How to Fill Out the Remuneration Report for KMP and Board Members in an Annual Report

The remuneration report is one of the most closely read sections of an ASX-listed company’s annual report. Investors read it. Proxy advisers read it. Employees may read it. Journalists may read it. And, importantly, shareholders vote on it.

That means the remuneration report should not be treated as a compliance appendix at the back of the annual report. It should be treated as a governance story.

A good remuneration report answers five practical questions:

1. Who are the people covered by the report?
2. What were they paid?
3. Why were they paid that amount?
4. How is pay linked to company performance?
5. Why should shareholders consider the outcome fair?

This article explains how to complete a remuneration report for Key Management Personnel, known as KMP, and board members in a practical, step-by-step way.

1. Start with the right mindset

The biggest mistake companies make is treating the remuneration report as a table-filling exercise.

Yes, the report needs numbers. Yes, it needs statutory disclosures. Yes, the accounting team, company secretary, remuneration adviser and auditors will all have views. But the report also needs to explain the board’s judgement.

A shareholder should be able to read the report and understand:

• what the remuneration framework is;
• how executives are rewarded;
• how non-executive directors are paid;
• what performance was achieved;
• what incentives vested or did not vest;
• whether outcomes are aligned with shareholder experience; and
• what changed from the previous year.

The best remuneration reports are not necessarily the longest. They are the clearest.

2. Confirm who must be included

Before drafting anything, confirm the KMP population for the financial year.

KMP generally means the people who have authority and responsibility for planning, directing and controlling the company’s activities, directly or indirectly. This usually includes:

• the Chair;
• non-executive directors;
• executive directors;
• the CEO or Managing Director;
• the CFO; and
• other senior executives with enterprise-level influence.

Do not rely only on titles. Look at actual authority.

For example, a Chief Operating Officer who runs the core business is likely to be KMP. A divisional general manager may or may not be KMP depending on the scale of the division and the person’s decision-making authority. A Chief Legal Officer or Chief People Officer may be KMP if they are part of the executive leadership group and materially influence company direction.

Practical table to include

Use a simple table early in the report:

Name	Position	Status	Period as KMP during the year
Jane Smith	Chair, Non-Executive Director	Current	Full year
Mark Lee	Managing Director and CEO	Current	Full year
Priya Rao	Chief Financial Officer	Current	From 1 October 2025
David Chen	Former CFO	Former	To 30 September 2025

This table is very useful because it prevents confusion later. If someone joined or left during the year, the remuneration table will often show part-year remuneration. Explain that upfront.

3. Separate board remuneration from executive remuneration

Board members and executives should not be explained as if they are paid the same way.

Non-executive directors are usually paid fees for board and committee service. They generally do not receive performance-based incentives because their role is to provide independent oversight.

Executives are usually paid through a mix of fixed remuneration, short-term incentives and long-term incentives.

A clear remuneration report should separate these two groups.

Suggested structure:

1. Introduction from the Chair or Remuneration Committee Chair
2. KMP covered by the report
3. Remuneration governance
4. Executive remuneration framework
5. Company performance and remuneration outcomes
6. Executive statutory remuneration table
7. Incentive outcomes
8. Executive contracts
9. Non-executive director fee framework
10. Non-executive director remuneration table
11. Equity holdings and other required disclosures
12. Remuneration consultant disclosures, if relevant

This structure makes the report easier to read and easier to audit.

4. Write the opening summary first

The opening section should give readers the “so what?” before they get to the detailed tables.

A practical opening summary should cover:

• key business performance for the year;
• key remuneration decisions;
• STI outcomes;
• LTI vesting outcomes;
• any fixed pay changes;
• any board fee changes;
• any one-off awards;
• any changes for next year; and
• any response to shareholder feedback.

Example wording

During FY2026, the Board focused on ensuring executive remuneration outcomes were aligned with Company performance, shareholder experience and the delivery of strategic priorities. The Company delivered revenue growth of X%, underlying EBITDA of $X million and total shareholder return of X%. Reflecting these outcomes, the Board approved STI outcomes ranging from X% to X% of maximum opportunity. The FY2024 LTI grant was tested during the year and vested at X%, based on performance against relative TSR and earnings per share growth hurdles. No increases were made to non-executive director base fees during the year.

This kind of summary helps shareholders understand the result before reading the detail.

5. Explain remuneration governance

The remuneration governance section should explain who makes decisions and how conflicts are managed.

Include:

• the role of the board;
• the role of the Remuneration Committee, if there is one;
• whether management provides input;
• whether external remuneration advisers were used;
• how independence is protected;
• how remuneration recommendations are approved;
• whether discretion can be applied; and
• how risk and conduct are considered.

Practical wording

The Board is responsible for approving remuneration arrangements for non-executive directors, the Managing Director and CEO, and other KMP. The Remuneration Committee assists the Board by reviewing remuneration strategy, incentive outcomes, executive contracts, market positioning and the alignment between remuneration outcomes and Company performance. Management may provide information to support the Committee’s deliberations but does not participate in decisions relating to its own remuneration.

If remuneration consultants were used, be very clear about whether they provided a remuneration recommendation or general market information. That distinction matters.

6. Explain the executive remuneration framework

This is the heart of the report.

For executives, explain each component of remuneration in plain English.

A useful table is:

Component	Purpose	How it works	Link to performance
Fixed remuneration	Attract and retain executives with the skills required to lead the business	Base salary plus superannuation and other fixed benefits	Reflects role scope, experience, market benchmarks and individual capability
Short-term incentive	Reward annual performance against financial, strategic and individual objectives	Cash and/or deferred equity, subject to Board approval	Linked to annual performance measures
Long-term incentive	Align executives with long-term shareholder value creation	Performance rights or options tested over a multi-year period	Vesting depends on long-term performance hurdles
Other benefits	Support market-competitive employment arrangements	May include leave, insurance or relocation support	Not performance-based

Avoid generic wording such as “we pay competitively to attract and retain talent” without explaining what that means in practice.

Better wording is:

The Company aims to position fixed remuneration around the market median for comparable ASX-listed companies of similar size, sector and complexity. Total remuneration opportunity may exceed the median where stretch performance is achieved and sustained shareholder value is created.

7. Explain fixed remuneration decisions

For each executive KMP, explain fixed remuneration changes during the year.

Do not just show the number. Explain the reason.

Common reasons include:

• annual market review;
• role expansion;
• promotion;
• external appointment;
• retention risk;
• increased company scale;
• no increase due to company performance;
• part-year service; or
• contractual change.

Practical table

Executive	Fixed remuneration change	Reason
CEO	3.0% increase	Market adjustment following external benchmarking and continued role scope expansion
CFO	No increase	Appointed during the year; remuneration set on commencement
COO	5.0% increase	Increased operational accountability following integration of acquired business

The reason should be specific enough to be credible. “Market adjustment” alone is weak. “Market adjustment following benchmarking against ASX-listed industrial companies of comparable revenue and market capitalisation” is stronger.

8. Explain STI design and outcomes

The short-term incentive section should explain both the opportunity and the outcome.

Include:

• who participates;
• target and maximum opportunity;
• performance measures;
• weighting of each measure;
• threshold, target and stretch performance;
• actual result;
• payout outcome;
• whether any Board discretion was applied;
• whether any amount was deferred; and
• whether malus or clawback can apply.

Practical STI table

Measure	Weighting	Target	Actual outcome	Result
Underlying EBITDA	40%	$50m	$54m	Above target
Revenue growth	20%	8%	6%	Below target
Safety	20%	TRIFR below X	Achieved	On target
Strategic milestones	20%	Delivery of integration milestones	Partially achieved	Partial payout

Then include a second table showing executive outcomes:

Executive	STI maximum opportunity	STI awarded	% of maximum	Delivery
CEO	$600,000	$390,000	65%	50% cash, 50% deferred equity
CFO	$250,000	$150,000	60%	Cash
COO	$300,000	$210,000	70%	50% cash, 50% deferred equity

Practical wording

The Board considered the formulaic STI outcome and determined that it appropriately reflected Company performance and shareholder experience for the year. No discretion was applied.

Or, where discretion was applied:

The Board exercised downward discretion to reduce STI outcomes by X percentage points, reflecting customer service issues experienced in the second half of the year. The Board considered this adjustment appropriate despite financial performance being above target.

This is the kind of explanation investors look for. They want to know whether the board simply followed the formula or applied judgement.

9. Explain LTI design and vesting

The long-term incentive section should be very clear because this is where many remuneration reports become hard to read.

Explain:

• the type of award, such as performance rights, options or restricted shares;
• grant date;
• face value or fair value;
• performance period;
• vesting conditions;
• testing date;
• retesting, if any;
• treatment on cessation of employment;
• dividend equivalent treatment, if any;
• whether the award is subject to malus or clawback; and
• actual vesting outcome.

Practical LTI table

Grant	Performance period	Measure	Weighting	Outcome	Vesting
FY2024 LTI	1 July 2023 to 30 June 2026	Relative TSR	50%	62nd percentile	60% of this tranche
FY2024 LTI	1 July 2023 to 30 June 2026	EPS CAGR	50%	8.5%	75% of this tranche
Total			100%		67.5% vested

Practical wording

The FY2024 LTI grant was tested following the end of the performance period. Based on relative TSR performance at the 62nd percentile and EPS CAGR of 8.5%, 67.5% of the award vested and the remaining 32.5% lapsed.

Be specific. Do not say “the award partially vested due to performance outcomes” without showing the performance outcomes.

10. Link pay outcomes to company performance

The remuneration report should explain the relationship between remuneration policy and company performance.

This section should not be generic. It should use actual company performance data.

Include a five-year performance table where appropriate, showing metrics such as:

• revenue;
• EBITDA or EBIT;
• net profit after tax;
• earnings per share;
• dividends;
• share price;
• total shareholder return;
• return on capital;
• safety outcomes; and
• STI and LTI outcomes.

Practical table

Year	Revenue	NPAT	EPS	Closing share price	Dividends per share	STI outcome	LTI vesting
FY2022	$Xm	$Xm	X cps	$X.XX	X cps	X%	X%
FY2023	$Xm	$Xm	X cps	$X.XX	X cps	X%	X%
FY2024	$Xm	$Xm	X cps	$X.XX	X cps	X%	X%
FY2025	$Xm	$Xm	X cps	$X.XX	X cps	X%	X%
FY2026	$Xm	$Xm	X cps	$X.XX	X cps	X%	X%

Then explain the story.

For example:

Over the five-year period, executive incentive outcomes have broadly reflected Company performance. STI outcomes were higher in FY2026 following improved earnings and delivery of strategic milestones. The FY2024 LTI award partially vested, reflecting above-threshold but below-maximum long-term performance.

This section is critical. It helps shareholders see whether remuneration outcomes are reasonable.

11. Prepare the statutory remuneration table carefully

The statutory remuneration table is one of the most important parts of the report. It should be checked carefully against payroll, accounting records, share-based payment calculations and prior-year disclosures.

The table typically includes categories such as:

• short-term employee benefits;
• salary and fees;
• cash bonus;
• non-monetary benefits;
• post-employment benefits;
• superannuation;
• long-term benefits;
• leave benefits;
• termination benefits;
• share-based payments; and
• total remuneration.

Practical table format

Name	Salary/fees	Cash bonus	Non-monetary benefits	Superannuation	Long-term benefits	Termination benefits	Share-based payments	Total
CEO	$X	$X	$X	$X	$X	$X	$X	$X
CFO	$X	$X	$X	$X	$X	$X	$X	$X
Chair	$X	-	-	$X	-	-	-	$X
Non-executive Director	$X	-	-	$X	-	-	-	$X

Practical tips

Make sure part-year KMP are disclosed only for the period they were KMP.

Make sure share-based payments reflect the accounting expense, not necessarily the value received by the executive during the year.

Make sure bonuses are classified correctly.

Make sure termination payments are separately identified.

Make sure superannuation is treated consistently.

Make sure prior-year comparatives, where required, tie back to the prior annual report or are clearly restated if necessary.

This is a section where small mistakes can create big credibility problems.

12. Include actual remuneration or realised pay, if useful

Many companies include an additional “actual remuneration” or “realised remuneration” table to help readers understand what executives actually received during the year.

This can be helpful because statutory remuneration can include accounting values for equity that do not match cash received or vested value.

A practical realised pay table may include:

• fixed remuneration actually paid;
• cash STI paid;
• deferred STI vested;
• LTI vested;
• other benefits; and
• total realised remuneration.

Practical wording

The statutory remuneration table has been prepared in accordance with applicable accounting standards and includes accounting expenses for share-based payments. To assist shareholders, the table below shows remuneration actually received or vested during the year.

This table is not a replacement for the statutory table. It is a readability tool.

13. Explain executive service agreements

For executive KMP, disclose key contract terms in a simple table.

Include:

• contract type;
• commencement date;
• notice period by executive;
• notice period by company;
• termination payment arrangements;
• restraint, if relevant; and
• treatment of incentives on termination.

Practical table

Executive	Contract type	Notice by executive	Notice by company	Termination payment
CEO	Ongoing	6 months	6 months	Up to 6 months fixed remuneration, subject to law
CFO	Ongoing	3 months	3 months	Up to 3 months fixed remuneration, subject to law
COO	Ongoing	3 months	6 months	Up to 6 months fixed remuneration, subject to law

Avoid burying this information in dense paragraphs. Tables are easier for shareholders to read.

14. Explain non-executive director fees

The non-executive director section should be separate from the executive remuneration section.

Explain:

• the aggregate fee pool approved by shareholders;
• base board fees;
• Chair fees;
• committee chair fees;
• committee member fees;
• superannuation treatment;
• whether directors receive equity;
• whether directors receive performance-based pay; and
• whether fees changed during the year.

Practical table

Role	Annual fee
Board Chair	$X
Non-executive Director	$X
Audit and Risk Committee Chair	$X
Audit and Risk Committee Member	$X
Remuneration Committee Chair	$X
Remuneration Committee Member	$X

Practical wording

Non-executive directors receive fixed fees for their board and committee responsibilities. They do not receive performance-based remuneration, options or incentives, in order to preserve independence and objectivity.

If directors participate in a fee sacrifice equity plan, explain it clearly and distinguish it from performance-based executive equity.

15. Include board member remuneration table

For each non-executive director, disclose fees paid during the year.

Practical table

Director	Board fees	Committee fees	Superannuation	Other benefits	Total
Chair	$X	$X	$X	$X	$X
Director A	$X	$X	$X	$X	$X
Director B	$X	$X	$X	$X	$X

If a director joined or retired during the year, state this clearly.

Example:

Amounts for Ms Smith reflect fees paid from her appointment date of 1 February 2026.

16. Disclose equity holdings and movements

A remuneration report usually needs to show KMP interests in shares, options, rights and other equity instruments.

This section should be carefully reconciled to:

• share registry records;
• employee equity plan records;
• director declarations;
• opening balances;
• grants;
• vesting;
• exercises;
• lapses;
• purchases;
• sales; and
• closing balances.

Practical table

Name	Opening balance	Granted	Vested/exercised	Lapsed	Purchased/sold	Closing balance
CEO	X	X	X	X	X	X
CFO	X	X	X	X	X	X
Chair	X	-	-	-	X	X

Do not leave this until the end. Equity movements often take longer to verify than cash remuneration.

17. Explain loans, related party items and unusual arrangements

If there are loans, guarantees, related party transactions, sign-on payments, retention awards, relocation payments or one-off discretion, explain them clearly.

The guiding principle is simple:

If a shareholder would reasonably want to understand it, explain it.

Examples of arrangements that need careful wording include:

• sign-on bonuses;
• make-whole awards for incentives forfeited at a previous employer;
• retention grants;
• termination payments;
• accelerated vesting;
• consulting arrangements with former executives or directors;
• director-related entities providing services;
• relocation benefits;
• unusual leave payments; and
• special bonuses.

Avoid vague disclosure. For example, “other benefits” should not hide material items.

18. Address remuneration consultants

If a remuneration consultant provided a remuneration recommendation, disclose the required details.

A practical disclosure should cover:

• name of the consultant;
• nature of the recommendation;
• fees for the recommendation;
• other services provided;
• fees for other services;
• arrangements to ensure independence;
• board statement on absence of undue influence; and
• reasons for that view.

Practical wording

During the year, the Remuneration Committee engaged XYZ Advisory to provide a remuneration recommendation in relation to executive KMP remuneration. The fee for the remuneration recommendation was $X. XYZ Advisory also provided general market data services for a fee of $X. The Board is satisfied that the remuneration recommendation was made free from undue influence by KMP because XYZ Advisory was engaged by, and reported directly to, the Remuneration Committee, and management was not present during Committee discussions regarding its own remuneration.

If the adviser only provided market data and not a remuneration recommendation, say that clearly.

19. Deal with shareholder feedback and strikes

If the company received a significant vote against the remuneration report, the next report should explain what happened and how the board responded.

Do not use defensive language. Use plain language.

Practical wording

At the 2025 AGM, X% of votes cast were against the adoption of the remuneration report, constituting a first strike. Following the AGM, the Board engaged with shareholders and proxy advisers to better understand their concerns. Key themes included the level of STI awarded despite lower shareholder returns, the complexity of the LTI framework and limited disclosure of performance targets. In response, the Board has simplified the FY2027 STI scorecard, increased disclosure of performance outcomes and introduced a relative TSR gateway for future LTI grants.

This kind of disclosure shows the board listened and acted.

20. Use plain English, not remuneration jargon

Remuneration reports often become unreadable because they use too many technical phrases.

Replace:

“The executive remuneration architecture is calibrated to incentivise sustainable outperformance.”

With:

“Our remuneration framework is designed to reward executives when they deliver strong and sustainable performance for shareholders.”

Replace:

“Discretion was applied having regard to holistic stakeholder outcomes.”

With:

“The Board reduced STI outcomes because customer and safety outcomes were below expectations.”

Plain English builds trust.

21. Use a final preparation checklist

Before finalising the remuneration report, work through this checklist.

KMP identification

• Have all KMP been identified correctly?
• Have appointments and departures been reflected for the correct period?
• Have former KMP been included where required?
• Have directors been separated from executive KMP?

Remuneration framework

• Is the executive pay framework clearly explained?
• Are fixed pay, STI and LTI described separately?
• Are target and maximum opportunities disclosed clearly?
• Are performance and non-performance components explained?

Performance link

• Does the report explain the relationship between remuneration and company performance?
• Are STI and LTI outcomes supported by actual performance results?
• Is board discretion explained?
• Does the outcome make sense compared with shareholder experience?

Statutory tables

• Do totals reconcile to payroll, accounting records and share-based payment calculations?
• Are part-year executives treated correctly?
• Are termination payments separately shown?
• Are share-based payments calculated consistently?
• Are prior-year comparatives checked?

Board fees

• Is the shareholder-approved fee pool disclosed?
• Are base board and committee fees clear?
• Are Chair and committee chair fees separately shown?
• Are non-executive directors excluded from performance-based incentives?

Equity

• Do equity balances reconcile to registry and plan records?
• Are grants, vesting, exercises and lapses disclosed?
• Are options and performance rights explained clearly?
• Are vested and unvested awards separated where useful?

Governance

• Is the role of the Board and Remuneration Committee explained?
• Are remuneration consultant disclosures complete?
• Are conflicts and independence safeguards described?
• Has shareholder feedback been addressed?

Readability

• Can a shareholder understand the report without specialist advice?
• Are the tables labelled clearly?
• Are unusual payments explained?
• Is the Chair’s summary consistent with the detailed tables?
• Would the report still read well if the company had a difficult AGM?

22. A practical drafting sequence

The easiest way to prepare the report is not to start at page one.

Use this sequence:

1. Confirm KMP list and dates.
2. Collect payroll data.
3. Collect board fee data.
4. Collect STI outcomes and board approvals.
5. Collect LTI grants, vesting and lapses.
6. Reconcile equity holdings.
7. Confirm executive contract terms.
8. Identify any one-off payments or unusual arrangements.
9. Draft statutory tables.
10. Draft explanatory narrative.
11. Draft Chair or Committee Chair summary.
12. Review against legal and accounting requirements.
13. Test the report for shareholder readability.
14. Finalise board approval.

This sequence avoids a common problem: writing a polished narrative before the numbers are final.

23. Common mistakes to avoid

Do not include generic performance language without actual outcomes.

Do not disclose STI and LTI results without explaining why they were achieved.

Do not mix non-executive director fees with executive incentives.

Do not hide material one-off payments in “other benefits.”

Do not forget part-year KMP.

Do not assume the statutory remuneration number equals what the executive actually received.

Do not describe a remuneration consultant’s work vaguely if a formal remuneration recommendation was provided.

Do not wait until the final week before audit sign-off to reconcile equity awards.

Do not say pay is aligned with performance if the tables tell a different story.

Final thought

A remuneration report is not just a compliance document. It is the board’s explanation of how leadership is paid, how performance is judged and how shareholder interests are protected.

The best reports are practical, transparent and balanced. They do not pretend every outcome is perfect. They explain the decisions made, the data considered and the judgement applied.

A strong remuneration report should leave shareholders thinking:

“I may not agree with every decision, but I understand the framework, I understand the outcome, and I can see the board has exercised discipline.”

That is the standard worth aiming for.