Welcome to the July 2009 issue of GuerdonNews®
In this issue we:
•Summarise the latest clarification to the Australian government’s share scheme tax
•Comment on the International Corporate Governance Network (ICGN) draft guidelines on Non-Executive Director remuneration
•Summarise issues with the most recent version of the executive termination benefits bill
•Note that executive pay killed off the “RuddBank”
•Summarise our submission to the Australian Productivity Commission’s inquiry into executive pay
•Report on what is known of the Australian Productivity Commission’s perspective on executive pay
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.
Are we there yet? Australian government’s share scheme taxation clarification #4
The Australian government has responded to broad based concerns.
It responds to critiques of legislative announcements with new legislative announcements, which in turn, creates new critiques, which generate new responses....and so on.
Senator Sherry provided a media release and a policy statement on taxation of employee share plans on 1 July 2009.
This article summarises where things stand now.
International Corporate Governance Network NED pay guidelines
The International Corporate Governance Network (ICGN) is a very significant influence on global corporate governance standards.
ICGN is holding its annual conference in Australia this year. Attending will be a global who’s who on governance standards from around the world. It is being held in Sydney on 13 to 15 July.
They recently requested submissions to comment on their new draft global guidelines for Non-Executive Director (NED) remuneration. This article summarises Guerdon Associates' response.
The Australian government introduces an executive termination benefits Bill that has major problems
The bill would require termination payments to company directors and senior executives which exceed one year’s salary to be subject to shareholder approval.
The Bill was introduced into the Australian parliament on 24 June 2009. The Bill will give effect to the Australian government’s March announcement that it would act “…to curb excessive ‘golden handshakes’ – or termination payments – paid to company executives.”
The Bill has yet to go through Parliament.
This article summarises the Bill, and identifies issues that it creates or fails to address.
Salary cap final blow to RuddBank
On Tuesday 16 June 2009 the Australian parliamentary upper house voted down the government’s plans to set up a “last resort” lending facility to maintain the pace of property development during the global financial crisis.
It was killed by the Greens because they want a salary cap.
RuddBank was to provide $4 billion to plug the hole left by the exit of foreign banks as $30 billion in funding is due to rollover in the next 3 years.
Guerdon Associates’ input into the Productivity Commission’s executive pay inquiry
The initial closing date for submissions to the Australian Productivity Commission’s inquiry into executive remuneration was 29 May 2009.
Guerdon Associates combined with proxy adviser CGI Glass Lewis’ to lodge a joint submission.
A condensed version of our conclusions and recommendations are provided in this article.
A preview of the Australian Productivity Commission’s perspective on executive pay
At Finsia breakfast seminars in Sydney and Melbourne on June 3 and 4 respectively, we heard the Productivity Commission’s chairman, Gary Banks, outline the scope of governance and remuneration issues being considered.
In addition to looking at detailed technical issues and the functioning of the executive labour market, the Commission appreciates from submissions that there are “community” perspectives on “excessive” remuneration, where there are political dimensions which may need to be addressed. Commissioner Banks noted that the effects of intervention in a market, including this one, can be perverse and lead to unintended consequences. He also noted that issues of community sentiment need to be balanced with “national income consequences” and that these remuneration issues relate to “efficiency of firms and markets”.
Latest GuerdonData® Updates
Updates to GuerdonData® include disclosures from the following company:
Programmed Maintenance Services Ltd, Singapore Telecommunications Ltd, James Hardie Industries NV, CSR Ltd, SP Ausnet
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
"Industry draws up shopping list", John Kehoe, Paul Smith and Patrick Durkin, Australian Financial Review, 9 June 2009, p. 9
“Frozen schemes will stay on ice”, Steven Scott and Patrick Durkin, Australian Financial Review, 16 June 2009, p. 13
“Tax change will drive cash pay bias”, Marsha Jacobs, Australian Financial Review, 17 June 2009, p. 4
“Director skills shake-up to follow Hardie decision”, Patrick Durkin, Australian Financial Review, 23 June 2009, p.13
“Hold the remuneration horses until PC reports”, Michael Robinson, Australian Financial Review, 26 June 2009, p.67
"Is this the death of the NED", Patrick Durkin, Australia Financial Review, 27 June 2009, p.27