GuerdonNews® Volume 10 Number 5

June 2014

Dear [FIRSTNAME],

Welcome to GuerdonNews®

In this June 2014 issue we:

• Look at the budget’s impact on director and executive remuneration
• Suggest how “character” can be assessed in a prospective director
• Make a submission to refine the government’s Deregulation Bill as it pertains to remuneration
• Guide you through ASX guidance re “performance shares”
• Summarise ASX Listing Rule changes as they pertain to executive and director remuneration

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

2014 Federal Budget impact on Australian executive and director remuneration

Non-executive director superannuation bug bear resolved

When it comes to executive remuneration-related matters, the Federal budget handed down by the Treasurer is notable more for what it did not do than for what it did. In particular, the budget did not fix the tax treatment applying to employee share schemes that is making life so difficult for high technology, start-up, and small explorer companies.

The hike in the top marginal tax rate, rise in fringe benefits tax and changes to the treatment of superannuation contributions may impact some executive and director remuneration. But it is not all bad.

Assessing a director’s “character”

Required to meet ASX Corporate Governance Council guidelines

ASX Corporate Governance Council Recommendation 2.1 suggests that listed entities should “undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director….” Such checks should include an assessment of “the person’s character, experience, education, criminal record and bankruptcy history”.

So, while it is relatively easy to check a candidate’s experience, education, and criminal/bankruptcy history, the assessment of someone’s character is far more challenging.

We suggest how this can be done.

Deregulation Bill submission on remuneration disclosure

Guerdon Associates' submission

The Australian government’s draft “Deregulation Bill” did away with nonsensical disclosure requirements while adding an additional requirement on listed companies to report how remuneration is governed.

But it still needed some refinement.

ASX issues guidance on the use of ‘performance shares’

Prompted by concerns as to how they may be used?

The ASX introduced Guidance Note 19, dealing with performance shares, on 28 April 2014.

For tax and other reasons, ‘performance shares’ (as opposed to performance rights and options) are not often used in LTI and other equity plans. The introduction of Guidence Note 19 indicates ASX may have concerns over the potential for abuse in the use of performance shares.

Amended Listing Rules will impact remuneration and governance

Key changes to impact remuneration

ASX released the final version of its proposed governance-related amendments to the Listing Rules on 6 May 2014. Subject to receipt of the necessary regulatory approvals under the Corporations Act, the changes to the Listing Rules will come into effect from 1 July 2014.

Latest GuerdonData® Updates

Updates to GuerdonData® include disclosures from the following 9 companies:

Australian Agricultural Co, Mortgage Choice Ltd, Macquarie Group Ltd, OzForex Group Ltd, Prana Biotechnology Ltd, Programmed Maintenance Services, Shopping Centres Australasia Property Group, Sigma Pharmaceuticals Ltd and 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.

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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