to the
entire group CFO helping with the transition to the new group. The company SEEK declared
the appointment of Geoff Roberts as the CEO of the group. The remuneration of Geoff is
divulged for the period 2015. Jason Lenga also ceased to operate as managing director and
stayed employed until the period July 2016 as Special Advisor, delivering strategic services
on worldwide business as well as corporate issues. Meahen Callaghan also resigned as
Director of Human Resource Group.
Remuneration Committee and its memberships of the competitor firm Fairfax Media
Ltd

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The remuneration arrangement of the entire Fairfax Media is as per the regulations of Key
Management Personnel that is presented according to the Corporations Act of the year 2001
(Bian 2016). The composition of the competitor firm is as presented below:
Remuneration strategy of the main firm SEEK
Remuneration strategy of the firm is aligned to the purpose as well as vision of the company.
Essentially, 50% of executive remuneration is necessarily in cash as base salary as well as
superannuation (Cassim and Madlela 2017). In essence, this is established at specific levels
that attract the people to operate in different market conditions as well as economic cycles
(Riaz et al. 2015). Primarily, 50% of executive remuneration is particularly in equity, having
25% in rights for equity and 25% in LTI options. The components of LTI has essentially
three year vesting period and is particularly locked up for particularly 12 months. Executives
are in essence subject to minimum necessity of shareholding. Given the emphasis on mainly

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equity in the remuneration of equity and limitations on disposal on mainly equity, executives
mainly concentrate on enhancing value of shareholders.
Remuneration strategy of the competitor firm Fairfax Media Ltd
The framework for executive remuneration contains a mix of different fixed as well as
performance based elements. Essentially, this framework concentrates on alignment of
remuneration with attainment of strategy of business and generating shareholder value
(Taylor and Richardson 2014). Therefore, it can be hereby mentioned that there is fixed
package of remuneration and a performance based package of incentive similar to that of the
firm SEEK Ltd. Essentially, the board of the corporation takes into consideration the fact that
considerably fraction of remuneration is at risk and is associated to short as well as long term
business strategy as well as performance (Ahmed et al. 2015). In essence, executive KMP
necessarily have an utmost incentive opportunity of approximately 200% of the entire fixed
remuneration. In essence, this reflects the fact 67% of the entire remuneration is necessarily
at risk. The table presented below shows KMP remuneration mix as presented below:

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Relationship between remuneration and performance of the company SEEK
The remuneration strategy of the firm can be compared to the performance of the company.
Analysis of remuneration methods utilized
Use of financial performance measures such as EPS/ROI/ROE
The total remuneration provided by SEEK Ltd comprises of executive package base salary,
equity rights, long term incentive option as well as superannuation. Base salary as well as

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superannuation for executives of the company SEEK is established at 50% of total
remuneration (Riaz 2016).
Executive Remuneration of the company SEEK contains two different elements:
- First is necessarily the fixed amount and it is the same in all market conditions. In essence,
this specific amount takes in certain locked up equity amount. However, there particularly no
short term incentives with intricate formulae (Duckett and Romanes 2016). Again, the second
part consists of long term incentive scheme that delivers return to executives in case if
absolute amount of wealth of shareholders is considerably increased.

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Composition of Remuneration of CEO consists of the following segments:
There is essentially 8% enhancement in overall remuneration based on the year financial year
2016.
Company Performance: (SEEK Ltd)
The segments presented below shows the way outcomes of remuneration can be aligned to
performance of the company SEEK. The performance of the company for the year 2016 is
presented in the table below:
The remuneration strategy of the company concentrates on maintaining long term rate of
growth in the value of the shareholder(Safari et al. 2016).
Company performance of the competitor firm Fairfax Media Ltd is hereby presented below:

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Analysis of financial highlights
Calculation of dividend growth for the past three years
SEEK Ltd
Dividend per share (Growth)
Year % change
2012 17.3
2013 22 27.16763006
2014 30 36.36363636
2015 36 20
2016 40 11.11111111
Dividend growth rate 23.66059438

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The above table and graph shows that dividend growth rate for the past 5 years are recorded
to be approximately 23%.
The table below shows the calculation of the dividend growth rate of the competitor firm Fair
fax Media Ltd:
Dividend per share
(Growth)
Fairfax Media Ltd % change
2015 0.06
2016 0.05 -16.66666667
2017 0.05 0
-8.333333333
Calculation of the Basic EPS of the main firm, SEEK Ltd is hereby presented below:
SEEK Ltd EPS % change
2015 0.8
2016 1.02 27.5
2017 0.97 -4.901960784
Growth Rate 11.29901961

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The table below shows the calculation of EPS growth rate of the competitor firm Fairfax
Media Ltd for the past three years:
EPS Growth
Fairfax Media Ltd
% change
2015 -0.38
2016 0.04 -110.5263158
2017 0.02 -50
Growth Rate -80.26315789
EPS dividend growth rate and remuneration of the main firm and the competitor firm
The EPS reflects an increase in rate of growth and that stands at around 11%. Also, the
dividend growth rate stands at approximately 23%. However, in line with this level of
performance of the firm, the remuneration of the firm’s CEO has also improved by around
8%.
The table below shows return on equity and return on invested capital of the main firm SEEK
and that of the competitor firm Fairfax Media Ltd
Return on Equity
SEEK
2015 2016 2017
Net Income 281 357 340
Total Invested Capital 1134 1355 1481
Ratio 24.77954145 26.34686347 22.95746117

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Fairfax Media Ltd
2015 2016 2017
Net Income 83 -893 84
Total Invested Capital 1946 911 843
Ratio 4.265159301 -98.02414929 9.964412811
Return on Invested Capital
SEEK
Net Income- Dividend 281 357 340
Debt +Equity 2118 2178 2449
13.26723324 16.39118457 13.88321764
Fairfax Media Ltd
Net Income- Dividend 83 -893 84
Debt +Equity 2228 2180 1083
Ratio 3.725314183 -40.96330275 7.756232687
Analysis of financial performance using the dimensions of return on equity, return on
invested capital of both the firms (Duong and Evans 2015).
Based on the calculations presented above, it can be hereby said that return on equity of the
main firm has decreased during the period of 2017. The same is recorded to be 24.77 in 2015,
26.34 in the year 2016 and 22.95 in the year 2017. The return on equity of the firm increased
during the period 2016 as compared to the period 2015 whereas the same declined during
2017 in comparison to the previous year period. Similarly, return on invested capital of the