Welcome to the October 2008 issue of GuerdonNews®.
In this issue we convey Mr. Rudd’s thoughts on how Australia will tackle banker pay regulation, examine the impact of US bank bailouts on executive pay in Australia, discover that Australian companies do well relative to other global companies in producing remuneration and annual reports, provide remuneration committees with a checklist for the disclosure of executive incentive targets, and alert companies that earnings per share measurement methods may be about to change, potentially impacting executive incentive plans.
We conclude with the latest on executive and director remuneration disclosure updates available on the GuerdonData® on line database and references to Guerdon Associates in the news media.
Rudd’s UN speech a window into government thinking on banker pay regulation
Few world leaders have addressed the systematic issues underlying the global financial crisis. Within a broader speech to the UN General Assembly on 25 September, Australia’s Prime Minister, Kevin Rudd, took time to do just that.
Within that speech he also provided a much clearer indication of how the Australian government preferred banker pay to be regulated.
The impact of US bank bailouts on executive pay in Australia
The US government’s latest financial intervention and regulation of executive pay is a response to an issue that fairly and squarely originated in its own backyard, but has infected the rest of the world.
The associated executive pay crackdown is the product of politicians’ short sighted and opportunistic appeal to voters on the eve of that country’s November elections.
The danger is that the US’s voter-driven but irrelevant regulation of executive pay may set precedents not only for the US, but for Australia and the rest of the world as well.
A board remuneration committee checklist for the disclosure of performance targets
Although Corporations Act S300A requires disclosure of performance requirements for incentive payments, it provides no guidance on the form of the disclosure.
Many companies currently sidestep the requirement by pleading commercial privilege, arguing that the information is competitively sensitive. As a result, many remuneration report disclosures lack the detail to determine if the performance condition and resultant performance pay seems reasonable.
Given that remuneration reports generally look backward, rather than revealing plans or objectives for future bonus payments, some governance reviewers are questioning whether the argument of commercial privilege is applicable.
Global evaluation of remuneration reports
ReportWatch is a global annual report monitoring service.
Each year it publishes its annual report on annual reports. Annual reports are assessed on a number of pertinent factors and 200 of the global top annual reports are graded.
Several of the largest Australian listed companies make the grade in several respects.
AASB proposed changes to Earnings Per Share definition will impact incentive pay
Proposed changes to the definition of earnings per share (EPS) in AASB 133 Earnings per Share are relevant to executive remuneration for at least two reasons
1. EPS is the second most popular long term incentive (LTI) performance measure after relative total shareholder return, and
2. The changes would mean that unvested shares, rights and options granted under LTI plans would no longer be counted when calculating diluted EPS, which would increase the diluted EPS figure
Latest GuerdonData® Updates
This month’s updates to GuerdonData® include disclosures from the following 57 companies:
ALLCO FINANCE GROUP LIMITED, AGL ENERGY LIMITED, ATLAS IRON LIMITED, AUSTRALIAN INFRASTRUCTURE FUND, AMCOR LIMITED, AUSTRALIAN PIPELINE TRUST, BABCOCK & BROWN INFRASTRUCTURE GROUP, BABCOCK & BROWN POWER, BENDIGO BANK LIMITED, BRADKEN LIMITED, BORAL LIMITED,BOOM LOGISTICS LIMITED, BRAMBLES INDUSTRIES LIMITED, COMMONWEALTH BANK OF AUSTRALIA, CREDIT CORP GROUP LIMITED, CONNECTEAST GROUP, CENTRO PROPERTIES GROUP, COCHLEAR LIMITED, COMPUTERSHARE LIMITE, CSL LIMITED, CARNARVON PETROLEUM LIMITED, CROWN LIMITED, DEEP YELLOW LIMITED, FOSTER'S GROUP LIMITED, FLIGHT CENTRE LIMITED, GUD HOLDINGS LIMITED, GWA INTERNATIONAL LIMITED, HFA HOLDINGS LIMITED, HILLS INDUSTRIES LIMITED, HASTIE GROUP LIMITED, INSURANCE AUSTRALIA GROUP LIMITED, IMDEX LIMITED, JB HI-FI LIMITED, MACMAHON HOLDINGS LIMITED, MURCHISON METALS LTD, ORIGIN ENERGY LIMITED, PACIFIC BRANDS LIMITED, PALADIN RESOURCES LIMITED, PAPERLINX LIMITED, PHARMAXIS LTD, QANTAS AIRWAYS LIMITED, QUEENSLAND GAS COMPANY LIMITED, RIVERCITY MOTORWAY GROUP, REVERSE CORP LIMITED, RIVERSDALE MINING LIMITED, SEEK LIMITED, STOCKLAND, SUNSHINE GAS LIMITED, SKILLED GROUP LIMITED, TABCORP HOLDINGS LIMITED, TRANSURBAN GROUP, THE REJECT SHOP LIMITED, TRANSFIELD SERVICES LIMITED, UNITED GROUP LIMITED, WEST AUSTRALIAN NEWSPAPERS HOLDINGS LIMITED, WESTERN AREAS NL, WOTIF.COM HOLDINGS 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
“The great divide”, Tony Featherstone, Company Director, Vol 24 No 9, October 08, pp. 23-25
“Big payouts not a problem here”, Michael Robinson, Australian Financial Review, Monday October 6, 2008, p.71
“Beware of knee-jerk reponse to pay”, Editorial, Australian Financial Review, Monday October 6, 2008, p.70
“Shareholders target boards in executive pay revolt”, Annabel Hepworth, Australian Financial Review, Monday October 6, 2008, p.1 and p.18
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
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