GuerdonNews® Volume 12 Number 4

May 2016

Dear reader,

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Welcome to the May 2016 issue oGuerdonNews®

 

In this issue we:

• Analyse trends in non-executive director remuneration

• Discuss the ambiguities in Australian legislation regarding what constitutes pay advice

• Describe recent moves in the US to comply with international banker incentives

• Summarise a sensible interim report to simplify executive pay that could revolutionise how executive incentives are applied

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

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Higher fee increases for Non-Executive Directors (NEDs) in 2015

Our annual review of changes in board director fees revealed a modest increase in fee levels

The median Chairman fee increase was 5.0%, and the median other NEDs fee increase was 6.9% in 2015. Forty-eight percent of chairmen and 57% of other NEDs received an increase in total remuneration.

Some increases are the result of increased responsibilities rather than an increase in fees.  

Read more.

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Remuneration advisers and poor pay governance

Prominent UK proxy adviser identifies remuneration consulting firms associated with poor pay outcomes

Manifest, one of the most prominent UK proxy advisers, has identified remuneration consulting firms associated with poor outcomes. It assembled remuneration report disclosures of external pay advisers, their fees, and subsequent ratings on governance.

It is questionable whether such an analysis could be undertaken in Australia because of the ambiguities in the legislation regarding what constitutes pay advice.

Read more.

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US slowly moves to comply with international banker incentives and risk taking standards

Regulators believe proposed rules could discourage excessive risk-taking

The US Federal Board has voted to re-propose executive compensation rule arrangements for executives. The rules should assist in levelling the playing field in terms of attracting and retaining global banker talent, and should also better enable banks to move employees around the world where incentive structures and standards will become more similar.

The proposed rule would apply to banks with more than $1 billion in assets. It also requires institutions to keep a record of senior executives and risk-takers and to disclose the incentive-based compensation arrangements of those individuals. In addition, there is an interesting twist that caps incentive pay that does not (yet) apply to Australian bankers.

Read more.

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UK institutional investors release interim report to simplify executive pay

A high likelihood that a greater variety in acceptable incentive arrangements will impact Australian standards

Last October Guerdon Associates reported that the UK Investment Association (UKIA) was trying to simplify and improve pay practices at UK listed companies. As expected, the UKIA's Executive Remuneration Group has issued an Interim Report.

The proposals in the report are centred on resetting the expectations both of listed companies and investment managers around pay structures, to overhaul the "current dominance" of Long-Term Incentives, which the UKIA says often results in a poor alignment of interests between executives and shareholders.

The result is highly encouraging, in that it contemplates a much greater variety of incentive practices than is currently permitted. If retained in the final report, it is likely that Australian standards will also change. 

Read more.

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Latest GuerdonData® Updates

Updates to GuerdonData® include disclosures from the following 11 companies:

AMP Limited, Beadell Resources Limited, Coca-Cola Amatil Limited, Invocare Limited, Oil Search Limited, Oz Minerals Limited, Spark Infrastructure Group, Forus, Asaleo Care Limited, GPT Group, Iress Limited, and Woodside Petroleum 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.

Copyright © 2016 Guerdon Associates

ISSN 1834-8300