Welcome to Guerdon Associates’ April 2007 newsletter.

In this month's newsletter we broadcast the government's welcome initiative on insider trading laws, enabling boards to make equity pay to executives that much more meaningful, examine the very significant lift in incentive pay to CFOs, share the entertainment offered by Warren Buffet's latest pronouncements on executive pay, review non executive director pay, including its relationship with chairman pay as well as workload, and find a sympathiser with our view that remuneration reports are being over-lawyered.

We conclude with the latest executive and director remuneration disclosure updates available on the GuerdonData® on line database, as well as the month's news articles featuring Guerdon Associates.

Hooray! Government Accepts Recommendations For Insider Trading Changes

“Please tell the board to not pay me in shares” pleaded the executive of one client company, “as they are worth little to me”.

Unfortunately, due to Australia's insider trading laws, this is not an uncommon refrain. But now the government has signaled its readiness to change.

Significant Increase In CFO Performance Pay

The increase in CFO pay over the past 12 months has been more a function of incentive pay than anything else.

And, in contrast with the prior year, this has been mainly focussed on long term incentives. The size of disclosed STIs and LTIs has increased significantly, with an increase in the proportion of CFOs receiving them.

Buffett propounds on executive pay

Warren Buffet, one of the icons of strong corporate governance, has again criticised high executive compensation in his latest letter to shareholders.

In particular, he argued against the practice of setting executive pay based on how much CEOs in similar industries earn, calling this the "All-the-other-kids-have-one" approach to setting pay.

Non-Executive Director Remuneration Update

Our analysis this year includes the relationship between non-executive director pay and chairman pay.

Also, we publish research on the relationship between director pay and workload.

Table 1 summarises the remuneration for all of the non-executive directors in the sample.

Remuneration Reports - Boilerplate or Potboiler?

Australian company remuneration reports have improved considerably since they first appeared in 2004.

Hermes, a global fund manager that specialises in improving shareholder returns through improved governance, says that Australian remuneration reports are the most interesting and diverse they have seen.
Our own view is that, while some are indeed outstanding, others take a lot of pages to comply with governace guidelines while not saying much at all. It seems we are not alone.

Latest GuerdonData® Updates

This month’s updates to GuerdonData® include disclosures from the following twenty-five companies:

AUSTRALAND PROPERTY GROUP, CAPRAL ALUMINIUM LIMITED, CALTEX AUSTRALIA LIMITED, ENERGY RESOURCES OF AUSTRALIA LIMITED, LIHIR GOLD LIMITED, RUBICON AMERICA TRUST, RUBICON EUROPE TRUST GROUP , RIO TINTO LIMITED, STRAITS RESOURCES LIMITED, ALUMINA LIMITED, AMP LIMITED, APN NEWS & MEDIA LIMITED, ARISTOCRAT LEISURE LIMITED, COLORADO GROUP LIMITED, GENERAL PROPERTY TRUST, HASTINGS DIVERSIFIED UTILITIES FUND, HPAL LIMITED, MYOB LIMITED, OXIANA LIMITED, PACIFICA GROUP LIMITED, PAN AUSTRALIAN RESOURCES LIMITED, SANTOS LIMITED, STW COMMUNICATIONS GROUP LIMITED, TAP OIL LIMITED, AND WESTFIELD GROUP

Executive and director remuneration data from all ASX 300 companies on GuerdonData® is available to any subscriber. Visit our website for more information on GuerdonData®.

Assess how easily you can find out director and executive pay information by viewing our 6 minute demo. Click on the “More Info” button below.

Guerdon Associates In The News

"Boardrooms submit to trial by peers", Ann-Maree Moody, Australian Financial Review Special Report, 29 March 2007, p.8
"Mutual Attraction", James Thomson, BRW Flagship Edition, March 29 - May 2, pp. 40-43
"Are Company Boards giving Their Executives Too Many Shares Too Cheaply?", Michael Robinson (for the NO case), Stuart Wilson (for the YES case), BRW Flagship Edition, March 29 - May 2, pp. 74-75