GuerdonNews® Volume 5 Number 10

November 2009


Welcome to the November 2009 issue of GuerdonNews®

In this issue we:

• Describe new oddities introduced by the government’s latest changes to the taxation of employee share schemes

• Provide a directors' checklist for the executive pay-setting process

• Report research showing robust shareholder returns and good remuneration governance correlations over the long term.

• Summarise the feedback to the Productivity Commission on executive pay recommendations by directors and institutional investors at our recent briefing, as well making our own submission

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.

Look out for our newsletter next month when we summarise our very interesting research on executive and director remuneration during the GFC.

Employee share plan tax is still very odd, while executive termination pay is subject to termination

If you feel punch drunk with the Australian federal government’s announcements of variations to employee share scheme taxation, then hold on. There is more.

On top of that the political process that should have seen passage of the government’s executive termination pay law did not count on one Senator’s frame of mind.

The legislation to give effect to the government’s changes to the taxation of employee share schemes was introduced into the House of Representatives on 21 October 2009. Pending any amendments in the Senate, far from simplifying the taxation of employee share scheme benefits, these provisions introduce new uncertainties. These include retrospective application of taxation to rights which were not classed as ‘share scheme interests’ at the time the rights were granted.

The remuneration committee’s guide to the executive pay-setting process: a checklist

The focus on directors to ensure good governance processes for the determination of executive pay makes it important to consider the steps that should be employed in benchmarking executive remuneration.

This article provides a checklist to review your own processes.

Shareholder returns and remuneration governance highly correlated over investment cycle

Recent research by Goldman Sachs JB Were (GSJBW) has confirmed that the long-standing correlation between good governance and good shareholder returns has held up well during recent market volatility and over the longer term (8 year) investment cycle.

In particular, executive remuneration maintained its place as the most significant indicator of good governance among the factors used.

This is consistent with earlier research noted by Guerdon Associates last year.

Constructive executive pay feedback given to the Australian Productivity Commission

Investors and directors provided Productivity Commission Chairman Gary Banks with direct feedback at a recent forum, and yesterday Guerdon Associates formally submitted its feedback on the Commission’s draft executive pay report.

Guerdon Associates sponsored a briefing session for directors, institutional investors, and management on the draft executive pay Productivity Commission report in association with the proxy firm CGI Glass Lewis. The meeting, held on Monday 19 October 2009, was at the offices of Allens Arthur Robinson in Sydney, with a video link to Melbourne. The Chairman of the Productivity Commission, Mr Gary Banks, commented on the Commission’s approach and its draft recommendations, which were then considered in a panel and audience discussion.

Separately, Guerdon Associates has made a formal submission to the Commission on its draft executive pay report.

Latest GuerdonData® Updates

Updates to GuerdonData® include disclosures from the following company:

Abacus Property Group, AED Oil Limited, Alliance Resources Limited, Apex Minerals Nl, Aquarius Platinum Limited, Arafura Resources Ltd, Ardent Leisure Ltd, Arrow Energy Nl, Aspen Group, Atlas Iron Limited, Ausdrill Limited, Avoca Resources Limited, Bannerman Resources Limited, Beach Petroleum Limited, Berkeley Resources, Blue Energy Limited, Bluescope Steel Limited, Bow Energy Ltd, Brockman Resources Limited, Cabcharge Australia Limited, Cape Lambert Iron Ore Ltd, Carbon Energy Limited, Carnarvon Petroleum Limited, Cash Converters International, Centennial Coal Company Limited, Centro Properties Group, Ceramic Fuel Cells Ltd, Challenger Financial Services Group Limited, Charter Hall Group, Citigold Corporation Limited, Clough Ltd, Coffey International Ltd, Conquest Mining Limited, Cooper Energy Limited, Cudeco Limited, Customers Limited, David Jones Limited, Dexus Property Group, Dominion Mining Limited, Eircom Holdings Limited, Emeco Holdings Limited, FKP Property Group, Fleetwood Corporation Limited, Flexigroup Limited, Flinders Mines Limited, Fortescue Metals Group Ltd, Geodynamics Limited, Gindalbie Metals Ltd, Giralia Resources Nl, Goodman Fielder Limited, Goodman Group, Gunns Limited, Harvey Norman Holdings Limited, Horizon Oil Ltd, Infigen Energy, IOOF Holdings Limited, Jabiru Metals Limited, Kingsgate Consolidated Limited, Lend Lease Corporation Limited, Lynas Corporation Limited, Mantra Resources Limited, Marion Energy Limited, Medusa Mining Limited, MEO Australia Limited, Mincor Resources Nl, Minemakers Limited, Mineral Resources Limited, Mirabela Nickel Limited, Mirvac Group, Molopo Australia Limited, Monadelphous Group Limited, Mount Gibson Iron Limited, Murchison Metals Ltd, Neptune Marine Services Limited, Nomad Building Solutions Limited, Nufarm Limited, Onesteel Limited, Panoramic Resources Limited, Perilya Limited, Perseus Mining Limited, Platinum Asset Management Limited, Platinum Australia Limited, Premier Investments Ltd, PrimeAg Australia Limited, Ramelius Resources Limited, RHG Limited, Salmat Limited, Seek Limited, Service Stream Limited, Sims Group Limited, Sonic Healthcare Limited, Spotless Group Limited, St Barbara Limited, Straits Resources Limited, Sundance Resources Limited, Sunland Group Limited, Tassal Group Limited, Transfield Services Limited, Troy Resources Nl, Virgin Blue Holdings Limited, West Australian Newspapers 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

“Fat cats who are lapping it up”, The West Australian, 3 October 2009, p.61


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 © 2009 Guerdon Associates

ISSN 1834-8300