Welcome to the April 2013 issue of GuerdonNews®
In this monthly issues we:
• Question whether the draft laws on additional Australian pay disclosure will add value in addition to complexity in our submission to The Treasury
• Note with interest how one sgnificant UK investor association would like to see executive pay re-configured
• Have confirmed at our Melbourne Remuneration Forum that some companies will never please all investors all of the time, especially in regard to performance metrics
• Observe the effect of the “tyranny of distance” first hand with the rare coming together of investors and directors at our Perth Remuneration Forum
• Assist The Treasury in its review of the effectiveness of the 2009 Australian executive termination payment laws
• Note that the US will now allow certain types of loan backed executive equity plans for Australian and New Zealand companies with ADRs
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.
Note that the UK House of Commons is now expected to finalise their well considered director pay disclosure regulations on 16 April. Watch our website for an update and our report in next month’s newsletter.
Guerdon Associates’ submission on proposed pay disclosure amendments
It would have been nice if our submission had been able to fully commend the government for introducing sensible governance laws.
Alas, not this time.
Should not a remuneration report state the total pay an executive received? And how much was paid for performance?
Neither the current nor the proposed disclosures require this basic information. There is no requirement to report an individual KMP's total pay. There is no requirement to report pay received for performance.
UK pension funds’ executive remuneration alternatives go against current practice, but worth consideration
An echo of the readiness of Australian investors' willingness to accept something different
The Melbourne Remuneration Forum heard from investors of their willingness to consider alternative methods of executive remuneration.
This is also evident in the UK. In early March the UK National Association of Pension Funds (NAPF) wrote to the chairmen of the FTSE 350 companies to emphasise several of its corporate governance policy best practice principles that it expects to see applied in 2013.
Guerdon Associates’ submission on the operation of the termination payments laws
The Australian Treasury is conducting a post implementation review of the 2009 termination payments reforms that lowered the threshold at which termination payments must be approved by shareholders to one year’s average base salary.
Overall, the effect of the law has been beneficial.
However, it does have drafting flaws and it has had unintended consequences.
We suggest some changes are necessary.
Australian, New Zealand, and other foreign listed companies with securities traded on US exchanges are now allowed to apply loan-based share plans
But only in a particular configuration
One of the peculiarities of the US Sarbanes-Oxley Act (SOX) is that it does not allow loan-based executive share plans for companies with securities traded in the US. This includes Australian and New Zealand (as well as other foreign) companies with ADRs traded on the NYSE.
Recent guidance suggests that some loan backed executive equity plans are allowed.
Perth Forum bridges "tyranny of distance" between directors and investors
At least for a few hours
Guerdon Associates, and our co-sponsors CGI Glass Lewis, felt pretty good about bringing together investors and company directors at our Remuneration Forum in Perth on 11 March, if only to confirm how very different and difficult it is for resources companies to understand and be understood on executive and director remuneration issues.
This was contrasted with the experience of directors in larger, non-mining, companies, where it was evident that distance was less tyrannical.
Melbourne Remuneration Forum hears what investors want in incentive plans
As well as government views on disclosure laws
This year’s Forum addressed the still evolving remuneration disclosure regime and the operation of the remuneration governance system, with particular attention paid to shareholder activism against ‘unjustified’ incentive payments.
While directors tend to remain pragmatic on what works best across companies, some investors remain convinced the relative TSR is the best method on which to assess performance.
Latest GuerdonData® Updates
Updates to GuerdonData® include disclosures from the following 33 companies:
AUSTRALAND PROPERTY GROUP, AMP LTD, APN NEWS & MEDIA LTD, ALUMINA LTD, RIO TINTO LTD, SYDNEY AIRPORT, AURORA OIL & GAS LTD, COCA-COLA AMATIL LIMITED, ENERGY RESOURCES OF AUSTRALIA LIMITED, GENERAL PROPERTY TRUST, GRANGE RESOURCES LTD, INTREPID MINES LIMITED, IRESS MARKET TECHNOLOGY LIMITED, IVANHOE AUSTRALIA LIMITED, INVOCARE LIMITED, MIRABELA NICKEL LIMITED, MINERAL DEPOSITS LIMITED, PERILYA LIMITED, ROC OIL COMPANY LIMITED, SPARK INFRASTRUCTURE GROUP, TAP OIL LIMITED, ADELAIDE BRIGHTON LIMITED, NORTHERN IRON LIMITED, OIL SEARCH LIMITED, HIGHLANDS PACIFIC LIMITED, INDOPHIL RESOURCES NL, GREENLAND MINERALS & ENERGY LTD, HENDERSON GROUP PLC, METMINCO LIMITED, TIGER RESOURCES LIMITED, BEADELL RESOURCES LIMITED, ILUKA RESOURCES LTD, LEIGHTON HOLDINGS LTD
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
“Executive pay disclosure plea rejected”, Patrick Durkin and Mercedes Ruehl, Australian Financial review, 11 March 2013, p.5