Welcome to Guerdon Associates’ December 2007 newsletter.
Season's greetings to all our subscribers!
We start off this month’s newsletter with a review of CEO pay increases, respond to the cynics out there by attributing most of the movement in CEO remuneration to the at-risk component of their pay, suggest that top executives, board members and institutional investors who missed out on meeting each other at this year’s board and executive remuneration forum get in early for the 12 February 2008 forum, and try to get to the complex factors resulting in some remuneration reports receiving a hostile reaction while other equally “radical” reports sail through.
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.
Our next issue of GuerdonNews® will be published on the first Tuesday in February. We have many new, innovative, useful and exciting board and executive remuneration research findings, methods, insights and points of view to share with you next year. (However, if you cannot wait, call us! We are only too happy to research your company and provide a fresh perspective.)
In the meantime, we wish all our subscribers a safe and happy holiday season, and look forward to your continued support, business and feedback in the New Year.
CEO 2007 Pay Increases
The majority of ASX 300 listed companies with 2007 financial years have released their annual reports with remuneration disclosures.
And, as in the past, GuerdonData® is the first publicly available database to capture the results. You, as a subscriber to GuerdonNews®, are the first to receive the latest trend analysis for CEO pay based on “same incumbent” movements.
To validly determine the rate of increase, we look at same incumbent data. That is, we identified the 163 Managing Directors and CEOs who were in the same role for all of the last two financial years. They are drawn from all industries, with ASX 300 company market capitalisation ranging from $41 million to $141 billion.
How Risky Is CEO Pay?
In the last financial year 80% of CEOs enjoyed an increase in total remuneration (up from 67% last year), while 20% suffered a decrease (down from 30% last year).
What is interesting is that at-risk pay, rather than fixed pay, explains most of the movement in CEO total remuneration. Many cynics and critics may need to re-work their sums and re-consider their views before they speak.
CEO at-risk pay is truly that.
Remuneration forum for boards, investors and executives
Earlier this year we had the privilege of holding Australia’s first remuneration forum for institutional investors, board directors, regulators and executives, in conjunction with CGI Glass Lewis and Allens Arthur Robinson.
Outcomes from the forum were in many ways surprising and pleasing. Feedback was overwhelmingly positive.
Hence we will be sponsoring another annual forum with CGI Glass Lewis on the morning of 12 February 2008. It will be held at Allens Arthur Robinson offices at Level 27, 530 Collins St Melbourne. More details will be forwarded by email to those interested shortly. Issues will focus on the content, feedback and voting outcomes of this year’s remuneration reports, as well as consideration of alternative executive remuneration frameworks.
Media organisations will be excluded from the event, and Chatham House rules will apply to ensure free and open dialogue. As at the last forum, there will be space available for institutional investors and board directors to discuss company specific issues in confidence during breaks and after the forum’s conclusion.
Numbers will be strictly limited.
No one size fits all in executive remuneration
For once the media hype has been correct. 2007 has been a hostile AGM season for executive remuneration.
And this is not because the proxy advisers and investors have all of a sudden decided to become more assertive. If anything, our experience is that they have become more accommodating. They have had to be, as more boards realise that “average” executive pay is no longer appropriate. And by this we do not just mean remuneration levels. We also mean how boards pay executives; that is, how much for warming the seat, how much for achieving results, the colour of the money (i.e. cash, options, rights, or shares), and the timing of pay delivery (i.e. now or some time in the future). The result is that more boards are willing to go out on a limb, and pay “differently”.
This article is a reprint of a Guerdon Associates’ opinion piece that appeared in the Australian Financial Review on 23 November 2007.
Latest GuerdonData® Updates
This month’s updates to GuerdonData® include disclosures from the following 23 companies:
AUSTAL LIMITED, DAVID JONES LIMITED, NUFARM LIMITED,OAKTON LIMITED, TEN NETWORK HOLDINGS LIMITED, WESTPAC BANKING CORPORATION, ILUKA RESOURCES LIMITED, BENDIGO BANK LIMITED, SUNCORP-METWAY LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED, AUSTRALIAN PHARMACEUTICAL INDUSTRIES LIMITED, BANK OF QUEENSLAND LIMITED, CENTRO RETAIL GROUP, COLES GROUP LIMITED, INCITEC PIVOT LIMITED, LYNAS CORPORATION LIMITED, MULTIPLEX ACUMEN PROPERTY FUND, MACQUARIE GROUP LIMITED , NEXUS ENERGY LIMITED, ORICA LIMITED, ST GEORGE BANK LIMITED, SMS MANAGEMENT & TECHNOLOGY LIMITED, LIHIR GOLD 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
“Salaries 2007”, Annabel Hepworth, Boss, November 2007, Volume 8, pp. 48–60
“What are you really worth”, Annabel Hepworth and Brad Hatch, Australian Financial Review, 9 November 2007
“Big results mean big dollars and big questions”, Damon Kitney and Annabel Hepworth with Alex Boxsell, S2-S3, Australian Financial Review, 13 November 2007
“Providing right incentive beats performance hurdles”, Round Table with Michael Robinson, Robert Savage, Pru Bennett, John Egan, Charles Macek, John Morschel, S20-S21, Australian Financial Review, 13 November 2007
“Pay-setters in race for rewards”, Annabel Hepworth, Australian Financial Review, 14 November 2007
“Remuneration rebels need information”, Damon Kitney and Annabel Hepworth, Australian Financial review, 15 November 2007, p. 26
“No one size fits all in executive remuneration”, Michael Robinson, Australian Financial Review, 23 November 2007, p.79
“Corporate governance: who is guarding the guardians?” Mark Cobley, Dow Jones Financial News On-Line, 29 November 2007
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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