Looking at the financial statement of WH Smith, it can be seen that director's remuneration includes Basic Salary, Benefit, Bonus, Pension entitlements and Share option (WH Smith annual report, 2012). From 2009 until 2012, the profits of WH Smith shown consistent increases not only because of their successful business strategies, but also related to a good remuneration policy. From the remuneration report of WH Smith, it follows The UK Corporate Governance Code (2010) strictly and based on Companies Act 2006, the Large and Medium-Sized Companies and Group, because the remuneration committee received advice from some professional firms and establishes the remuneration policy with several regular meetings.
The board of WH Smith consists of seven members in total, which includes 4 non-executive directors and 3 executive directors. Walker Boyd is the chairman of the board and also a non-executive director, which is a member of the remuneration committee since February 2010 after the Robert Walker resignation. The Chief Executive Officer (CEO) of the company is Kate Swann. She joined the board in November 2003 and will step down as Chief Executive on 30 June 2013. Other members of the Board are in charge of different parts of company, but have worked as non-executive and executive not more than 10 years. This kind of composition avoids centralization of power, cliques and power struggles in an organization. In order to avoid breaking the Code and attract, retain and motivate directors, the Committee cooperates with FIT Remuneration Consultants LLP (‘FIT’) and an independent law firm and compile a reasonable remuneration policy.
4.1 Remuneration committee
According to UK Corporate Governance Code (2010), it is suggested that listed c...
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...ith strong share price and some of them will get the organisation with the worst conditions of company performance. This is when the corporate governance bringing the right direction for organisation making best practice in deciding executive remuneration to sufficiently attract and motivate, eventhough to reach the satisfactory result there is a long way to go, involves time and efforts. The executives' remuneration at WH Smith especially for CEO is considered appropriate because it does not rely on agency theory alone but also considered the guidelines of the UK Corporate Government Code (2010) which is to attract, retain and motivate directors. To support this argument, “high pay itself is not evidence of inefficient contracts but may simply reflect the market for CEOs and the pay necessary to attract, retain, and motivate talented individuals.” (Conyon, M. 2006)
The emergency rescue of the Royal Bank of Scotland in 2008 has cost the UK government thus the British taxpayer a huge amount of money. Many people are upset about the high bonuses the RBS management board have received, both because of the outrageously high amount and because the performance of the bank on the long-term was not good at all. According to the agency theory managers do not always act in the interest of the shareholder, but often act in the interest of themselves. The downfall of RBS could have been prevented if managers were not paid out a bonus based on their performance of one year, but rather a combination of a bonus based on their performance of multiple years and a bonus ...
Frydman, C., & Saks, R. E. (2010). Executive Compensation: A New View from a Long-Term Perspective, 1936-2005. Review Of Financial Studies, 23(5), 2099-2138.
In order to reinforce Telstra's value and culture. Telstra rewards directors' strong performance towards financial and strategic objectives. This creates long term shareholders. At risk remuneration is related to the performance of executives and is set via short term and long term incentive payments through cash and equity rewar...
Reasons being their job in an organization or a corporation is very crucial and not easy to replace. Due to this, companies often go to great lengths spending hundreds of thousands of dollars searching and recruiting for someone who is able to help their company grow in value and continue to be successful. In order to attract the best and highly skilled employees, companies cannot just focus on their salary offers anymore. Competitive hiring practices are now focusing on various compensation and benefit packages that will make potential employees favor them to other competitive companies (“Executive Benefits and Compensation”, 2016). Companies must offer benefits that will have a positive effect on the organization without being counterproductive, meaning offering benefits that employees will use appropriately and will consequently have a positive impact on their effectiveness at work. Some concerns about executive compensation include making business decisions in order to meet business goals under the premise of personal gain in order to receive their incentive (“Executive Benefits and Compensation”, 2016). In order to combat this concern companies should tie the employee’s incentives to the value of their firm
Executive compensation has come under increasing scrutiny in recent literature in the wake of the growing publicity surrounding managerial failures and executive self-interest. Financial experts have long been examining the problem of aligning the performance of executives with their salaries and benefits. Public discontent with the visible top-heaviness of the compensation structure has brought this issue into the spotlight throughout the business world. Experts point to the flaws of traditional payment schemes and offer a number of different solutions. Shareholder value and the success of the firm can be significantly affected by executive performance. Hence, understanding the advantages and costs of the current trends in executive compensation is crucial to the compensation committee of a Fortune 500 corporation.
Mr. Roger Thompson is Editor of the HBS Alumni Bulletin. In his article “Excessive Executive Pay:
Not only that but, believe that it is so awesome what Chief Executive Officer Amos, is allowing stockholders to vote on the pay package can include salary, bonus, stock options, and deferred compensation. There are not many top level managers that would put their livelihood in the hand of others. To me this speaks volumes about his leadership.
CEO compensation has been a heated debate for many years recently, and it can be argued that they are either overpaid or that there payment is justified by the amount of work they do and their performance. To answer the question about whether CEO compensation is justified it must be looked at by the utilitarian viewpoint where the good of many outweighs the good of one. It is true that many CEO’s are paid an exorbitant amount of money; however, their payment is justified by the amount of money that they bring back to the company and the shareholders. There are many factors that impact the pay that the CEO receives according to Shah et.al CEO compensation relies on more than just the performance of the CEO, there are a number of factors that play a rule in the compensation of the CEO including the fellow people who help govern the corporation (Board of Directors, Audit Committee), the size of the company, and the performance that the CEO accomplishes (2009). In this paper the focus will be on the performace aspect of the CEO.
It is concluded that neither of the above proposals are adequate in that any practical benefit that results from the proposal such as employee and shareholder engagement are outweighed by the theoretical impact of increasing the overlap of the organs which would alter the structure of company law. The legal side of directors’ remuneration appears to be sufficient with the directors’ duties legislation acting as an efficient preventative measure for the problems that directors’ remuneration creates. Furthermore, shareholders already must approve several payments as such this could be strengthened to tackle the issue and employees are to some extent taken care of within s172 as such it is these sections that need development rather than directors’ remuneration.
To accomplish these objectives, the Holland Enterprise will provide a compensation program that establishes and maintains competitive salary levels within the mark...
The company must have a clear statement of its policy for remunerating directors whether executive or non executive directors. This will make the work of remuneration committee very easy. The remuneration policy should be properly disclosed before the shareholders in the AGM for their approval.
Management spends a huge amount of time to design incentive systems and schemes to motivate their workers and to ensure they work in their best possible manner. Motivating workers by giving them decent pay helps in winning employees heart to make the work done efficiently, significantly and effectively. The most effective way to motivate people to work productively is through individual incentive compensation (Pfeffer, 1998). An attraction of getting more is a powerful incentive to people for high performance. While most people agree that money plays a major role in motivating people, in organizations there is a widespread belief that money may also have some undesirable effects on morale.
Remuneration management is defined as the sum received for an employment or service delivered, this includes the money received on a monthly basis as well as benefits given as rewards (investopedia,para.1 ). Individualism need to be taken into account when implementing these remuneration structures or reward schemes, equal pay plays a role in balancing earnings among the diverse workforce (Shen, Chanda, D’Neetto and Monga,2009,p.241). The Woolworth’s Holdings uphold remuneration policies which have the purpose of making sure to attract and hold on to the best talent, that they are congruent with the strategies of the company and are the determinants of performance during the short and long phases. The policy considers the board members and the employees. This policy manages employees of the company by giving...
The total pay package has a direct impact on the successful recruitment, selection and the retention of staff within any organization. This pay package is critical for any business to remain competitive in today’s business world. Competitive compensation packages are vital to both large and small organizations as they encourage the retention of talented staff.
In large organisation, competition is not only in the market for goods and services but also for the quality of employees. As such, a large organization can only become attractive to the most skilled and high quality workers if it has an effective compensation and benefit plan. The key purpose of an effective compensation and benefit system is to provide employees with the right rewards for their work and right behavior in the workplace. Typically, organizational success is determined by the quality of employees an organization has. In turn, the organization can only attract such quality workers and maintain them through effective compensation and benefit