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Remuneration and Financial Performance

Executive Summary of Flexi Group Analysis

The purpose of the report is to evaluate remuneration and its relation to financial measures of the company. The Company taken is Flexi Group for the analysis and evaluation. Methodology used will be literature review of the remuneration packages of top management. And review of Company Remuneration report.

Introduction to Flexi Group Analysis

The Remuneration of higher management is generally always as matter of discussion, as they are directly responsible for the company’s financial performance are answerable to internal or external stakeholders. The report will discuss the points which can put highlight on the basis or key areas important for in deciding the remuneration of the Director or Top Management.

Literature Review: - Use of Financial Performance Measures

(Rita Ruparelia, 2016) Stated in her research that the requirement for controls to diminish the hazard is subsequently fast approaching and has prompted advancement of administration rules beginning with the Green bury Report of 1995 which concentrated on building up a harmony among pay and execution as a method of re-establishing investor confidence.

If a firm wants to possess a good, optimal, and therefore the best compensation structure, the primary issue that should be taken under consideration is “compensation for money performance”. It means that analysis of the CEO’s performance by comparing it with the worth creation for the shareholders of the firm. If we tend to contemplate that the shareholders square measure the homeowners of the corporate and one in all the salient parties within the neutral cluster, then it should be aligned with compensation of the CEO and firm’s monetary performance.. (Eklund, 2019)

(Dean Baker, 2019) , As per research, increasing chief operating officer pay isn't connected to increasing chief operating officer productivity. The explosion of get hold of CEOs of enormous companies isn't powerfully related to proof that these CEOs became much more productive and with increased ability to get returns to shareholders.

(Balnaves-James, 2015) Researched in his study and said that the outperformance contributes to more and more pronounced levels of financial gain difference. Subjective generation referents and benchmarking, combined with ineffectual regulative instruments, account for a lot of of this trend, despite public anger and media scrutiny

(Ozkan, 2007) In one of the studies it is find out that board size has a significant positive influence on executive compensation.

(Ahmad, 2018) This study used OLS regression to check the connection between variable quantity and variable quantity as mentioned within the section explaining the study methodology. the info comprised of 228 firms industrial and services. As this study Jordan makes an attempt to bridge the gap within the existing literature by investigation the association between nomination and remuneration committee and company money performance within the rising market of Jordan. The findings indicated a considerably positive relationship between the nomination and remuneration committee and therefore the company money performance. Finally, this study provides recommendations for future analysis.

(Gunasekarage, 2002) Findings of those studies reveal that rather than Associate in Nursing economical written agreement arrangement aiming constrictive agency prices and generating social control incentives, govt pay packets adopted by New zeland listed corporations tend to utilize money compensation as a main compensation mechanism that disconnects executives' personal wealth from corporations performance,

Most management studies attempt to perceive however the choices executives make have an effect on company performance. (CARTON; HOFER, 2006).

Company Review

Flexi group is a company with the various products started its consumer finance business in 1991 in Australia along with the Paper Print and fax machines. They are leaders in the business with huge experience of 30 years.

Flexi cluster could be a company with the varied merchandise started its shopper finance business in 1991 in Australia in conjunction with the Paper Print and fax machines. They’re leaders within the business with expertise of thirty years. Flexi cluster serve over two.1 million customers throughout Australia, New Zealand and Ireland and have designed success through a team of extremely engaged and high playing flexi group individuals, all bent creating a richer, fuller life cheap for everybody (https://www.flexigroup.com.au/about-us, n.d.)

Motivation is surely among one of the forces that results the performance of any human being and applies to business executives also. It is outlined because the need to attain a target or an explicit level of performance, resulting in purposeful behaviour. Motivation is vital element in overall performance but not the only factor. Maslow’s Hierarchy of Needs

Key Takeaways from Remuneration Report

(Remunartion Report, n.d.)

  • flexi group has not only identified the key indicator of performance to link the remuneration but also defined the approval process for these decisions. There are different levels e.g amendments to CEO’s salary has to approve by board.
  • Individual and cluster performance and incentivising transformational growth;
  • Recommendations from the cluster chief operating officer on remuneration arrangements the team of executives and market information (ASX) is analysed to match against contemporaries so which means West African and relevant call is taken.
  • Remuneration mixture of the Flexigroup is weighted towards variable half to confirm that there's important specialize in achieving the performance and transformational objectives.
  • Structure is CEO: 60% of the remuneration is performance based and 40% is based as performance right
  • Component of the Remuneration in FlexiGroup are divided in the Fixed, Long Term Incentive (LTI) and ( STI) Short Term incentive.

Group Board has also identified measures to link achieving the Group’s strategic objectives and increasing shareholder worth or value. Strict conduct hurdles were also in place to ensure that any performance was generated as the result of sustainable business practices , e.g Group Cash NPAT, Group Receivable , Cost to income ratio and ROE, Net Promoters Score all these are performance indicators to link the remuneration in flexi group. Corporate Group has 60% weightage and individual performance has 40% which emphasis team achievement and performance.

As per (https://www.payscale.com, n.d.), Average Salary of Flexi group Employees in Australia is AUD 81K.

Conclusion on Flexi Group Analysis

 With the above evaluation and remuneration report analysis, it can be concluded that though there are various researches conducted to establish the relation between Financial performance measures and Remuneration, but no concrete measure is available to link it, Because Top Management is not only responsible for the profit of the organization but also the overall growth of the company in many ways including Brand value creation in the initial years and long term strategies and for that if the company is into losses that doesn’t mean that management has failed. So, performance of management should be something which can motivate them and keep their spirit up to be the part of the growth of the organization as done in Case of Flexi group by linking the remuneration to key objectives and also providing long term incentives (LTI)

References for Flexi Group Analysis

(n.d.). Retrieved from https://www.payscale.com: https://www.payscale.com/research/AU/Employer=Flexigroup/Salary

(n.d.). Retrieved from https://saylordotorg.github.io/text_organizational-behavior-v1.1/s09-theories-of-motivation.html

(n.d.). Retrieved from https://www.flexigroup.com.au/about-us: https://www.flexigroup.com.au/about-us

Ahmad, M. (2018). Academy of Accounting and Financial Studies Journal .

Balnaves-James, A. (2015, June). The Ethics of Executive Compensation: A Matter of Duty. Retrieved from https://sevenpillarsinstitute.org/the-ethics-of-executive-compensation-a-matter-of-duty/

Dean Baker, J. B. (2019, June 4). Reining in CEO compensation and curbing the rise of inequality. Retrieved from https://www.epi.org/publication/reining-in-ceo-compensation-and-curbing-the-rise-of-inequality/

Eklund, M. A. (2019). Fairness of CEO Compensation. pp.39-65.

Gunasekarage, A. (2002). CEO COMPENSATION AND FIRM PERFORMANCE: A NEW ZEALAND INVESTIGATION. Retrieved from https://www.researchgate.net/publication/328718515_CEO_COMPENSATION_AND_FIRM_PERFORMANCE_A_NEW_ZEALAND_INVESTIGATION

Ozkan, N. (2007). CEO Compensation and Firm Performance. SSRN Electronic Journal .

Remunartion Report. (n.d.). Retrieved from https://investors.flexigroup.com.au/FormBuilder/_Resource/_module/7jG9ikYqmkOo8Txf6baoiQ/file/annual-reports/2019_annual_report.pdf

Rita Ruparelia, A. N. (2016). International Journal of Financial Research . Retrieved from https://pdfs.semanticscholar.org/fa87/216b1992d8cb087cb32e628cabac71847558.pdf

Team Clarizen. (n.d.). Retrieved August 15, 2020, from https://www.payscale.com/research/AU/Employer=Flexigroup/Salary: https://www.payscale.com/research/AU/Employer=Flexigroup/Salary

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