Mercer ASEAN | Executive Remuneration Disclosure in Asia

Executive Remuneration Disclosure in Asia

Enhancing Corporate Governance In Asia Through Better Executive Remuneration Disclosure

In light of increased focus on executive pay practices, shareholders and regulators in Asia are demanding more comprehensive disclosure on the pay levels, compensation package designs, and performance assessments for key executives. This first article in our Executive Rewards & Performance Effectiveness Perspective series provided boards and management teams of Asian companies with six tips for enhancing their remuneration disclosures and, in doing so, satisfying or even going beyond their country’s corporate governance requirements.

Executive Remuneration Disclosures in Asia

In light of increased focus on executive pay practices, shareholders and regulators in Asia are demanding more comprehensive disclosure on the pay levels, compensation package designs, and performance assessments for key executives. The second article in our Executive Rewards & Performance Effectiveness Perspective series provided provides a comparative study of remuneration disclosure requirements across Asian jurisdictions and the steps necessary to become disclosure-ready.

The Role of Realized and Realizable Pay in Disclosure and Beyond

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.

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