An increasing number of boards are coming under fire from investors and the media over their remuneration policies.
Some experts feel that in order to ensure that the remuneration policy is above criticism, a broad range of issues from strategy to stakeholder expectations need to be considered and addressed. Alongside, peer practice, internal relativities and corporate objectives require detailed examination as well.
Hay Group, a leading organisation and human resources management consultancy firm, is launching a comprehensive study on top executive compensation practices in the Asia Pacific.
Starting May, the Hay Group study will cover more than 500 companies with either market capitalisation or revenue of at least $750 million in India, Australia, China, Hong Kong, Indonesia, Malaysia, Singapore, Thailand and New Zealand.
In India, the study is expected to cover the analysis of top executive pay in over 100 companies. Hay Group has completed the study of top executive pay in Europe which analyzed the pay of 1,656 executives in 203 listed companies across 13 European countries.
In India, the study will focus on how executive pay is decided, the structure of base salaries and bonuses, service contracts, executive benefits, long term and annual incentive plans and the role and remuneration of non-executive directors.
The study in India will be spearheaded by Richard Bednarek, director, Executive Compensation, Hay Group and is expected to be completed by the end of 2005.
According to Bednarek, "Companies should regularly review whether they are still benchmarking against the most appropriate markets. Hay Group does not advocate following market practice slavishly but it is important for companies to be aware of the pay practices of the others against whom they will be benchmarked. If a company is deviating from the common market practice, it must be able to explain and justify the divergence from common practice."
Companies now have to formulate and manage executive pay policy against a background of conflicting pressures that are changing faster than ever before. In response, experts feel that they must undertake frequent reviews of their executive remuneration policies to ensure they remain appropriate, justifiable and competitive.
"A failure to do so may lead, at best, to embarrassment for the remuneration committee and, at worst, to the use of a policy that actively conflicts with the company's business needs", Manon Gerritsen, HIS Country Manager, Hay Group, said. © 2005 agencyfaqs!