GuerdonNews® Volume 7 Number 6

July 2011

Dear [FIRSTNAME],

Welcome to the July 2011 issue of GuerdonNews®

In this issue we:

• Provide a checklist for Board approval of remuneration consultancy contracts

• Describe the implications of the Centro decision for board remuneration committees

• Summarise the improvements required in remuneration reports by ASIC

• Note ATO warns of FBT risk with loan-backed share plans using trust structure

• Summarise the provisions of the final version of Australian executive remuneration legislation

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.

Board approval of remuneration consultancy contracts –a checklist

Life is getting more complicated for directors - in this article we have tried to make things a bit easier.

New legislation introducing a 'two-strikes' rule and making substantial changes to procedures associated with executive remuneration, board limits and determination of proxy votes received Royal Assent on 27 June 2011, just three days before it came into force on 1 July 2011.

Included are requirments for the board to approve a remuneration consultant. We provide a checklist.

Centro decision and implications for board remuneration committees

The decision handed down on 27 June 2011 by Middleton J of the Federal Court in the ‘Centro Case’ (ASIC v Healey [2011] FCA 717) demonstrates how demanding a director's duties in approving financial statements can be.

The Centro decision is a case about financial reporting. This has implications for the board remuneration committee, given that the financial statements and the laws pertaining to them include the directors’ remuneration report.

ASIC cracking the whip on remuneration reports

As listed companies prepare for the release of their 30 June 2011 financial reports, the Australian Securities and Investments Commission (ASIC) has called for companies to provide more clarity on the remuneration arrangements for their directors and executives.

ATO warns of FBT risk with loan-backed share plans using trust structures

Loan backed share plans are a tax effective method for aligning the interests of employees with shareholders.

Employees are liable for capital gains tax on the share price appreciation instead of income tax, and dividends can be used to help pay off the loan. But the ATO warns that some companies take things a bit too far.

Australian executive remuneration Bill enacted without amendment

On 20 June 2011, the Senate passed the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011, without any amendments to the Bill previously passed by the House of Representatives.

The Bill received Royal Assent on 27 June 2011.

Latest GuerdonData® Updates

Updates to GuerdonData® include disclosures from the following 6 companies:

James Hardie Industries SE, Macquarie Group Ltd, Programmed Maintenance Servces, Singapore Telecommunications Ltd, Sigma Pharmaceuticals Limited, 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

“Understanding the new executive pay laws - how will they affect you?”, Guerdon Associates, Business Spectator, 29 June 2011

“Bar raised on executive pay deals”, Michaela Whitbourne with Patrick Durkin, Australian Financial Review, 1 July 2011, p. 1 and p. 7

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 © 2011 Guerdon Associates

ISSN 1834-8300

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