It often appears that the most closely scrutinised section of a listed company's Annual Report is not the disclosure of the company's profit or loss, but the Remuneration Report, which provides details of key executive compensation.
With growing attention from shareholders, proxy advisors, institutional investors, the media, and other stakeholders, the importance of Remuneration Reports has never been greater. This is reflected in their increasing length year after year. Given that directors and executives (Key Management Personnel or KMPs) are responsible for overseeing the company's operations and stewardship, stakeholders are keen to understand director and executive remuneration, how their conduct supports the achievement of the organisation's strategic objectives (including ESG goals), and whether their interests are aligned with those of shareholders, employees, customers, and broader society.
Producing effective remuneration reports is challenging
A clear and understandable Remuneration Report explains how KMPs are remunerated in the short, medium and long-term and links that remuneration back to the performance of the organisation.
This is challenging because the Remuneration Report is not only about compliance with relevant legislation, it is also a key communication tool between the organisation and its stakeholders. The report should tell the story of how the remuneration framework is structured, the remuneration outcomes achieved, and how these align with the creation of long-term sustainable value for shareholders and other key stakeholders. It should be forward-looking as well as reporting on what has occurred in the current year, while also balancing the privacy of individuals captured in the report.
Given the breadth of matters covered, preparing a Remuneration Report often involves multiple parts of the organisation. Human Resources and Finance are usually central to the process, but the Company Secretary, General Counsel, Investor Relations, and the Board or Remuneration Committee often have significant input. With competing priorities and perspectives, it can be easy to lose focus on the key statutory requirements that must be included in the Remuneration Report.
Key reporting requirements for statutory remuneration
KPMG's Insights into Remuneration Reporting Guide (3rd edition) considers key legislative requirements for preparing Remuneration Reports and highlights practical tips and better practice to help organisations produce clear and meaningful disclosures.
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Insights into Remuneration Reporting (Edition 3)
Support for preparers of Remuneration Reports for listed disclosing entities.
Insights into Remuneration Reporting – Executive summary for Directors
High-level overview providing a general understanding of Remuneration Reporting requirements.
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FAQs
A remuneration report must include detailed information about the compensation of KMPs, including executive directors and senior executives, as part of the organisation's KMP disclosure obligations under Australian legislation. Key disclosures typically include:
- Fixed and variable remuneration components, including salaries, bonuses, and non-monetary benefits.
- Share-based payment arrangements, including performance rights or stock options.
- Termination benefits and payments made upon resignation or retirement
- The link between performance and remuneration outcomes.
KPMG's Remuneration Reporting Guide provides practical guidance and examples to help you deliver disclosures that meet statutory and compliance requirements with clarity and accuracy.
Yes. KPMG's Remuneration Reporting Guide includes an illustrative example of a statutory remuneration table, with clear guidance on what types of remuneration should be included in each column and category.
Our comprehensive Guide goes beyond simply showing what a compliant table looks like. It explains – with practical examples – how common remuneration items are classified and measured for statutory reporting and KMP disclosure purposes in accordance with Australian Accounting Standards and Legislation.
The detailed remuneration report disclosure requirements are set out in s. 300A of the Corporations Act 2001 and Reg. 2M.3.03 of Corporations Regulations 2001. While this Guide is not a disclosure checklist, it brings these statutory requirements together in one practical, easy to navigate resource.
The Guide is designed to help you confidently prepare the Remuneration Report by clearly explaining the legislative requirements, translating them into practical insights, and highlighting better-practice approaches observed in the market. Through clear explanations and illustrative disclosures, the Guide will support you in producing a Remuneration Report that is not only compliant, but also clear, well-structured and meaningful for stakeholders.