The increasing privatisation of listed companies is likely to impact benchmarking of executive pay given their disclosure requirements. This will particularly exacerbate the challenge of benchmarking executive pay within sectors that already have a limited number of broadly comparable listed peer organisations (especially for companies on less-deep exchanges like the ASX).
Listed company boards and superfund trustees should urgently complement the traditional position matching approach (same position title, same pay) adopted for executive pay benchmarking with a supplementary approach that has regard to the underlying complexities and size of the organisation and the individual position being benchmarked (aiming for a better “apples-for-apples” analysis). The framework should also robustly incorporate private, non-public executive pay data.
Whilst media scrutiny has historically been on pay quantum (especially of listed company executives), a deeper and more comprehensive pay-for-performance analysis would also offer additional insights. Listed company pay arrangements differ quite significantly from private company pay structures.
Listed company boards and superfund trustees are increasingly focussed on pay-for-performance considerations in respect of their investment portfolios and underlying investee/portfolio companies. This trend will continue as companies shift from public listing to private ownership. A more holistic benchmarking of executive pay, one that also incorporates a pay-for-performance lens, will mean more and more organisations (listed and private), and their owners, will realise the proactive value creation opportunities presented by executive pay.
We invite you to get in contact to discuss executive pay opportunities for your organisation.
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