GuerdonNews® Volume 14 Number 2

March 2018

Dear reader,

 

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Welcome to the March 2018 issue of GuerdonNews®

 

 In this month's newsletter we:

• Analyse differences between sectors in NED pay increases 

• Examine whether having more women on boards improves company performance. 

• Review trends in more recently disclosed combined incentive plans.

• Wonder why some investors have difficulty with "difficult to measure" non-financial factors for incentive purposes when the Financial Stability Board released new guidance supporting their use in banks

• Report on the BEAR's recent transition into law mere months before it is to come into effect for large banks' remuneration policies. 

• Note ISS' purchase of EVA Dimensions. 

• Report how US tax law changes will affect certain Australian companies. 

• Tell you all about our independent valuation services in what is to become our advertisement of the month feature.  

Last Thursday's Sydney Forum for institutional investors, boards, regulators and management was a great success, judged by the feedback received so far. We apologise to those who missed out on a seat at the forum, which was fully booked. The Perth Forum, specially designed for west coast issuers who never get an opportunity to engage with east coast capital, is being run today (Tuesday 12 March) and is also fully booked. If you are a director and wish to be engaged in remuneration and governance issues, remind us to invite you to our smaller lunchtime director briefings run throughout the year.

Stay tuned next month for our summary of Forum outcomes.

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Consumer sector NEDs received the highest fee increases  

And guess which industry received a 0% increase.

Once again, it’s time for our annual review of changes in board director fees. 

Read more

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Women and board performance

We do the math.    

Over the years, we have observed that boards with a significant proportion of women members demonstrate more constructive and open debates of issues. Based on our observations (albeit, biased to larger companies), we would expect these boards to perform well in comparison to their peers. 

Read more

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What is the typical combined incentive?

Imaginative they are not, and as for being fit for purpose, well.....

Guerdon Associates reviewed the most recently disclosed plans where companies had made the decision to diverge from the normal STI and LTI model. 

Read more

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Global financial regulator makes clear the need to adjust pay for "fuzzy" non-financial factors

Institutional investors take note. 

On Friday 9 March, the FSB released “supplementary” guidance to its 2009 compensation guidance.

Read more

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BEAR becomes law 

Now comes the fun part.  

The Banking Executive Accountability Regime Bill was passed by both Houses on 7 February and received royal assent on 20 February. Large banks will have to comply in a matter of months. 

Read more

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ISS buys EVA firm 

Expect changes in future years' ISS proxy advisory reports. 

ISS says its acquisition will provide their clients a “holistic” means of assessing and defining performance of their portfolio companies.

In preparation for future years, some boards may want to see more regular assessments of incentive pay relative to the net cash generated less a charge for the cost of capital.

Read more

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US Tax on executive compensation will directly impact some ASX listed companies 

Never mind. Enjoy the 22% tax rate.  

We previously noted that US tax changes may permit Australian and other foreign companies to have a competitive advantage in the cost of executive pay, and how it is structured. However, there will be exceptions as a result of an expansion in the definition of “Publicly Held Corporation”.

Read more

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This month's advertisement: do your equity accounting valuations meet requirements?  

Many do not. 

Every year when we review annual report data, we see valuations that are so far off from what we expect we can only conclude an error either in calculation or disclosure has been made.

Read more

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Latest GuerdonData® Updates

Updates to GuerdonData®  this month include disclosures from the following 27 companies: 

APN OUTDOOR GROUP LIMITED, APPEN LIMITED, COCA-COLA AMATIL LIMITED, CIMIC GROUP LIMITED, CALTEX AUSTRALIA LIMITED, G8 EDUCATION LIMITED, GENWORTH MORTGAGE INSURANCE AUSTRALIA LIMITED, HT&E LIMITED, ILUKA RESOURCES LIMITED, IRESS MARKET TECHNOLOGY LIMITED, INVOCARE LIMITED, MACQUARIE ATLAS ROADS GROUP, MYOB LIMITED, OOH MEDIA LIMITED, OIL SEARCH LIMITED, OZ Minerals Limited, QBE INSURANCE GROUP LIMITED, SCENTRE GROUP, SMARTGROUP CORPORATION LTD, SPARK INFRASTRUCTURE GROUP, SANTOS LIMITED, SYDNEY AIRPORT, VIVA ENERGY REIT, WESTFIELD CORPORATION, WOODSIDE PETROLEUM LIMITED, BEADELL RESOURCES LIMITED, RIO TINTO 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 © 2017 Guerdon Associates

ISSN 1834-8300