The recent controversy over Rakon’s executive remuneration highlights our poor disclosure.
The company revealed on page 53 of its 2012 annual report that Chief Executive Brent Robinson had received a 6.7% remuneration increase, to $846,573, and Sales and Marketing Director Darren Robinson a 8.0% rise, to $691,800.
These figures were included in a table with the accompanying introduction; “The following people held office as a director during the year and received the following remunerating including benefits during the year”.
Rakon released a terse statement to the NZX after a journalist wrote about these remuneration increases in a year that the company had a $0.4 million loss. The release’s main point was that the 2012 remuneration figure included a bonus payment for the 2011 year and there will be no bonuses for the 2012 year.
It concluded; “the total remuneration for FY13 that is paid to senior executives, who have a variable element, will be substantially lower than that paid in FY12. This will be reflected and reported in the 2013 Annual Report.”
But why didn’t Rakon give a full explanation of its remuneration policies in order to avoid this confusion?
Most of our listed companies lag way behind ASX listed companies in this regard.
All ASX companies, both large and small, include a remuneration report in their annual report. These contain a detailed description of a company’s fixed and performance-linked remuneration and the total amount received by each senior executive.
New Zealand companies should follow the Australian example and give a much fuller description of senior executive’s remuneration.
This would avoid the confusion caused by the incomplete disclosure in Rakon’s annual report.