Welcome to the September 2009 issue of GuerdonNews®
In this issue we:
• Provide a board remuneration committee checklist of five principles for effective remuneration governance
• Give you the good news and the not so good news on the draft employee share scheme tax legislation
• Comment on the revised draft executive termination payment provisions Corporations Amendment Bill 2009
• Note that the Australian Senate Economics Committee agrees with us, and recommends deferral of share scheme tax amendments
• Describe the Investment and Financial Services Association Limited (IFSA) Blue Book revised remuneration guidelines
• 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.
Focussing on what matters – a NED checklist for remuneration governance
Amid the tumult of regulatory change, board remuneration committees should maintain focus on matters critical to shareholders.
While being diverted on box ticking compliance matters is understandable, the principles underlying good remuneration governance could be left behind in the confusion.
This article seeks to redress the balance, and provide directors with a checklist of five primary principles for effective remuneration governance. The principles reflect remuneration governance considerations discussed by Guerdon Associates in past newsletters over the years that have since become better recognised, and may actually provide the foundation for principles-based regulation in several countries. But the regulation should not be considered as important as the principles themselves.
Australian employee share scheme tax draft legislation has come, and gone!
On 14 August 2009, Treasury released the government’s latest explanatory material on the proposed new employee share plan tax arrangements and an exposure draft of the legislation to give effect to the changes.
Submissions on the exposure draft package closed yesterday.
The exposure draft is generally consistent with the policy statement issued by the Assistant Treasurer, Senator The Hon Nick Sherry, on 1 July 2009 .
The draft has some good news and some bad news.
Guerdon Associates makes submission to the Australian Treasury on termination payment regulation, and appears before Senate enquiry
Guerdon Associates was invited by Treasury to comment on the revised draft Corporations Amendment Bill 2009.
Our comments were submitted on 5 August and were to be read in conjunction with our original submission on 1 June 2009 on the initially proposed amendments to the Corporations Act termination payments provisions, and also with our submission to the Senate Standing Committee on Economics on 13 July 2009. Afterwards we were invited to appear (on August 25) before the Senate Economics Legislation Committee, who sought our views on the draft legislation, and executive pay generally.
Australian Senate Economics Committee recommends delaying share scheme tax
The Senate Economics References Committee reported on the operation of Employee Share Schemes (ESSs) in Australia on 17 August.
The Committee made two recommendations:
1. That the ABS conduct a survey of ESSs in Australia every five years, starting at the end of the 2009–10 financial year.
2. That the Government delay the introduction of the ESS tax legislation in order to take note of the other reviews in this area, including the Productivity Commission and Board of Taxation and the Henry reviews, to maintain legislative integrity and coherence.
IFSA amends Blue Book for remuneration guidelines
IFSA has issued Guidance Note No. 2.00 'Corporate Governance: A Guide for Fund Managers and Corporations'. It is an update of what is commonly known as the IFSA Blue Book.
The Guidance Notes are issued by IFSA to assist its Members to provide leadership in promoting matters central to the interests of all shareholders. Compliance with the various IFSA Guidance Notes is ‘voluntary but strongly encouraged’ for IFSA members. IFSA also issues ‘Standards’ that are compulsory for its members.
Remuneration guidelines in the Blue Book have been amended.
Latest GuerdonData® Updates
Updates to GuerdonData® include disclosures from the following companies:
Austal Limited, ASX Limited, Hastie Group Limited, ISOFT Group Limited, The Mac Services Group Limited, Oakton Limited, Primary Health Care Limited, Telecom Corporation Of New Zealand Limited, Worleyparsons 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
“More work, more pay for scarce board members”, Marsha Jacobs, Australian Financial Review, 17 August 2009, p. 9
“Experts differ over effect of termination pay caps”, Marsha Jacobs, Australian Financial Review, 26 August 2009, p. 6
“The rising workload of NEDs”, The Boardroom Report, Volume 7, Issue 16, 26 August 2009, p. 2