Across most Western jurisdictions (particularly the US, UK, Canada, and Australia), companies are increasingly disclosing "realized" or "realizable" executive pay levels to help tell their pay-for-performance story. Companies contend that these pay calculations provide more valid comparisons for performance than the compensation disclosure according to accounting standards, which may include amounts that executives will never receive. For most Asian companies, the issues of realized and realizable pay disclosures are probably a few years away. However, aligned with corporate governance best practices, it is likely that remuneration disclosures will evolve in this direction over time. This article discusses the reasons for using realized and realizable pay, how they differ from disclosure according to accounting standards, their growing credibility, and the advantages and disadvantages of using each. It also provides examples of how they are typically disclosed.
This article is the last in a series of three perspectives on executive remuneration disclosures in Asia. The first article in the series offered six tips for companies to enhance their executive remuneration disclosures, and the second article was a comparative overview of executive remuneration disclosure requirements across all Asian jurisdictions.
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