Welcome to the September 2013 issue of GuerdonNews®

In this month's issue we:

• Note that proposed ASX Governance Principles go a lot further than the shelved government laws to disclose “clawback” policies
• Highlight key aspects of the revised governance guidelines that ACSI apply for their vote recommendations to industry superannuation funds
• Speculate that developments in the UK will increase the likelihood of harsher and more difficult clawback policies that so far all but one ASX listed company have avoided
• Describe a proposed new ASX Listing Rule that puts to bed, for the moment, any talk of shareholder approval being required for on-market purchases of equity for directors
• Congratulate proxy adviser, CGI Glass Lewis, on their adoption of a new parent
• Regret that the Treasury's long overdue review of employee share schemes regulation and taxation has been “deferred”

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

ASX Governance Principles streamlined and strengthened

They require companies to have and to disclose remuneration "clawback" policies

Unlike the targeted amendments in 2010 (which saw new diversity recommendations ‘shoehorned’ in), this latest round of changes represents a major overhaul of the ASX Principles. They reflect the evolution of the corporate governance environment in Australia, including the introduction of the ‘two-strikes’ voting regime for company remuneration reports in 2011.

The Council's recommendation for companies to have and disclose a "clawback" policy goes much further than the now shelved government legislation. Unfortunately the Council has inappropriately applied the term "clawback", which does not do much to improve the clarity of disclosures that it and most others seek.

ASX listing rule changes for employee share plan on-market purchases

A new ASX Listing Rule that puts to bed talk of shareholder approval being required for on-market purchases of equity for directors

Interestingly, the ASX has not acceded to the calls from those who have advocated closing what they see as a 'loophole' to Listing Rule 10.14, choosing not to require shareholder approval for equity grants to directors where shares are to be sourced from on-market purchases rather than from new issues.

Proxy advisory firm ownership change

Glass Lewis has another owner

Ontario Teachers' Pension Plan (Teachers') announced on Wednesday 28 August that it had sold 20% of its ownership in proxy advisory firm Glass, Lewis & Co. (known in Australia as CGI Glass Lewis) to Alberta Investment Management Corporation (AIMCo).

Revised ACSI Governance Guidelines published

ACSI uses the guidelines to underpin its voting recommendations on ASX300 companies.

The Australian Council of Superannuation Investors (ACSI) has released the latest version of its Governance Guidelines – A guide for superannuation trustees to monitor listed Australian companies.

These Guidelines provide a framework by which industry superannuation funds can assess the Environmental, Social and Governance (ESG) practices of investee companies, particularly when exercising their voting rights.

Guerdon Associates has noted several issues companies may need to be mindful of in remuneration as well as the areas of board and director evaluation.

Tougher executive remuneration ‘clawback’ on the way?

Australian companies may become subject to more stringent “clawback” expectations

UK developments indicate that Australian listed company remuneration committees should probably prepare for more stringent "clawback" expectations. These go beyond the introduction of what are termed "clawback" disclosures in the proposed new ASX Corporate Governance Principles and Recommendations.

Already this reporting season, a number of companies have voluntarily disclosed provision to forfeit unvested executive rewards in the event of financial misstatement, malfeasance or fraud. Such “malus” arrangements contrast with true “clawback” in the form of recovery of remuneration that has vested to the employee. For a host of practical, legal, and other technical reasons, effecting a “clawback” policy is fraught with difficulty.

Submission deadline for employee share scheme taxation deferred

Closing date will be confirmed after Australian election

The Government, by convention, assumed a caretaker role on 5 August 2013 prior to the election and this will continue until the election result is known or, in the event of a change of government, when the new government is appointed.

Submissions on the ESS discussion paper will continue to be accepted, however, the closing date for submissions will be determined once the election result is known or, in the event of a change of government, when the new government is appointed. While no-one would begrudge Treasury officials taking a well earned break before a torrent of likely policy reviews on the appointment of a new government, we trust that whatever government takes the reins post election will continue to seek out reform in this area.

For more information on this interesting discussion paper click on "more info" below.

Latest GuerdonData® Updates

Updates to GuerdonData® include disclosures from the following 90 companies:

Ardent Leisure Ltd, Abacus Property Group, ABM Resources NL, Acrux Ltd, Ainsworth Game Technology Ltd, AGL Energy Ltd, Atlas Iron Limited, Asciano Ltd, Astro Japan Property Group, Ansell Ltd, APA Group, Aspen Group, Arrium Ltd, Ausdrill Ltd, ASX Limited, Aurizon Holdings Limited, BC Iron Limited, Bradken Ltd, Bandanna Energy Ltd, Buru Energy Limited, Bluescope Steel Ltd, Commonwealth Bank Australia, Cardno Limited, Cromwell Property Group, Cooper Energy NL, Carsales.com Ltd, Decmil Group Ltd, Downer EDI Ltd, Echo Entertainment Group, Emeco Holdings, Evolution Mining Ltd, Federation Centres, Forge Group Ltd, FKP Property Group, FlexiGroup Limited, Goodman Fielder, Hills Holdings Limited, Horizon Oil Ltd, IOOF Holdings Ltd, Infigen Energy, Independence Group NL, Imdex Limited, IMF (Australia) Ltd, Maverick Drilling & Exploration Ltd., Macmahon Holdings Ltd, Matrix Composites & Engineering Ltd, Mincor Resources, Magellan Financial Group Limited, Mirvac Group, Mineral Resources, Medusa Mining Limited, McMillan Shakespeare Limited, Monadelphous Group Ltd, M2 Telecommunications Group Limited, Navitas Limited, NRW Holdings Limited, Origin Energy Ltd, Qube Holdings Ltd, RCR Tomlinson Limited, REA Group Ltd, Ramelius Resources Ltd, SAI Global Ltd, Saracen Mineral Holdings Ltd, St Barbara Limited, Shopping Centres Australasia Property Group, Sedgman Ltd, Seek Ltd, Sandfire Resources NL, Sims Metal Management Ltd, Skilled Group Limited, SMS Management & Technology Ltd, Starpharma Holdings Limited, Sirtex Medical Ltd, Seven West Media Ltd, Southern Cross Media Group Limited, Senex Energy Limited, Wotif.com Holdings, Western Areas Ltd, WorleyParsons Ltd, Whitehaven Coal Ltd, Webjet Ltd, UXC Ltd, UGL Ltd, Transfield Services Ltd, The Reject Shop Limited, Transpacific Industries Group, Tox Free Solutions Limited, Toll Holdings Ltd, Transurban Group. and Tabcorp 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.