GuerdonNews® Volume 12 Number 7

August 2016

Dear reader,

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Welcome to the August 2016 issue oGuerdonNews®

 

In this issue we:

• Report ISS's and Blackrock's perspectives discussed at our recent roundtable with directors of issues likely to arise at this year's AGM season

• Summarise US governance principles, noting one that could, but is not, applied in Australia

• Discuss the UK Investment Association Working Group's recently released final Executive "simplification" report

• Summarise the latest amendments to Australian Accounting Standards applicable to share based payments

• Ponder whether proposed UK governance regulations will make their way to Australia

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Current issues for this AGM season from ISS and Blackrock

On 28 July 2016 Guerdon Associates hosted a briefing for Non-executive Directors (NEDs) to hear the views of ISS’s Australian Head of Research and Governance, Vas Kolesnikov, and those of Pru Bennett, Blackrock Inc.’s ASPAC Head of Governance, and express their concerns with investor and proxy firm engagement.

This was a timely opportunity to discuss and debate the remuneration and governance issues that are top-of-mind before the start of the 2016 AGM season.

 Read more

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US business leaders release “common sense principles for governance”, some of which are not practised in Australia

Probably because one is not common sense; but given that the other is common sense, it just goes to show no-one has it right yet

Unlike Australia and the UK, the US lacks any common reference set of governance principles that act as a guide for good listed-company governance.

Recently, however, prominent US business leaders released a set of Principles that could well serve this purpose. In fact, they could serve as a useful checklist for Australian investors and boards as well. However, they differ from the ASX Corporate Governance Council’s “Principles” in important ways.

This article summarises the US leaders’ Principles. In most of these cases, Australian practice is already well established. However, in one case, we believe the US Principles add something that may not be captured in the Australian principles.

Read more.

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UK Investment Association Working Group releases final Executive Remuneration “simplification” report

Coincides with Theresa May's plans to tackle perceived excesses in executive pay

The UK Investment Association has a very important role in governance, in that they are the UK’s default standard setters. Their standards tend to trickle their way not only into UK proxy adviser and investor guidelines, but also to Australian and other countries' standards.

The Working Group believes there are five areas to help restore trust in the system.

Read more.

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This one’s for the Finance team! Improving AASB2

Even the Australian Accounting Standards Board (AASB) recognises that accounting for ‘share-based payments’ is not easy.

Recently, the AASB released AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment Transactions. These amendments focus accounting  for cash-settled SBPs, accounting for cash-settled changing to equity settled-SBPs and accounting for non-settlement features.

Read more.

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Populist UK Governance Regulation For Australia? No Worries (for now)

Though many governance initiatives originate out of the UK, not all of them find their way to Australia

On her elevation to leader of the UK Tory party, Therese May shocked UK business leaders by saying that, among other things, her government will improve governance by:

• Bringing forward proposals for representatives of both consumers and workers to behold Board positions

• Requiring annual remuneration policy and implementation report votes

• Publication of a ratio between the CEO’s pay and the average worker’s pay

Could similar changes find their way to Australia?

Read more.

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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