Welcome to the November 2015 issue of GuerdonNews^®

 In this Melbourne Cup Day issue we trust your favourite horse wins, and:

• Consider recent changes to ACSI's governance guidelines

• Review CGI Glass Lewis and Macquarie Group research concluding that relative TSR is largely an ineffective LTI performance hurdle

• Examine other proxy advisers’ guideline changes

• Watch as a culture regulator is hoist by its own petard

• While we summarise the UK Financial Reporting Council plans to provide practical solutions for poor company cultures

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

New ACSI Governance Guidelines raise the bar again on executive remuneration requirements

Diversity targets are also given some heft

The Australian Council of Superannuation Investors (ACSI) has Governance Guidelines that are updated every two years to take into account the evolving regulatory and governance landscape.

As expected, these guidelines have raised the ante with additional remuneration requirements. These requirements include an opposition to overly generous CEO 'sign-on' grants, support for companies using "bespoke" remuneration frameworks and support for variability of outcomes "over time and across executives."

ACSI will also not support director elections if a company resists adequate setting and reporting on diversity objectives. 

Read more.

Relative TSR canned by proxy adviser

A wasted expense

Last month, Macquarie Group and CGI Glass Lewis published their joint research on the relationship between incentives and executive behavior in Australia.

Overall, they find that remuneration models are suffering from ‘group think’. Their research further indicates that there is a strong relationship between incentives using accounting based performance metrics and performance outcomes, but little to no correlation when total shareholder return (TSR) is used as an incentive performance metric.

Read more.

Updated Proxy Adviser Guidelines

As usual, published after boards have signed off on their new financial year's remuneration policies

Proxy advisers CGI Glass Lewis and ISS have also both recently published their updated proxy guidelines for 2015. 

Read more.

What if the culture criticising regulator has a bad culture?

The UK equivalent of APRA has a culture that is in need of a tune-up

The UK’s Financial Conduct Authority (FCA) is in hot water after a mis-step attributed to board culture.

An FCA media briefing led to incorrect reports that the FCA would investigate closed-book life and pension policies and the trailing commissions associated with these dating back to the 1970s, leading to significant share market losses for insurers and associated companies.

In response to a UK Treasury Committee enquiry into the so-called ‘closed-book blunder' the regulator confirmed that either an internal or an external board review would take place every year to ensure accountability.

Read more.

UK’s Financial Reporting Council launches culture project

Boards are in need of a "how" to oversee company culture

The UK’s Financial Reporting Council (FRC) has launched an initiative to provide practical guidance on how company boards can increase their oversight of company culture. Perhaps the FRC will be guided by its own recent experience.

The FRC will gather practical insight into corporate culture, particularly in the areas of delivering sustainable success, people issues, stakeholder issues and embedding and assurance.

In due course (i.e. timing unknown), the FRC will publish a report of the observations gathered.

Read more.

Latest GuerdonData^® Updates

Updates to GuerdonData® include disclosures from the following 55 companies:

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.