GuerdonNews® Volume 10 Number 1

February 2014

Dear [FIRSTNAME],

Welcome to the February 2014 issue of GuerdonNews®

In this first of our monthly issues in 2014 we:

• Look into our crystal ball to predict the key issues to be addressed by remuneration and nomination committees in 2014
• Analyse non-executive director remuneration trends
• Confirm the government’s commitment to amend the taxation of employee equity to encourage wealth creating start-ups, and some of the issues and opportunities this may involve
• Provide a checklist for boards to easily monitor the health of their board performance on a regular basis
• Update you of a timing change and progress in developing what looks like to be a fascinating Remuneration and Governance Forum for directors and investors

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.

The outlook for director and executive pay and board renewal in 2014

Many issues and opportunities for boards to consider

The US and European economies are recovering. The first cuts have been made in quantitative easing while the $A-$US exchange rate is likely to continue to be lower than in recent years. Inflation pressures may give rise to higher wage demands. The Australian economy is successfully transitioning and should grow more strongly in the second half of 2014 after a tepid first half.

In addition to what rates of increase in director and executive pay to expect, there are 9 key areas of change for remuneration and nomination committees to focus on.

Non-executive director remuneration trends

Extent of increases in 2013 modest

Consistent with the reduced rate of executive remuneration increases, non-executive director (NED) fees also moderated from an already modest pace. The median change in total remuneration for all NEDs (both chairmen and directors) in 2013 was 2.2%. This was lower than the 3.8% median NED fee change in 2012.

However, there were some variations across industries.

Australian government to act on employee share plan tax

It will be changed!

The announcements and press releases from seven government departments on this subject underline the commitment to doing something. But it is the ‘something’ that is still up in the air. Clearly, action would most likely have minimal effect on tax revenues. In 2010-2011 the taxable value of employee share scheme benefits was over $2 billion. So kiss goodbye to any thoughts of major ESS tax reform that would apply to all ESSs. Instead, the stated focus is on “start-ups” and “innovators”.

Employee share schemes and the Corporations Act

There is a simpler approach

Guerdon Associates has lodged its submission on ASIC’s proposals to expand the relief from the Corporations Act disclosure, licensing and hawking provisions.

We support many of the proposals, on the basis that they reduce the regulatory requirements for employers wishing to offer incentive schemes to their employees. We have, however, made some specific comments and suggestions on a number of the proposals – these are set out in our article and submission - click on "more info" below.

2014 Remuneration and Governance Forum Update

Panellists, timing, and the issues

Due to factors outside our control, the 2014 Remuneration and Governance Forums for board directors and institutional investors have had to be re-scheduled. For an update on the timing, panelists and issues to be addressed, click on "more info" below.

The high performing board and continuous improvement

A checklist for a “pulse check”

Directors want to be associated with a high performing board, so a key question for every director is:

“What are the things that outstanding boards do more frequently, and more effectively than their poorer performing counterparts?”

Whilst there are several differentiating factors, perhaps a key one is the way in which the board focuses on continuous improvement.

We provide a checklist.

Latest GuerdonData® Updates

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

Orica Limited, Aristocrat Leisure Limited, Graincorp Limited, Gryphon Minerals Limited, Village Roadshow Limited, Telecom Corporation Of New Zealand Limited, Collection House Limited, Fonterra Shareholders Fund, and Mayne Pharma 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.

Guerdon Associates in the news

"Connecting with investors on pay", Domini Stuart, Company Director, Volume 30 Issue 01, February 2014, pp. 25-27

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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  Copyright © 2014 Guerdon Associates

ISSN 1834-8300

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