Welcome to the February 2011 issue of GuerdonNews®

And a year of challenge for the board remuneration committee

In this issue we:

• Start off the year with our predictions for director and executive pay for the year ahead
• Summarise the government's executive remuneration legislation exposure draft and clawback discussion paper
• Submit to the Treasury our views on draft executive pay legislation
• Invite you to the Remuneration Forum discuss the issues with the government
• Note that NED pay levels have barely moved
• Find the answer to the clawback from within the Government discussion paper

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.

The outlook for director and executive pay in 2011

This article dusts off our crystal ball and presents our outlook for non-executive director and executive pay in 2011.

Executive remuneration legislation exposure draft and clawback discussion paper released

A case of the tail wagging the dog?

Just in time for Christmas, on 20 December 2010 the Australian Parliamentary Secretary to the Treasurer, the Hon David Bradbury, MP, released an exposure draft of legislation to implement the government’s response to the Productivity Commission’s executive remuneration reform recommendations.

Guerdon Associates’ submission to Treasury on executive pay

The dog may bite

The Australian government released the Treasury’s exposure draft on executive pay legislation on 20 December 2010. Submissions on the draft were required in barely the amount of time to sleep off the Christmas and New Year festivities, i.e. 20 January 2011. Fortunately Guerdon Associates had the people on the ground to publish our assessment on our website within days.

The Honourable David Bradbury, MP, to discuss government’s remuneration regulations at Remuneration Forum

Invitations to go out this week

David Bradbury, Treasury Secretary responsible for taxation and corporate law, among other things, has agreed to discuss the government’s approach to remuneration regulation at this year’s Remuneration Forum.

This year’s Forum is on the morning of Monday 21 March. Sponsored by Guerdon Associate with proxy adviser CGI Glass Lewis, it will be hosted at Arthur Allens Robinson’s Sydney premises.

If you are an institutional investor, company director, in executive management or a regulator you should receive an invitation later this week (sorry, no media permitted at this event). The Chatham House Rule applies.

Call us if you do not receive this invitation, or want to reserve a place.

Non-Executive Directors (NEDs) give up shares and super for cash

The median 2010 change in NED total compensation was less than 1%. This was lower than the 2.5% median increase in CEO fixed remuneration summarised by us in December

While the total value of NED remuneration has not increased, there has been a significant shift in how directors are opting to structure their remuneration.

Time to clawback the clawback paper?

20 December 2010 was a significant date for board remuneration committee, their advisers, investors, and other stakeholders.

On this date the government not only released the exposure draft of its legislation to implement its response to the Productivity Commission’s recommendations to reform executive remuneration but also a discussion paper seeking comments on clawback of executive remuneration.

Latest GuerdonData® Updates

Updates to GuerdonData® include disclosures from the following 16 companies:

Australian Infrastructure Fund, Australian Pharmaceutical Industries Limited, Australian Pharmaceutical Industries Limited, Carbon Energy Limited, Cash Converters International, Galaxy Resources Limited, Goodman Group, Gwa Group Limited, IOOF Holdings Limited, Mineral Deposits Limited, Mirabela Nickel Limited, Perilya Limited, Qantas Airways Limited, Seek Limited, Seven Group Holdings Limited, St Barbara 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

“Planned federal government changes to executive pay are set to burden non-executive directors with costly new responsibilities”, Damon Kitney, The Australian, 04 January 2011

“Pay reforms unnecessary, say experts”, Patrick Durkin, The Australian Financial Review, 21 January 2011, p. 7

“Directors’ executive pay plea”, Patrick Durkin, The Australian Financial Review, 31 January 2011, p. 3

"The tail wagging the dog? A perspective on the federal government's proposed executive pay regime", Business Spectator, 31 Jan 2011