GuerdonNews® Volume 6 Number 11

December 2010

Dear [FIRSTNAME],

Season’s greetings, and welcome to the December 2010 issue of GuerdonNews®

We have a bumper issue to keep you occupied over the holidays!

In this last newsletter for 2010 we:

• Witness that CEO pay has increased by 2.5% from 2009 to 2010
• Notice that the Australian government is set to release draft executive pay legislation “in coming weeks”
• Draw your attention to the date of fifth annual Remuneration Forum for directors and institutional investors
• Summarise the impact of legislation on company directors from an Australian Institute of Company Directors survey
• Note the merger of global corporate governance ratings firms
• Explain the changes to remuneration reporting proposed in Canada and if any can be applied to Australia
• Find that higher pay really does apply to those CEOs with good performance
• Summarise the UK Financial Services Authority’s proposals on remuneration disclosure

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.

We look forward to reporting board and executive remuneration news to you again in 2011, with our first monthly issue to be delivered on the first Tuesday in February. Until then, from all of us in Guerdon Associates, best wishes for a safe, happy and prosperous New Year.

2010 CEO pay – median increases of 2.5% with increases in frequency and size of performance pay

Regular workers' pay outpaces the boss's pay for another year.

Despite the improved economic conditions, more than one third (37%) of CEOs have suffered a reduction in their total remuneration between 2009 and 2010.

Only half ASX 300 CEOs received an increase in total remuneration.

CEOs' pay increases failed to match the increases received by their employees for the 2nd year running.

Government draft executive pay legislation set for release “in coming weeks”

As Parliamentary Secretary to the Treasurer, the Hon David Bradbury, MP, assists the Treasurer in relation to corporate governance and taxation, competition and consumer policy and financial literacy.

In a speech on 26 November 2010, Mr Bradbury indicated that the Australian government is set to release draft legislation to implement several executive pay reforms in “coming weeks” for public consultation.

Save the date – Remuneration Forum on 21 March 2011

Mark your calendars. The 2011 Remuneration Forum for board directors and institutional investors is scheduled for 21 March.

The Forum is Australia’s only annual opportunity for directors and their companies’ institutional investors to openly discuss remuneration levels, structure and governance. The Chatham House Rule applies. This allows for a frank exchange of views and constructive debate about what constitutes good remuneration governance.

The Australian Institute of Company Directors survey the impact of legislation on directors

On 1 November 2010 the AICD released the results of its survey on the impact of legislation on company directors.

The survey reveals that the burden of laws imposing personal liability on directors is stifling business decision-making and having a serious detrimental impact on key aspects of corporate performance.

Merger of governance ratings firms

On 2 December 2010 it was announced that The Corporate Library, GovernanceMetrics International (GMI) and Audit Integrity have merged, creating the “independent leader” in global corporate governance ratings and research.

The merged entity provides ratings on an international basis on companies covered by the MSCI world and emerging market indices. These global ratings agencies are becoming increasingly important in the attractiveness of Australian companies to offshore investors, which currently hold stakes of about 30% in our larger companies.

As Australia’s CAMAC finalises its recommendations, the Canadians are also proposing changes to remuneration reporting

As reported in the media, CAMAC is to workshop alternative approaches to remuneration reporting on 10 December. Guerdon Associates is one of the participants.

Almost in concert, the rest of the world is also amending reporting requirements. The latest proposals come from the Canadians, who released their own proposed changes on 18 November.

Does executive pay reflect how talented an executive is?

One of the issues in executive pay is whether pay reflects merit.

This article suggests there is evidence for this.

New UK financial services disclosure consultation paper on pay disclosure

Responses required soon!

The regulatory response to the GFC continues, with the UK Financial Services Authority (FSA) now seeking comment on the extension of remuneration disclosure requirements to banks, building societies and investment companies.

Latest GuerdonData® Updates

Updates to GuerdonData® include disclosures from the following 11 companies:

Australia and New Zealand Banking Group Limited, Bank of Queensland Limited, Elders Limited, GWA Group Limited, Incitec Pivot Limited, Mineral Deposits Limited, National Australia Bank Limited, Orica Limited, St Barbara Limited, Ten Network Holdings Limited, Westpac Banking Corporation

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

“BT Investment Management Limited; 2010 Annual Report”, ASX ComNews, 8 November 2010.

“Gonski concedes on exec pay votes —exclusive”, Damon Kitney, Annabel Hepworth & Glenda Korporaal, The Australian, 8 November 2010, p.21.

"Two-speed economy sets two levels", Tony Featherstone, Australian Financial Review, 17 November 2010, p.10.

“Resources chiefs lead the way”, John Stensholt & Patrick Durkin, Australian Financial Review, 17 November 2010, p.2.

“It's raining money for bank chiefs”, Matthew Drummond, Australian Financial Review, 17 November 2010, p.1.

“Challenger Financial Services Group Limited; Chairman and CEO Address to Shareholders at AGM”, ASX ComNews, 18 November 2010.

“Less ‘no’ votes at AGMs”, The Boardroom Report, Volume 8, Issue 23, 1 December 2010, p.1

“Three focus areas for pay”, Michael Robinson, Company Director, pp.52-53

Disclaimer

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 © 2010 Guerdon Associates

ISSN 1834-8300

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