GuerdonNews® Volume 11 Number 4

May 2015

Dear [FIRSTNAME],

Welcome to GuerdonNews®

In this month's issue we:

• Suggest that board nomination committee members have 30% tattooed on the back of their eyelids, as the AICD ups the ante on female board representation
• Verify that there are indeed “Super NEDs” who research indicates deliver superior company performance by being strategically and well connected
• Provide best practice examples of board and director skill matrices and related disclosures
• Note that the US may require companies to provide interactive data allowing investors to more easily assess pay and performance alignment
• Summarise AMP Capital’s requirements to get its support for remuneration and related resolutions.

We conclude with mentions of Guerdon Associates in other news media and the latest executive and director remuneration disclosure updates available on the GuerdonData® on-line database.

AICD calls for 30% female directors on all company boards

And sets 2018 as the target year for achieving the goal

As the next step in its long-running effort to improve gender diversity in boardrooms, the Australian Institute of Company Directors (AICD) is urging S&P/ASX 200 companies to ensure that 30% of their directors are female by the end of 2018.

It supports this goal based on research demonstrating a positive link between the level of female representation on boards and improved corporate performance.

“Super non-executive directors” and why they appear everywhere

And yet seem to still do a great job

Have you ever wondered how the same company directors manage to pop up at conferences and seminars, as independent appointees to important government committees or investigations, and as chairman of more than one major company? In our board effectiveness and remuneration work, as we observe company directors cope with the heavy load of board papers and governance processes, we are often asked “how can these extremely busy company directors cope with multiple boards, charitable and pro bono commitments, and still be effective?” Yet, more often than not, they are. And the reasons they are could be their highly networked and busy lives - their very “connectedness”.

Recent research described later in this article provides solid support for individual director “connectedness” and board effectiveness.

Skill matrices – examples of best practice disclosures

Methods to tell a story

The clock is ticking. For the 2015 financial year company directors’ reports will need to disclose more information about director skills and experience and to present this in a more meaningful way than in the past, or explain why the information is not provided.

There is a lot that can be learned from others who have already trodden the path. We have applied this experience in assisting companies with effective disclosure and also in our board effectiveness work to identify what is required. The broader and deeper US market offers what we think are excellent examples to share. We present these in a form that we suggest may serve companies well.

APRA’s continuing focus on risk management sees room for improvement in remuneration management and board behaviour

Subsidiary board directors may need more gumption

The Australian Prudential Regulation Authority (APRA) still has challenges in monitoring risk management effectiveness in regulated financial institutions. Ian Laughlin, the Deputy Chairman of APRA, gave some flavour of this in a speech recently.

An interesting point made by Mr Laughlin is that subsidiary boards need to be more robust when reviewing the remuneration framework for meeting APRA guidelines.

US proposes disclosure of pay versus performance

Requires use of interactive technology

The US Securities and Exchange Commission (SEC) has proposed a new rule requiring disclosure of the extent to which the pay of top corporate executives is linked to their companies' financial performance.

The new SEC requirements will force companies to make use of interactive internet technology to enhance understanding and make comparisons easier.

How to please an investor during proxy voting season

AMP Capital provides some hints

Because of AMP Capital's size it has to hold a good proportion of most ASX 200 companies across its portfolios and, unlike European or US fund managers, does not have the luxury of walking its investment out of one company into another. Therefore, like most large Australian investors, it has no choice but to seek out better governance of locally listed companies for an improvement in risk adjusted returns.

As many ASX 200 directors have experienced, AMP Capital's active corporate governance team is not averse to using its proxy votes to express displeasure with a remuneration report or a director seeking re-election.

AMP Capital’s 2015 ‘Corporate Governance Report’ summarises what it looks for in remuneration and other proxy resolutions.

Non-executive director remuneration committee course

Interactive, small group development opportunity

In response to frequent requests, Guerdon Associates will be conducting Remuneration Committee courses.

The courses will be based on client commissioned programs, plus university programs we have conducted for post graduate law students. It is open to ASX listed company NEDs. However, numbers will be restricted to 6 per course to permit a high level of interaction.

The first course will be run in Sydney in early July over either one or two half days (TBA, as content is in the process of being finalised). Course details will be available next month.

Listed company directors who want t express interest in reserving a place on the course should contact us at info@guerdonassociates.com

Guerdon Associates in the news

“ESS tax bill introduced”, The Boardroom Report, Volume 13, Issue 7, Thursday 16 April 2015

Latest GuerdonData® Updates

Updates to GuerdonData® include disclosures from the following 3 companies:

RECKON LIMITED, TIGER RESOURCES LIMITED and SYDNEY AIRPORT.

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®.

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 © 2015 Guerdon Associates

ISSN 1834-8300

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