Welcome to the August 2015 issue of GuerdonNews®

In this issue we:

• Describe the advantages and disdavantages of share appreciation rights as a payment vehicle for Long Term Incentives

• Consider board evaluation trends and issues

• Note that the Basel Committee on Banking Supervision's newly revised Corporate Governance Principles Guidelines require boards to do more on ensuring appropriate organisation culture

• Describe the impact that APRA's recent remuneration disclosure requirements have for identifying material risk takers

Did you know that this is the 10 year anniversary of our continuous monthly newsletter on board and executive remuneration and governance? We considered a re-cap of our most momentous articles, but it was too difficult to choose. There have been so many articles that today remain as informative, valid and applicable as the day they were published. Fortunately, these are still available on our website. If you can, take time to browse.

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

Share Appreciation Rights provide more potential upside reward than traditional LTI vehicles

But only if you have an executive team that can deliver substantive improvements in shareholder value

Share-settled share appreciation rights (SARs) entitle the holder to a payment, in shares, equal in value to the amount by which the underlying shares have appreciated since the right was granted. They are economically similar to share options, but offer distinct advantages to the granting corporation in the form of reduced plan dilution and less drain on plan reserves.  Further, by providing employees with net shares from share price growth, share-settled SARs also encourage long-term share ownership.

Read more.

Trends in board evaluations

What organisations should consider for an effective board review

The proportion of boards seeking assistance and the level of sophistication expected of board evaluation processes have both grown significantly in recent years. These evaluations are most effective when organisations define a strategy, maintain a diverse group of board members, seek opinions from non-directors, and encourage board renewal. Further, following up and providing feedback after the evaluation remain critical for effective boards.

Read more.

Basel Committee on Banking Supervision publishes revised international Guidelines on Corporate Governance Principles for Banks

Guidelines call for company boards to step up and establish a sound corporate culture

The Basel Committee on Banking Supervision has published final updated Guidelines on Corporate Governance Principles for Banks. These were issued because the thematic review on risk governance that the Financial Stability Board undertook in 2013 established that banks still need to improve risk governance frameworks.

There are several elements that should be of interest to Australian listed company boards, particularly that the principles require boards to step a bit further into matters often seen as the preserve of management, such as establishing and maintaining a sound corporate culture.

Read more.

APRA amends remuneration disclosure requirements for banks

Omission made in disclosure significantly altered definition of 'material risk taker'

The Australian Prudential Regulation Authority (APRA) requires regulated banks to publicly disclose quantitative and qualitative information on their approach to remuneration, including aggregate information on the remuneration of material risk-takers.

In July, APRA released a revised version of Prudential Standard APS 330 Public Disclosure, which rectifies an omission made in an earlier version. The omission had the effect of altering the definition of ‘material risk-taker’ for the purposes of the remuneration disclosure, which would have imposed quantitative remuneration disclosure requirements on a wider range of persons than APRA intended.

 Read more.

Latest GuerdonData® Updates

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

ALS Limited, Metcash Limited, and Thorn Group Limited.

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, for more information click HERE.

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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.