GuerdonNews® Volume 3 Number 10

November 2007

Dear [FIRSTNAME],

Welcome to Guerdon Associates’ November 2007 newsletter.

We start off this month’s newsletter with the unhappy news that companies about to grant share options may have waited a Melbourne Cup day too long; seriously put forward a case for not only more executive share options, but discounted ones at that; provide a checklist for companies and their boards assessing internal executive pay equity; highlight an obvious point of difference (to us anyway) between US remuneration consultants and Australian remuneration consultants; and relate an obscure piece of good tax news for companies that operate employee share trusts.

We conclude with the latest on executive and director remuneration disclosure updates available on the GuerdonData® on-line database and mentions of Guerdon Associates in the news.

Higher interest rates could mean fewer executive share options

As many of you read this, the Reserve Bank of Australia is deliberating on interest rates.

So, it may be too late to grant executive share options before interest rates increase. For many, an increase in interest rates will either mean fewer executive share options or a greater bottom line expense to the company.

Time to rethink executive share options

Share options as a form of executive reward have been much maligned in recent years.

As a result, their usage has dropped away in Australia, as well as in the UK, Canada and the USA. But share options can be an important component of executive reward. We think it is about time that the use of share options received fresh consideration. Further, it may even be better for both executives and shareholders if these options were granted with an exercise price at a discount to the market price.

Read on.

Internal pay equity approaches and checklist

Significant pay inequities among executives and between executives and other employees can cause significant strife.

Interestingly, internal pay equity was routinely used as a tool to help set CEO pay levels until relatively recently. Now it is starting to make a reappearance.

Want high pay for low performance? Then hire a US compensation consultant

Because Guerdon Associates prides itself on independence of thought and impartial advice, we feel brave enough to report on research that may otherwise be regarded as a shot in the big toe.

Recently, a report was published that showed US companies that hire compensation experts tend to pay their top executives more. But that does not translate into higher shareholder returns.

Employee Share Trusts and FBT

We have had the unfortunate experience too many times of being called in to advise on employee and executive equity plans after a company has already been operating one for several years that fails on several taxation counts.

Fortunately, one of many bugbears has recently been resolved.

Latest GuerdonData® Updates

This month’s updates to GuerdonData® include disclosures from the following 125 companies:

ABACUS PROPERTY GROUP, ABB GRAIN LIMITED, ABC LEARNING CENTRES LIMITED,, ADELAIDE BANK LIMITED, AED OIL LIMITED, ALBIDON LIMITED, ALLCO FINANCE GROUP LIMITED, ALLIANCE RESOURCES LIMITED, ANSELL LIMITED, ARC ENERGY LIMITED, ARROW ENERGY NL, AUSTEREO GROUP LIMITED, AUSTRALIAN INFRASTRUCTURE FUND, AUSTRALIAN PIPELINE TRUST, AUSTRALIAN WEALTH MANAGEMENT LIMITED, AUSTRALIAN WORLDWIDE EXPLORATION LIMITED, BABCOCK & BROWN CAPITAL LIMITED, BABCOCK & BROWN JAPAN PROPERTY TRUST, BABCOCK & BROWN WIND PARTNERS GROUP, BANNERMAN RESOURCES LIMITED, BEACH PETROLEUM LIMITED, BECTON PROPERTY GROUP, BHP BILLITON LIMITED, BRAMBLES LIMITED, BRAVURA SOLUTIONS LIMITED, CABCHARGE AUSTRALIA LIMITED, CBH RESOURCES LIMITED, CHALLENGER FINANCIAL SERVICES GROUP LIMITED, CHARTER HALL GROUP, CITIGOLD CORPORATION LIMITED, COATES HIRE LIMITED, COCHLEAR LIMITED, COFFEY INTERNATIONAL LIMITED, COMMANDER COMMUNICATIONS LIMITED, COMPUTERSHARE LIMITED, CREDIT CORP GROUP LIMITED, CUDECO LIMITED, CUSTOMERS LIMITED, DB RREEF TRUST, DEEP YELLOW LIMITED, EMECO HOLDINGS LIMITED, ENERGY DEVELOPMENTS LIMITED, ENVESTRA LIMITED, EQUIGOLD NL, FAIRFAX MEDIA LIMITED, FELIX RESOURCES LIMITED, FKP PROPERTY GROUP, FLEETWOOD CORPORATION LIMITED, FLIGHT CENTRE LIMITED, FORTESCUE METALS GROUP LTD, GINDALBIE METALS LTD, GOODMAN FIELDER LIMITED, GUNNS LIMITED, HARVEY NORMAN HOLDINGS LIMITED, HOUSEWARES INTERNATIONAL LIMITED, IBA HEALTH LIMITED, INDEPENDENCE GROUP NL, INDUSTREA LIMITED, IOOF HOLDINGS LIMITED, IWL LIMITED, JABIRU METALS LIMITED, JB HI-FI LIMITED, JUST GROUP LIMITED, KAGARA ZINC LIMITED, KIMBERLEY DIAMOND COMPANY NL, KINGSGATE CONSOLIDATED LIMITED, LEIGHTON HOLDINGS LIMITED, LEND LEASE CORPORATION LIMITED, LYNAS CORPORATION LIMITED, MACARTHUR COAL LIMITED, MACMAHON HOLDINGS LIMITED, MACQUARIE LEISURE TRUST GROUP, MCGUIGAN SIMEON WINES LIMITED, MFS LIMITED, MIDWEST CORPORATION LIMITED, MINCOR RESOURCES NL, MINTAILS LIMITED, MIRABELA NICKEL LIMITED, MONADELPHOUS GROUP LIMITED, MOUNT GIBSON IRON LIMITED, MULTIPLEX GROUP, MURCHISON METALS LTD, NEWCREST MINING LIMITED, ORIGIN ENERGY LIMITED, PAPERLINX LIMITED, PHARMAXIS LTD, PLATINUM AUSTRALIA LIMITED, PROGEN INDUSTRIES LIMITED, PUBLISHING & BROADCASTING LIMITED, QUEENSLAND GAS COMPANY LIMITED, RAMSAY HEALTH CARE LIMITED, REDFLEX HOLDINGS LIMITED, RESOLUTE MINING LIMITED, RIDLEY CORPORATION LIMITED, RIVERSDALE MINING LIMITED, RUBICON JAPAN TRUST, SALLY MALAY MINING LIMITED, SALMAT LIMITED, SEEK LIMITED, SEVEN NETWORK LIMITED, SILEX SYSTEMS LIMITED, SIMS GROUP LIMITED, SKILLED GROUP LIMITED, SONIC HEALTHCARE LIMITED, SPECIALTY FASHION GROUP LIMITED, SPOTLESS GROUP LIMITED, ST BARBARA LIMITED, SUNDANCE RESOURCES LIMITED, SUNLAND GROUP LIMITED, SYLVANIA RESOURCES LIMITED, TABCORP HOLDINGS LIMITED, TATTERSALL'S LIMITED, TELECOM CORPORATION OF NEW ZEALAND LIMITED, TELSTRA CORPORATION LIMITED, TISHMAN SPEYER OFFICE FUND, TRANSFIELD SERVICES INFRASTRUCTURE FUND, TRANSPACIFIC INDUSTRIES GROUP LTD, TRANSURBAN GROUP, UXC LIMITED, VALAD PROPERTY GROUP, WESFARMERS LIMITED, WEST AUSTRALIAN NEWSPAPERS HOLDINGS LIMITED, WESTERN AREAS NL, WOOLWORTHS LIMITED, ZINIFEX LIMITED

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

“Remuneration reports should pass high school test”, Michael Robinson, Australian Financial Review, 2 October 2007, p. 63

“The pros and cons of globalising your board”, Domini Stuart, Company Director, Vol 23 No 10 November 07, pp 32-34

Disclaimer

The information, analysis and opinion in this e-mail and attachments are intended to be for informational purposes only. Analyses are based on information taken from public documents or private surveys, and we do not represent to its accuracy. Guerdon Associates assumes no liability for the use or interpretation of information contained herein. This publication is provided 'as is' without warranty of any kind, either expressed or implied, including, but not limited to, the implied warranties of marketability, fitness for a particular purpose, or non-infringement of third party rights.

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  Copyright © 2007 Guerdon Associates

ISSN 1834-8300

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