Welcome to the August 2019 issue of GuerdonNews^®

 In this newsletter we:

• Summarise APRA's new, prescriptive, remuneration regulation

• Review ACSI's analysis of ASX 200 ESG disclosures

• Identify superannuation fund remuneration issues to comply with APRA's proposed regulation

• Recognise that there is a place for risky executive mega equity grants

• Describe the findings of the APRA capability review critical of culture

• And contrast the above with Wayne Byres' view that boards brought prescriptive pay regulation on themselves

• Suggest amending EVA performance measure's to encourage growth as well as capital efficiency 

We conclude with executive and director remuneration disclosure updates available on the GuerdonData® on-line database. And if you have any other executive remuneration or governance query  type it into your search engine with "Guerdon Associates" and you will find we will likely have provided an answer already.

APRA’s new standard on remuneration is as we expected

It prescribes measures you must have and executive pay deferral periods  

APRA introduced a draft standard CPS 511. It seems to absolve top management of pay decision accountability by delegating that function up to the board, in addition to its traditional role of moderating conflicts of interest; mandate increased executive pay deferral and; limit the use of financial metrics to 50% of incentive pay.  

Read more

ACSI’s research into ASX 200 ESG disclosures 

Size matters 

ACSI finds that the larger companies are better at disclosing information on ESG matters that feature as material risks for industry superannuation funds. The report names the top companies in ESG reporting and shames the bottom 6. As expected, climate change action is highlighted. In addition, the absence of adequate safety disclosures receives welcome attention.

Read more

Superannuation funds' compliance with new APRA regulation 

Deferral hardly features as a practice now, much less 7 years  

We delve a little deeper into what the new standard means for registrable superannuation entities. The requirement from the new standard for RSEs to potentially defer 60% of a CEO’s variable remuneration for seven years will come as a shock to some. But what of the funds that do not pay incentives? Well, an unintended consequence is that they could have company as others decide it is all too hard.

Read more

Mega LTI grants

The pros and cons of large upfront equity grants 

Large LTI grants upfront can focus  executives on key goals fro achieve within a defined number of years. But they also come with risks. 

Read more

APRA’s capability review 

Familiar challenges, new acronym 

The review highlights familiar problems, albeit under a new acronym, GCA. The report makes recommendations on two fronts. Firstly, it suggests changes that address the organisation’s culture, workforce capability and resourcing. Secondly, it addresses organisational capability design and delivery. 

Read more

APRA says that boards failed to do the job 

Hence they now have to deliver pay in a narrowly prescribed way

APRA's chairman acknowledges that more legislation is inefficient in ensuring companies act in the public’s best interest, but a future reduction is possible if all stakeholders play a more active role in self-regulation. But some may say that the scope to self-regulate is diminishing fast. 

Read more

Improving capital efficiency measures in incentive plans

EVA crimps growth. We suggest tweaks.

Using residual cash earnings instead of EVA may mitigate the risk of underinvestment. 

Read more

GECN 2019 Global Trends in Corporate Governance Report

Guerdon Associates is a founder of the Global Governance and Executive Compensation Group (GECN), comprised of the leading independent consulting firms in Europe, Asia and North America. Results from our annual research into global governance and executive remuneration trends are published in early September. This year will consider global investor perspectives on executive compensation and corporate governance, so our GECN report is particularly useful for ASX 200 companies that find an increasing proportion of their share registers are taken up by global investors.

To register your interest in the upcoming (and did we say, free?) Global Trends in Corporate Governance Report or for access to earlier reports, please contact info@www.guerdonassociates.com

Latest GuerdonData^® Updates

Updates to GuerdonData^®  this month include disclosures from the following 2 companies: 

Credit Corp Group Limited, GUD Holdings 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 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.