GuerdonNews® Volume 13 Number 1

February 2017

Dear reader,

 

Welcome to the February 2017 issue oGuerdonNews®

 

In this first monthly issue for 2017 we:

• Present our annual outlook for director and executive pay

• Consider the initial independent report commissioned by the Australian Banking Association on banker pay and culture

• Advise that the Melbourne and Perth Remuneration and Governance Forums are either at, or close to, capacity

• Describe how CEO to worker pay ratio disclosure is already being applied

• Summarise the UK government's Green Paper on Corporate Governance Reform

• Compare inconsistently applied Australian gender diversity reporting standards to new UK standards

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The outlook and issues for Australian director and executive pay in 2017

An improving and changing economic outlook should also see executive remuneration changes. 

This article dusts off our crystal ball and presents our outlook for director and executive pay for calendar year 2017, including:

• The economy and pay

• Vehicles of pay

• Investor trust and the road to simplification

• Performance measures

• Board fee increases

• Executive remuneration increases

Will 2017 repeat last year's proxy season of high "no" remuneration report votes?

 Read more

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Review of Australian banker pay and culture - preliminary reports suggests there is no systemic issue 

The outcome was logical - what bank would want to reduce the present value of its customers with a culture that systematically sells what is not wanted or needed?

Many banks have admitted that a "sales culture" is deeply embedded in the DNA of their organisations. This in itself is not a negative. It is, after all, what "for profit" companies do. The question is, did sales cultures result in customers receiving incorrect advice or inappropriate products on a broad scale, or in a systematic way.

Mr Stephen Sedgwick AO leads the review of determining whether incentives of the bank staff are aligned with the interests of their customers. he has published his interim report. 

Read more.

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Melbourne Forum full, only a few vacancies available in Perth

Currently, there are only a few places left for the Perth Forum 

The Melbourne Remuneration and Governance Forum for institutional investors, directors and management has been fully subscribed. Please click "Read more" for details on obtaining an invitation to the Perth Forum.

If you have missed out on the Melbourne and Perth Forums this year, and are interested in these issues, let us know at info@guerdonassociates.com . We will ensure you are issued with an invitation to our next small group Directors’ Briefing.

Read more.

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CEO to worker pay ratio disclosure – how it is being applied to punish certain companies

The recent Australian controversy on executive pay has resulted in suggestions that such disclosure be required here too.

The US regulation requiring pay ratio disclosure has contributed to what some may say are counter productive consequences

Under the new rule, companies in some cities will pay an additional 10% in taxes if their pay ratio exceeds the stated 100 times median pay limit. Companies with pay ratios greater than 250 times the median will face a 25% surcharge.

Read more

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UK's Green Paper on Corporate Governance Reform

It appears a bureaucrat may have had a word with Mrs May about her ideas.

The Green paper follows the Prime Minister's suggestions that board remuneration committees bring investors and employee representatives into the tent, and that CEO to worker pay ratios be a disclosure focus.

The report covers three areas:

• Executive pay

• Strengthening the "voice" of employees, customers and suppliers; and

• Corporate governance in the UK's largest privately-held businesses

Could any UK developments in executive pay and governance have a likelihood of adoption within Australia?

Read more.

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Australian gender diversity reporting does not allow boards to make meaningful and valid comparison with their peers

Yet it is a requirement supported by the ASX Corporate Governance Council

In order to draw meaningful like-for-like comparisons – or to identify industry leaders and laggards – Australia could benefit from standardised requirements for employment bands and look to the UK regime as an example.

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 © 2017 Guerdon Associates

ISSN 1834-8300