Welcome to the August 2017 issue of GuerdonNews^®

In this monthly issue we:

• Discuss non-financial performance measures for executive long-term incentives

• Review the Australian federal government's remuneration proposals for the Banking Executive Accountability Regime

• Provide insight on how superannuation funds can vote on complex remuneration and other matters when the portfolio managers they outsource to decide on the companies they are voting on 

• Consider government legislation that makes superannuation trustees answerable to members on remuneration at annual meetings

• Note that health insurers are in line for more rigorous APRA supervision on remuneration and other governance matters

• Provide a board checklist for meeting climate-related risk disclosures

Are non-financial performance metrics "soft"?

Non-financial measures may provide balance to the performance measurement process.

We cover several different non-financial performance measures within five broad measurement categories, highlighting two examples from past disclosures. We end with a small checklist and key takeaway points for those considering the use of non-financial measures. 

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Government’s views on controlling the appointment, termination and pay of bankers

They probably underestimate APRA's abilities to cope with variability in executive remuneration arrangements

More importantly, however, the paper fails to recognise that remuneration needs to be tailored for each executive's as well as each bank's situation for better prudential management. 

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Who has the most say at AGMs, superannuation funds or fund managers?

Guerdon Associates had another Director Briefing in July to discuss this and other aspects of AGM voting with the Heads of Responsible Investment at First State Super and Colonial First State Global Asset Management. 

In addition, a theme confirmed at the briefing was that directors should be given the freedom, and trusted, to act in the best interests of the company as they best see it. 

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Legislation will require superannuation funds to have general meetings with members 

The Australian federal government has released for consultation draft legislation and associated draft explanatory material to improve superannuation accountability and member outcomes.

Superannuation funds had better gird themselves for probing queries on their remuneration. Guerdon Associates provides suggestions on how to cope. 

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APRA to focus on private health insurers’ governance, including executive remuneration

APRA is commencing Phase 2 of their Roadmap to improving the prudential viability of health insurers.

APRA’s review will include consideration of issues such as the independence of directors, their tenure, assessment and appointment processes, as well as expectations around board composition,  board committee structures, remuneration structures and board-level engagement with APRA.

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Pressure to disclose climate change risk: a board checklist

Climate change disclosures have become an increasing focus for ESG raters and activist investors.

Directors need to consider whether the extent of activist pressure will be expressed in director elections and remuneration report votes.

We discuss some of the key obligations directors should be aware of and provide a board checklist for climate-related disclosure.

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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.