Welcome to the October 2012 issue of GuerdonNews®

In this issue we:

• Highlight ISS' preview of executive remuneration and the 2012 voting season
• Note that there is consistency in APRA's evaluation of Australian financial institution pay governance
• Look at how ACSI evaluated ASX100 CEO remuneration and found disclosure wanting
• Looked again at Citi's review of ASX100 CEO remuneration and found disclosure improving!
• Note that CAMAC is considering proxy firm regulation
• Warn directors that investors and proxy firms have flagged that the prospect of a second-strike does not faze them
• Look at the final text of the LAFH allowance taxation law as passed by both houses and received Royal Assent

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 since our last newsletter.

ISS previews the proxy season

And paints a gloomy picture for 1st-strikers

ISS published the “2012 Voting Season Preview: Australia and New Zealand” report on 19 Sep 2012.

The report reinforces Guerdon Associates' earlier warnings that ISS, like other proxy advisers, will evaluate the 1st strikers' remuneration practices the same way as all other ASX-listed companies.

Australian financial institutions receive encouragement from APRA

But more is needed

APRA gave an evaluation of Australian financial institutions' remuneration governance standards in a recent speech.

While Australian financial institutions are praised for addressing risk management implications in their remuneration practices, APRA noted areas where specific improvements are still required.

Citigroup review shows improved disclosure for ASX100 CEO pay

Study points at improved incentive pay and performance target disclosures

Citigroup’s “ASX100 CEO Remuneration Analysis” indicates that both STI and LTI vesting have varied widely for CEOs, despite recent media reports that focus on pay cuts and forfeiture of incentive payments.

ACSI research finds statutory disclosures of CEO remuneration are good proxies for realised pay

Although there can be wide deviations for individual CEOs

ACSI released the 2012 issue of its annual “CEO Pay in the Top 100 Companies” report on 18 September 2012, except it is CEO pay in the top 200 companies.

Main findings of the research are that statutory disclosures of S&P/ASX100 CEO remuneration, on average, are close to realized pay for the 2011 financial year and that fixed pay held steady, while bonuses fell materially in the same period relative to the previous year.

Australia’s CAMAC reviews the need for the AGM

And talks of regulating proxy advisers

In their AGM and shareholder engagement discussion paper, CAMAC identifies three overarching issues and seeks view on:
• the role of the AGM within the broader context of the ongoing relationship between the board and the institutional and retail shareholders of the company
• the content of the annual report
• the current processes of the AGM

They also ask if the manner in which institutional shareholders utilise the services of proxy advisers require enhanced guidance or regulation.

Two strikes and investor behaviour

The threat of a spill will not deter a 2nd strike

Despite the speculation that investors will not exercise a vote that may result in a second strike, they are in fact likely to vote on the remuneration report in a “business as usual” fashion, but not support the spill resolution.

Changes to tax concessions for LAFH allowances and benefits legislated

With clarifications but no changes from first reading

The Tax Law Amendment Bill 2012 passed both houses on 19 September 2012, and received Royal Assent on 28 September 2012.

The final bill incorporates the recommendations made by the House of Representatives Standing Committee on Economics.

Latest GuerdonData® Updates

Updates to GuerdonData® include disclosures from the following 72 companies:

ABM RESOURCES NL, AGL ENERGY LIMITED, ALS LIMITED, AMCOR LIMITED, AUSTIN ENGINEERING LIMITED, AQUILA RESOURCES LIMITED, ARB CORPORATION LIMITED, ARAFURA RESOURCES LIMITED, AZIMUTH RESOURCES LIMITED, BENDIGO BANK LIMITED, BHP BILLITON LIMITED, BORAL LIMITED, BANDANNA ENERGY LIMITED, BIOTA HOLDINGS LIMITED, BRAMBLES INDUSTRIES LIMITED, CASH CONVERTERS INTERNATIONAL , CERAMIC FUEL CELLS LIMITED , CARABELLA RESOURCES LIMITED, COCKATOO COAL LIMITED, COALSPUR MINES LIMITED, CSG LIMITED, CROWN LIMITED, DAVID JONES LIMITED, DART ENERGY LIMITED, FLETCHER BUILDING LIMITED, FORGE GROUP LIMITED, FLINDERS MINES LIMITED, GINDALBIE METALS LTD , GRYPHON MINERALS LIMITED, HILLS INDUSTRIES LIMITED, INDUSTREA LIMITED , INDEPENDENCE GROUP NL, INTEGRA MINING LIMITED, IINET LIMITED, Imdex Limited, Karoon Gas Australia Limited, KATHMANDU HOLDINGS LIMITED, KINGSROSE MINING LIMITED, LYNAS CORPORATION LIMITED, McMillan Shakespeare Limited, MOLOPO AUSTRALIA LIMITED, MERMAID MARINE AUSTRALIA LIMITED, NEWCREST MINING LIMITED, NEON ENERGY LIMITED, NUFARM LIMITED, NEXUS ENERGY LIMITED , ORIGIN ENERGY LIMITED, OROTONGROUP LIMITED, PANORAMIC RESOURCES LIMITED, PACIFIC BRANDS LIMITED, PRIMA BIOMED LTD, PRIMARY HEALTH CARE LIMITED, PHARMAXIS LTD, QANTAS AIRWAYS LIMITED, RED 5 LIMITED, RAMSAY HEALTH CARE LIMITED, RESOLUTE MINING LIMITED, SUNDANCE RESOURCES LIMITED , SANDFIRE RESOURCES NL, SONIC HEALTHCARE LIMITED, SAMSON OIL & GAS LIMITED, SUPER CHEAP AUTO GROUP LIMITED, SEVEN GROUP HOLDINGS LIMITED, SENEX ENERGY LIMITED, TOX FREE SOLUTIONS LIMITED, TROY RESOURCES NL, WHITE ENERGY COMPANY LIMITED, WESFARMERS LIMITED, Whitehaven Coal Ltd, WOOLWORTHS LIMITED, TREASURY WINE ESTATES LIMITED, and CSR 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

“Top companies act on investor anger”, Patrick Durkin, Australian Financial Review, 19 September 2012, p. 11

“Labor rapped over executive pay”, Patrick Durkin and Neil Chenoworth, Australian Financial Review, 19 September 2012, p. 11

“Telstra’s performance-pay plan: Could it work for you?”, SmartCompany, 14 September 2012

“Executives overlook exit clauses during contract negotiations”, Kath Walters, Smart Company, 10 September 2012

“Rid your contract of career-wrecking exit clauses”, Leading Company ,9 September 2012

“Telstra boosts Thodey’s salary”, Mitchell Bingemann, The Australian, 7 September 2012, p. 21