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Remuneration policies: transparency in board and executive pay

Corporate remuneration, or the salaries of executives and the board, is a topic that is often buried deep within the annual report. However, stakeholders want this information clearly communicated on the corporate website – something very few companies do.

Corporate remuneration, or the salaries of executives and the board, is a topic that is often buried deep within the annual report. However, stakeholders want this information clearly communicated on the corporate website – something very few companies do.

Remuneration has been an increasingly interesting topic under the area of corporate governance. While there’s no doubt it is extremely important to the long-term financial performance of a corporation, it can also be a significant indication of corporate values – whereby mishandling or perceived negligence can pose risks to a company’s reputation.

Stakeholders share their views

This year’s Webranking shows that corporate remuneration is important to capital market stakeholders, as well as the labour market. However, these two stakeholder groups have different motivations regarding why this topic is significant.

The capital market

78% of capital market stakeholders stated a corporate remuneration policy was important to them. Bearing that in mind, only 7% of companies in the Webranking provide information on their corporate websites about remuneration for executives and only 11% provide information about remuneration for the board. This proves a significant gap between the information required by the capital market and what is provided by companies. This gap may also indicate to investors and analysts that the company has something to hide – which may lead to decreased trust.

The labour market

Jobseekers often consider executive remuneration a CSR issue, where excessive executive pay-outs could signify corporate irresponsibility and a lack of oversight. Working for a responsible company is one of the key areas candidates look for when determining a suitable employer. According to this year’s Career Survey, 56% of jobseekers want to know information about CSR, ethical stances and remuneration. Disclosing executive remuneration signifies to jobseekers that a company is a leader in progressive communication and compensation practices – while also building employee loyalty and a stronger corporate culture.

Looking for more ways to improve your corporate website? Download your free copy of the 2015-2016 Webranking Highlight Magazine. 

 

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