604 Accounting: Business Reporting for Decision Making
The leadership and ingenuity of forward-thinking companies like Catalyst Paper, ERA, and
other leaders in the space, are providing focus and substance to advancing sustainability in
business and communities. Rolling Stone magazine, while the first, will certainly not be the
last major publication, or business, to face head-on the challenges of climate change and sus-
tainability. In becoming an ‘early reducer’, Rolling Stone magazine has been able to tangibly
reduce its environmental footprint, while sustaining its position as the ‘go to’ publication for the
latest in music reviews, in-depth interviews, respected political commentary, and award-winning
investigative journalism.Source: Brown, L 2008, ‘Case study: going green without the moss’, Awareness into action,
http://www.awarenessintoaction.com.Required
a. How did Rolling Stone achieve a carbon neutral paper? Why did Rolling Stone choose to
reduce its emissions by concentrating on paper? Can you think of other printing processes that
are harmful to the environment?
b. Catalyst Paper helped Rolling Stone achieve its claim. Hypothesise what the culture and vision
of this company would be with regard to sustainability. Review Catalyst Paper’s website,
http://www.catalystpaper.com, and make a conclusion about whether your hypothesis is correct.
c. A number of companies offer a carbon offsetting option when purchasing their services (e.g.
airline companies). Formulate your opinion on the concept of carbon offsetting by reforesta-
tion. What do you think are the pros and cons of such an approach?14.54 Chief Executive Officer remuneration packages have courted much controversy. The packages
are normally divided into a base salary and incentive payments. The incentive payments are
usually aligned with the financial performance of the company and are made up of bonuses and
share options. However, critics believe that many managers are only concerned with maximising
their own wealth and are working to increase the short-term financial performance, rather than
the long-term growth and sustainability of the company.
Critics say that payments deplete the value of the company and sacrifice cash, that the link
between payments and performance is tenuous and that it is easy to compensate good perfor-
mance, but boards falter when it comes to dealing with poor performance. However, defenders
say that a few big payments to some poor performers are overshadowing the deserved payments
to hard working, high performing managers.
Required
a. Appraise the need for an individual to earn millions of dollars each year.
b. A number of high profile companies came under attack for excessive CEO payment. Major
banks fell into that category. The CEO of ANZ, for instance, received $10.8 million in 2015.
His fixed remuneration was $3 300 000 and his cash bonus was 2.05 million. In addition, the
board allows extra payment to cover his ‘car parking, life insurance and taxation services’.
Profit attributable to shareholders was up 3 per cent to $7493 million for 2015 and the total
dividend for the year rose by 2 per cent. Discuss whether you feel the CEO of ANZ earned his
pay during 2015. Comment on whether or not a company should pay its employees personal
expenses such as car parking, life insurance and tax services.
c. Boards and shareholders (at the AGM) decide on CEO pay. Why do they agree to pay such large sums?
d. When companies don’t do well, hypothesise why their CEOs didn’t lose their jobs.
e. Most of the CEOs would be paid a combination of a base salary plus share bonuses and
options. What is the reason the board likes to have its CEO own shares in the company?
Sources: ANZ, 2015 shareholder review, http://shareholder.anz.com/sites/default/files/2015_anz_shareholder_review_
online_version_151109.pdf; AAP 2015, ‘ANZ’s CEO pay packet closes in on $11m’, SBS, http://www.sbs.com.au; Lannin, S
2015, ‘ANZ delivers record $7.2 billion profit despite “constrained environment”’, ABC News, http://www.abc.net.au.