A remuneration report is a document that describes payments made to a company’s executives and board of directors. Publicly held companies commonly include it in quarterly and annual reports. Information detailed on the remuneration report can include gross salaries, details on benefits, and information on stock options. While these are merely figures, more detailed information may be included in explanatory paragraphs. The information typically informs shareholders and stakeholders about the state of remuneration for individuals in the company.
Gross salaries can be the simplest figure included in a remuneration report. Each executive or board of directors member has his or her gross salary listed next to his or her name. In some cases, a short history for remuneration may be listed. This allows shareholders and stakeholders the ability to see the growth in gross salaries for executives and boards of directors. A common purpose for this section is to ensure each individual receives pay that is both worthy and acceptable.
Details on the benefits offered to executives and board of directors can be a larger section in the remuneration report. Here, a general list of benefits — such as medical, insurance, perquisites, and others — has inclusion. Unless an executive or board of directors has a specific benefit for his or her job, it may not be detailed separately. The report does not usually make any justifications for the benefits listed. Only those benefits that provide a monetary benefit to the executive or board of directors may be in this section.
Stock options are often a large part of an executive’s or board of director’s remuneration. Companies can choose to offer stock at a significant price reduction at various times during the individual’s tenure. Disclosure here is necessary so shareholders and stakeholders have information on which executives will buy and sell the company’s stock. Many times, insider buys and sells are not strategic. They simply occur at predetermined times based on remuneration contracts.
Explanatory paragraphs in a remuneration report detail any information behind the numbers listed. Retirement contracts and golden parachutes may need these paragraphs to explain the details of such arrangements. Shareholders often require this data and information in order to understand what will happen when an executive leaves the business. Employment contracts or other arrangements may also need explanatory paragraphs. Not all of these paragraphs will be in the report on a repeated basis; in some cases, the paragraph may simply have one line saying no explanation was needed.
