GuerdonNews® Volume 9 Number 9

October 2013

Dear [FIRSTNAME],

Welcome to the October 2013 issue of GuerdonNews®

In this month's issue we:

• Report that ACSI has appointed a new CEO from the Future Fund
• Identify some of the more interesting findings from last week’s annual ACSI review of board composition and director fees
• Welcome most of the Australian Shareholders’ Association policy guideline refinements
• Observe that the new influx of CEOs has reduced overall pay levels, according to ACSI’s recent executive pay findings
• Resist calling anyone stupid for not recognising that company performance has a significant impact on executive pay votes
• Note that the US has again delighted the consulting community with regulation requiring CEO to average worker pay ratio disclosure
• Are comforted that governance and proxy advisers are also formally surveyed and assessed by their clients

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

ACSI Appoints New CEO

Gordon Hagart will replace Ann Byrne, who retires from the ACSI CEO position at the end of October.

The Australian Council of Superannuation Investors announced that Gordon Hagart, Head of Environmental, Social and Governance (ESG) Risk Management at the $100 billion Commonwealth Government fund, would take over as its new Chief Executive Officer.

The appointment is significant, given that ACSI represents more than 30 industry and government funds in the not-for-profit sector which manage more than $350 billion in retirement savings for six million Australians.

ACSI publishes review of ASX 200 CEO pay

Average ASX 100 CEO pay has decreased

Key findings from this year’s study indicate that:

• Average ASX top 100 fixed pay declined by 2.4 percent to $1.9 million in 2012, whereas average ASX 101-200 CEO fixed pay was almost 5 percent higher than average fixed pay in 2011.
• Average short-term incentives (STIs) for ASX top 100 CEOs increased by 4.8 percent in 2012, compared with a 20 percent decline in the size of STIs in 2011.
• The majority of sample (82%) CEOs received an STI in 2012.
• High levels of cash pay remain a feature of the ASX largest 100 company CEOs.

Australian Shareholders’ Association releases a revised policy paper

Many points appear more finely considered than in prior years

The Australian Shareholders Association (ASA) has released a policy paper setting the foundation for how they will vote their proxies on board governance and executive remuneration resolutions. The paper promotes a number of significant items which are a departure from past policy, a departure from other governance stakeholders, and/or a new area of emphasis for the ASA.

ACSI’s 12th annual review of board composition and non-executive director fees in Australia’s largest listed companies

NEDs are older and stay longer, but boards let in more, younger women

And often it is the same women who turn up on a different board.

The study also found that median fees paid to company chairmen in the ASX 100 have fallen 5.1%, while the median fell 10% in the ASX 101-200 group. In contrast, the median fees for other non-executive directors in the ASX 100 remained flat, and in the ASX 101-200 they increased by 5.5%.

Remuneration report votes are not so much about executive pay

It is more about performance

In the last 2 seasons, and indeed since the advisory vote on the remuneration report was introduced for ASX listed companies, there has been a discomforting capriciousness with the outcome of many votes. Why is it that some companies and their boards get away with questionable pay practices, while others with seemingly few executive pay issues get slammed with a strike?

Well, look no further. There is an answer.

Pay ratio disclosure regulation: CEO to the average worker

The US strays down another regulatory path

For several years there has been lobbying for regulation for the disclosure of CEO to “average” worker pay across the Anglo-speaking and Euro zone countries. Despite a recent report by Will Hutton, the UK has so far resisted the move. In addition, an attempt by the mainly conservative German government to legislate for this disclosure was defeated by an opposition Greens (no less!) coalition. The US, however, has charged ahead.

Independent corporate governance research firms ranked in a global survey of asset managers

The raters get rated

Directors often complain that these proxy advisers and a small group of other researchers have too much influence and are not as accountable as they should be. As usual, the story is never quite that simple. It should provide some level of comfort that the research firms are also ‘researched’ and ranked.

The Independent Research 
In Responsible Investment (IRRI) 2013 survey invited responses from all participants in the Sustainable and Responsible Investment (SRI) and Corporate Governance (CG) value chain: asset managers, sell-side research houses, independent SRI agencies & quoted companies. It received 668 votes from 142 different firms in 30 different countries.

Among the research outcomes were rankings for the best independent SRI and CG research firms.

Latest GuerdonData® Updates

Updates to GuerdonData® include disclosures from the following 85 companies:

AWE Ltd, Bendigo and Adelaide Bank Limited, Brambles Industries Ltd, Clough Ltd, Cochlear Ltd, Codan Limited, David Jones Ltd, Newcrest Mining Ltd, Orotongroup Limited, Domino's Pizza Enterprises Ltd, ALS Ltd, Amcom Telecom Ltd, Amcor Ltd, Aquila Resources, ARB Corp Ltd, Australian Infrastructure Fund Limited, Computershare Ltd, CSG Limited, Envestra Ltd, Fletcher Building Ltd, Gindalbie Metals Ltd, iiNET Limited, Kingsgate Consolidated Ltd, Nexus Energy Limited, Papillon Resources Limited, Pharmaxis, Rex Minerals Ltd, Treasury Wine Estates, Kathmandu Holdings Limited, Nufarm Limited, Base Resources Limited, Beach Energy Limited, BHP Billiton Ltd, Billabong Intl Ltd, Boral Ltd, Breville Group Ltd, Cash Converters International, Challenger Limited, Coalspur Mines Ltd, Credit Corp Group Limited, Crown Limited, CSL Ltd, Dexus Property Group, Discovery Metals Ltd, Drillsearch Energy Ltd, Flight Centre Ltd, Flinders Mines Limited, Fortescue Metals Group, Goodman Group, GUD Hldgs Ltd, GWA Group Ltd, Insurance Australia Group Ltd, Jb Hi-Fi, Karoon Gas Australia Limited, Kingsrose Mining Limited, Lend Lease Group, Linc Energy, Lynas Corporation Limited, Mermaid Marine Australia Ltd, Mesoblast Limited, Molopo Energy Limited, Mount Gibson Iron, Neon Energy Ltd, NEXTDC Ltd, Northern Star Resources Ltd, Pacific Brands Ltd, Paladin Energy Ltd., Panoramic Resources Limited, Perpetual Limited, Perseus Mining Limited, Platinum Asset Management Limited, Prima Biomed Ltd, Primary Health Care Ltd, Qantas Airways Ltd, Regis Resources Ltd, Seven Group Holdings Limited, Silex Systems Ltd, Silver Lake Resources Ltd, Sonic Healthcare Ltd, Stockland, Suncorp Group Ltd, Super Retail Group Ltd, Tatts Group Limited, Telstra Corp Ltd, and Fairfax Media 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.

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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ISSN 1834-8300

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