Essay about Paying for Performance

Essay about Paying for Performance

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Table of Contents

Executive Summary 3
1.0 Introduction 4
1.1 How different Accounting Theories relate to real world scenarios? 5
1.2 Bonus plan hypothesis and executive remuneration 6
2.0 Company overview with Remuneration plans 7
2.1 Telstra Corporation Limited 7
2.2 Harvey Norman Holdings Limited 7
2.3 Remuneration plan and the contracting cost 8
3.0 Corporate Amendments and “Say on Pay” 9
3.1 Global Developments of Cooperation Amendments 11
3.2 Pay on Performance link and “First Strike” 11
3.3 Pay on Performance link and “Second Strike” 11
4.0 Conclusion 12
Bibliography 13

Executive Summary

This report is based on Pay and Performance links, and whether the respective components of the remuneration could be used to align the interests of the managers and also minimize the contracting cost of the organization. We have taken examples of annual reports from 2 different companies and have identified various incentives that are given to its respective executives.
Moreover we have generally argued the impact of “Say on Pay” and the “Two Strikes” to companies. Global development of corporation amendments and financial legislations has also been identified.

1.0 Introduction

In this highly competitive and complex business world, executive compensation and shareholder influence on decision making has been controversial. This has particularly become under public scanner and considerable media scrutiny with the start of the global financial crisis in 2008.
These reasons have lead many countries to introduce new financial and corporate amendments to restrict excessive compensation for CEOS and top management executives. The amendments include corporation amendments wh...

... middle of paper ...

...of Management Journal, vol.57, no.1, pp.94-115.
Mangen, C & Mangen, M 2012, ‘"Say on Pay'': A Wolf in Sheep's Clothing?’, Academy of Management Perspective, 1 May, Viewed on 20th April 2014,

Muir, J 2014, ‘Topic 6: Positive Accounting Theory’, ACC30001/ACC30008 Accounting Theory, Learning materials on Blackboard, Swinburne University of Technology, 09 April, viewed 19 April 2014.
Shin,J,Y & Seo, J 2010, ‘Less Pay and More Sensitivity? Institutional Investor Heterogeneity and CEO Pay’, Journal of Management, vol.37, no.6, pp. 1719-1746.
Telstra Corporation Limited 2013,, Viewed on 21st April 2014,

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