Welcome to GuerdonNews®

In this May 2014 issue we:

• Wonder if the recently released Australian “deregulation” Bill’s changes to pay disclosures missed an opportunity
• Provide some guidance on how to assess a prospective new board director
• Suggest questions the board remuneration committee should ask to verify that equity grants have the value ascribed to them in the remuneration report and the AGM notice
• Alert readers to Europe’s proposed binding votes on executive pay prescribing pay levels

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

Deregulation Bill

A missed executive pay simplification opportunity?

The highly anticipated ‘deregulation’ bill, released on 10 April, is aimed at reducing red tape and compliance costs for businesses. When it comes to simplifying remuneration disclosures, however, it falls well short of the mark.

In fact, the compliance burden has been added to.

Appointing a new director

How to assess his or her suitability

The third edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations released earlier this year includes a new recommendation regarding the appointment of directors to listed company boards. The purpose of this new recommendation is to minimise the risk associated with a ‘bad hire’ and to ensure that the candidate is capable of consistently strong performance.

According to the commentary under this recommendation, these checks “…should include checks as to the person’s character, experience, education, criminal record and bankruptcy history.”

So how should a Chair or Nominations Committee best undertake these checks, and ensure that they are sufficiently robust, valid and reliable?

Traps in executive equity grants

What questions the board remuneration committee should ask

One of the significant complexities of executive remuneration is valuing and communicating equity grants, both to executives and to shareholders. The risk is that using a value that is not appropriate for the purpose will result in misleading communications. The remuneration report may end up incorrectly describing the company’s pay mix, or the proportion of remuneration that varies with performance, or statements of the value of an executive’s equity grant.

This article suggests the questions board remuneration committees ask to verify that company policy statements and actual practice are in agreement.

EU proposal for companies to put their remuneration policy to a binding shareholder vote

Pay levels to be prescribed

It is probably a good idea to keep track on overseas developments, given the trend for a convergence on several aspects of company governance among OECD countries.

On April 10 the European Commission proposed a binding “say on pay” policy that would apply to around 10, 000 companies listed on Europe’s stock exchanges.

Interestingly, the Commission’s proposals go further than the recent UK law on a binding vote of pay. The move is the latest by European lawmakers to be more prescriptive on executive pay, after earlier laws prescribing the nature of pay in financial services.

Latest GuerdonData® Updates

Updates to GuerdonData® include disclosures from the following 17 companies:

Ampella Mining Ltd, Elemental Minerals Ltd, Greenland Minerals & Energy Ltd, Grange Resources Ltd, Galaxy Resources Ltd, Mirabela Nickel Limited, Metminco Limited, Northern Iron Limited, Perilya Limited, TAP OIL Limited, Reckon Ltd, Altium Limited, Bionomics Ltd, iProperty Group Ltd, Sino Gas & Energy Holdings Ltd, TFS Corporation Limited, and Vocus Communications 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.