GuerdonNews® Volume 9 Number 5

June 2013


Welcome to the June 2013 issue of GuerdonNews®

In this month's issue we:

• Advise that the new Australian executive remuneration disclosure requirements legislation has been shelved
• Summarise a recent research paper, which confirms that "short-termism" in incentive pay structures and investor expectations hurt long-term returns
• Alert you to an amendment of an ASX listing rule requiring discosure of CEO and director employment terms
• Note that new accounting proposals for the treatment of operating leases will impact some executive incentive plans
• Point at likely effects of the EU banker bonus cap

We conclude with the latest on executive and director remuneration disclosure updates available on the GuerdonData® on-line database.

New Australian executive remuneration disclosure requirements legislation has been shelved

Was the preparatory work in vain?

An Australian Treasury source has confirmed to Guerdon Associates that the proposed disclosure requirements will not be enacted before the election.

Pay does make a difference to long term returns

Recent research reveals patterns of pay, ownership and shareholder returns

An award winning article provides further evidence that the structure of executive pay, as well as the investor expectations, can have consequences detrimental to the longer-term returns that could otherwise be achieved.

These results are consistent with Guerdon Associates' prior research that earnings pressure leads executives to focus on short-term behavior that may damage longer term performance.

ASX Listing Rules now specifically require disclosure of material CEO employment terms

What is material to a CEO is not necessarily the same as what is material to the company

An amended ASX Listing Rule requires listed entities to notify the ASX of the material terms or material variation of any employment, service or consultancy agreement made with the CEO or a director.

Previously, information on CEO employment terms was only required if a reasonable person would expect it to have a material effect on the price or value of the entity’s securities.

Laying bare the cost of operating leases and the impact on executive incentive plans

Long term leases might affect capital efficiency metrics in incentive plans

New AASB standards will apply to include operating leases on plant and equipment in the balance sheet.

The new standards will also require application of income/losses and cash flows arising from the use of leased assets in the income and the cash flow statements, respectively.

How the EU cap on bankers’ bonuses will work and its likely impact

Unintended, but not-so-unforseen, consequences may follow

The European Banking Authority (EBA) has approved restrictions on banker bonuses via a mandatory shareholder vote.

Likely consequences include banker increases in base salaries.

Did you receive the May newsletter?

A few subscribers did not.

Apparently some subscribers did not receive the May issue of the newsletter. We are sorry that this occurred. The reasons are still being investigated, and we hope to have this fixed soon. But if this was you, you can catch up by clicking "more info' below.

Latest GuerdonData® Updates

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

Programmed Maintenance Servces, SP AusNet, Thorn Group 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.


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 © 2013 Guerdon Associates

ISSN 1834-8300