Welcome to the September 2016 issue of GuerdonNews^®

In this issue we: 

•  Observe once again that average CEO pay is reducing, courtesy of ACSI commissioned research

• Describe the likely outcomes from New Zealand Exchange listing rule changes on executive remuneration and board governance

• See hints in the latest FSB G20 report that banker pay and culture regulatory change is giving way to more reliance on supervision

• Bemoan the absence of behavioural economics in the framing more effective executive pay frameworks

• Consider a checklist of common shareholder AGM questions for which the board should have appropriate answers

CEO pay decreasing: ACSI survey released

A useful contribution to understanding executive pay in Australia

The Australian Council of Superannuation Investors (ACSI) released its annual survey of CEO remuneration in ASX200 companies on 31 August 2016.

The most significant finding in this survey was that CEO remuneration had declined, with median “reported pay” down 3.1% and “realised pay” down 2%.

 Read more

New Zealand governance rule changes taking shape

Final paper before 2017 implementation

The New Zealand Exchange (NZX) has released changes being proposed for all NZX companies. The proposed rules, released for consultation on 31 August, have already been through one round of feedback and, while further submissions are being sought, they are expected to be implemented.

A primary focus of the governance reporting requirements is to provide greater clarity about what is expected of companies in respect of the "comply or explain recommendations".

Read more.

G20 measures to reduce bank misconduct risk via remuneration and culture

But focus moves from regulation to supervision

For the G20 meeting the Financial Stability Board (FSB) made some interesting observations relevant to how bank remuneration and culture should be regulated.

In particular, given recent political wrangling pre and post the recent Australian federal election, the FSB noted that the division of labour between financial institutions and regulators is clearer – financial institutions need to own conduct/culture and if authorities owned this, then it would fail as it would become a compliance exercise. 

Read more.

Behavioural economics and executive pay effectiveness

LTI plans that have no empirically demonstrated validity. 

Based on behavioral economics, people are irrational when interpreting and acting on financial data. What’s missing from most standard analyses is any assessment of how incentive rewards impact behavior. 

Read more.

AGM time: a checklist of questions from the floor on remuneration and governance

It is that time of year again that many chairmen dread

As AGM season looms, board chairmen are considering those inevitable questions from the floor. Are they ready for all of them? Have they anticipated the concerns of shareholders? What’s the right response to their concerns?

Here is a checklist of a few of those questions that may surface from shareholders.

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.