KMP Remuneration Recordkeeping: How to Stay Audit-Ready Throughout the Year

For many ASX-listed companies, preparing the annual remuneration report involves gathering information from payroll, Finance, Company Secretariat, HR and the share plan administrator. The challenge is rarely a complete absence of data. More often, the information exists in different systems, decisions have been implemented at different times and supporting approvals are difficult to locate.

A simple year-round KMP remuneration register can make the process considerably easier. Instead of reconstructing a full year of executive remuneration activity just before annual reporting, companies can record changes as they occur and reconcile the information regularly.

This guide explains how to maintain practical, reliable records for key management personnel (KMP), even if you do not have a dedicated remuneration team.

Why KMP remuneration records matter

KMP generally includes directors and people with authority and responsibility for planning, directing and controlling the organisation. The precise population and reporting requirements need to be assessed for the relevant entity and reporting period.

For Australian listed companies, section 300A of the Corporations Act 2001 contains remuneration-report requirements, while AASB 124 Related Party Disclosures sets out KMP disclosure categories for applicable financial statements. These requirements are not identical, so Finance and the annual-report team should confirm the appropriate disclosure treatment.

Maintaining good records makes it easier to explain an executive's remuneration, demonstrate approval, reconcile expenses and support the figures appearing in the annual report.

1. Create one KMP remuneration register

You do not need an expensive system to get started. A controlled Excel workbook or SharePoint register can work well if it has a clear owner, restricted access and links to the authoritative source documents.

Create a KMP summary tab with each person's name, position, KMP commencement and cessation dates, fixed remuneration, superannuation arrangement, incentive eligibility and the location of their contract. Maintain a separate event log so that past decisions are not overwritten when remuneration changes.

An event log could look like this:

Illustrative entries only.

For each item, record the decision date, effective date, amount or award, approval reference, source-system entry, owner and reconciliation status. Store links to the actual evidence rather than relying on a note that says the change was approved.

2. Update records when remuneration changes

The most effective rule is to update the register when an event occurs, not when the annual report is due.

Events worth tracking include salary adjustments, changes to director fees, STI decisions, discretionary payments, equity grants, vesting and forfeitures, employment agreement amendments, new appointments and departures.

For example, if the board approves a CEO salary increase effective 1 July, the record should show the amount approved, the board approval reference, the effective date and confirmation that payroll implemented it correctly. If payroll begins applying the increase in August with a back payment, retain evidence of that treatment too.

This allows the reporting team to distinguish what was approved, what was paid and what needs to be recognised for accounting and disclosure purposes. These are not always the same figure.

3. Reconcile salary, bonuses and other payments monthly

Payroll is an important source of executive remuneration data, but payroll totals alone do not explain every reporting component. Accounting adjustments and the timing of remuneration recognition may produce different results.

Each month, compare the register with payroll and, where relevant, Finance records. Check whether fixed remuneration matches the approved rate, new allowances or benefits have appeared, manual payments require explanation and incentive payments align with approved outcomes.

A useful exception log needs only four fields: issue, responsible person, corrective action and resolution date. For instance, if an executive's car allowance has been missed from the working file, document the omission, update the relevant records and confirm its correct reporting treatment.

The goal is not to prepare the full remuneration report every month. It is to avoid carrying unexplained differences into year end.

4. Give STI and LTI their own records

Executive incentives require more than a payment amount or an award balance.

For short-term incentives (STI), retain the target opportunity, performance measures, performance period, assessed outcome, any board discretion, approval date, payment date and any deferral arrangements. This is especially useful when an STI earned in one financial year is paid in the next.

For long-term incentives (LTI), record the award or grant ID, grant date, instrument type, number of rights or shares, vesting conditions, performance period, vesting outcome, lapses, forfeitures and settlement activity. Reconcile the movement history with the share plan administrator and Finance.

Consider an executive granted 30,000 performance rights, of which 20,000 subsequently vest and 10,000 lapse. The register should clearly explain those movements and link them to the supporting approvals and administrator records. Finance should separately determine the applicable share-based payment expense and accounting treatment. The number of rights vested is not itself the accounting expense.

5. Keep director fees and KMP departures under control

Non-executive director fees should be distinguishable from executive salary and incentives. Record base board fees, Chair and committee fees, effective dates, superannuation treatment and the relevant approval evidence.

When a KMP leaves, document the end of their KMP responsibilities separately from their employment end date if those dates differ. Confirm final salary or director fees, outstanding bonuses, deferred incentives, equity treatment, leave and termination payments, together with relevant approvals and accounting adjustments.

Do not close the file immediately after a departure. Final incentive or equity events may still need to be considered for the reporting period.

6. Agree on a simple reporting calendar

In a smaller company, one person may handle several of these activities. However, material changes and reconciliations should still receive an appropriate independent review.

7. Prepare a reporting-ready evidence pack

Before the annual-report drafting process begins, gather the confirmed KMP population and dates, remuneration change log, payroll reconciliation, STI outcomes, equity movement schedule, director fee records, departure calculations, approval references and any unresolved exceptions.

Make sure that the person preparing the remuneration disclosures can trace a figure back to an approved decision and a supporting operational or accounting record. Apply suitable permissions because executive remuneration information is sensitive.

Section 286 of the Corporations Act 2001 requires relevant financial records to be retained for seven years after the transactions they cover are completed. Not every employment, governance or remuneration document necessarily has the same retention rule, so follow your organisation's records policy and obtain advice where needed.

Quick checklist: are your KMP records ready?

• We have confirmed the KMP population and relevant service dates.
• Every material remuneration change has a documented approval and effective date.
• Payroll amounts have been reconciled to approved arrangements.
• STI opportunities, decisions and payments can be traced.
• LTI grants and movements agree with the equity administrator and Finance.
• Director fees and KMP departures have been reviewed separately.
• All significant exceptions have an owner and resolution status.
• The annual-report team can retrieve evidence without rebuilding the working files.

The benefit of maintaining records throughout the year

Good KMP reporting starts long before the annual report is written. A reliable register, regular reconciliation and clear ownership reduce the risk of missing information and leave more time to review the quality of disclosures rather than chase documents.

For ASX-listed companies with complex executive remuneration arrangements, Remunera supports executive remuneration benchmarking, remuneration frameworks and related reporting analysis. If you would like to discuss your organisation's requirements, contact Remunera.

Frequently asked questions

What is KMP remuneration?

It is remuneration provided to people identified as key management personnel, including relevant salaries, benefits, incentives and share-based payments. The applicable accounting and listed-company disclosure rules determine how each component is reported.

Can we use Excel to track KMP remuneration?

Yes. A well-controlled Excel workbook can be effective if responsibilities are clear, versions are managed, evidence is linked and the data is reconciled to the relevant systems.

How often should KMP remuneration records be updated?

Update the register whenever a material event occurs, reconcile key amounts monthly and review completeness quarterly.

Who should own the KMP remuneration register?

HR or Reward commonly maintains remuneration decisions, while Company Secretariat supports governance approvals, Payroll verifies payments and Finance owns accounting calculations and financial reporting. The company should nominate one coordinator for the overall evidence pack.

Is the value of vested shares the same as the share-based payment expense?

Not necessarily. Share-based payment accounting follows the applicable accounting standard and may recognise expenses over a vesting period. Finance should reconcile the disclosure figures to the underlying accounting treatment.

This article provides general practical guidance and does not replace legal, financial reporting or audit advice. Requirements depend on the entity, the reporting period and the arrangements involved.