Comparing executive remuneration disclosures worldwide
How does your country measure up when it comes to remuneration reporting? The Australian Accounting Standards Board (AASB) has published an interesting comparative review of executive remuneration disclosure requirements across nine jurisdictions, including Australia.
The research sought to understand requirements arising from local legislation and regulation, beyond the basic disclosures of the total remuneration of key management personnel required under the International Accounting Standard IAS 24 Related Party Disclosures (or its local equivalent). These cover areas such as governance framework, remuneration policies, the link between remuneration and performance, and the level of disaggregation in disclosures. The review also looked at whether disclosures are mandatory, where they are made, whether they are subject to assurance.
AASB found many similarities in disclosures by listed companies across the jurisdictions. All nine have mandatory disclosure requirements, the majority of which are embedded in company law or securities law, are legally enforceable, and are generally located outside the financial statements. It also observed a number of significant differences in the breadth and depth of the information required. Only two jurisdictions (Australia and Germany) currently require the disclosures to be audited, and only two (Australia and South Africa) require the remuneration information presented outside financial statements to be measured in accordance with the relevant accounting standards.
The review also looked at disclosures by not-for-profit and public-sector entities, it found standardised nationwide requirements in only four countries in each case, varying in their level of detail.
The research is intended as a basis for improving the quality and consistency of executive remuneration disclosures in Australia – but there are insights available for non-Australians too!