GuerdonNews® Volume 15 Number 11

December 2019

Dear reader,

 

Welcome to the December 2019 issue of GuerdonNews®

 

 In this calendar year's final newsletter we:

• Look ahead to 2020 and for a remuneration committee checklist of issues that you may need to address

• Remind you to save the date for our 14th annual remuneration and governance forum with proxy adviser CGI Glass Lewis - 12th of March in Sydney and 17th of March in Perth

• Consider APRA's hints on how they may bend their draft CPS 511 executive pay regulation in the face of significant resistance

• Note the convergence in both US the UK investor executive remuneration guidelines and the implications for a lagging Australia

• Provide a remuneration committee check list for TSR performance testing governance

• Tally annual Gender Equality Scorecard pay and other outcomes

• Summarise interesting research on index funds' stewardship

• Highlight ASX Listing Rule changes as they impact executive remuneration

 

We conclude with executive and director remuneration disclosure updates available on the GuerdonData® on-line database. 

 

We look forward to reporting board governance and executive remuneration news to you again in 2020, with our first monthly issue to be delivered on the second Tuesday in February. In the interim we will, as usual, be toiling away the summer for our clients throughout January. If you need to escape the heat of the most recent proxy season, call by for a cool drink.

 

It has been another great year for Guerdon Associates, our clients and their investors. Thank you to our clients, and their investors, for being open and responsive to reward solutions that focus executives on creating value, and board governance processes to optimise risk and return.

 

From all of us in Guerdon Associates, best wishes for a safe, happy and prosperous New Year.

A 2020 Remuneration Committee checklist 

Regulators and a Royal Commission have set a high bar to jump, while investors provide the hoops to jump through, and a slowing economy provides the alligators to avoid.

Guerdon Associates anticipates 2020 issues in remuneration and governance based on some 2019 hindsight. One of more of these should probably feature on the remuneration committee's 2020 calendar for more attention.

Read more

Remuneration and Governance Forum 2020

Save the date! 12 March 2020 in Sydney and 17 March 2020 in Perth 

Join Guerdon Associates and CGI Glass Lewis as we host our annual Remuneration and Governance Forum. We discuss proposed remuneration regulation and enforcement, and investor and issuer pushback; board discretion and its alternatives; and investors wanting companies to consider how profit is made as well as how much. We invite board directors, regulators and shareholders to share their perspectives, debate what is appropriate, and come to a better understanding of what is material, ethical, and appropriate. 

Read more

APRA pay regulation will bend, however reluctantly, to feedback   

But not too much - Wayne Byres fires back

In a speech, APRA's chairman acknowledged the consternation caused by the proposed draft regulation. He indicated that some wriggle room exists with respect to the prescribed 50% maximum financial measure weighting proposal and hinted at alternatives. There may be flexibility surrounding the 7-year deferral requirement too. 

Read more

UK investor guidelines  

Forewarned is forearmed for changes that could filter Downunder

The UK Investment Association originated most of the first remuneration governances guidelines and has been setting th standard since. Its recently updated its remuneration governance guidelines differ markedly from those prevalent in Australia. Guerdon Associates discusses some of the key points, which include alternative LTI frameworks, board discretion, post-employment shareholding requirements, among others.

Read more

TSR testing may trap the unwary remuneration committee

A checklist to ensure sound TSR testing governance

A majority of ASX 200 executive longer term incentives rely on relative total shareholder return (TSR) performance. Yet TSR testing is fraught with ambiguity. No standardized rules exist, and this leads to potential gaming of the system. We provide a remuneration committee checklist to consider when undertaking TSR testing.

Read more

What US investors want of Australian company executive pay

We provide a comparison with Australian investor requirements

Similar to the UK Investment Association, the US-based Council of Institutional Investors has also updated its executive remuneration policies. We present similarities and differences between the norm in Australia and the CII policies. We look at performance measures, hybrid plans, peer groups, severance pay and other policies. 

Read more

Gender Equality Scorecard - maybe a "C-"

Taking stock 50 years on

No increase in the number of female CEOs this year, but more employers are promoting women and instituting strategies on gender equality and flexible working. We highlight some key findings on the pay gap, domestic violence policies, parental leave and the glass ceiling, among others. 

Read more

Index funds and stewardship conflicts and inconsistencies

Index funds are found to be passive on more than just investing

Recent research finds that index funds are not incentivised towards stewardship. Business relationships between fund managers and corporate managers also lead to deference. The report suggests reforms to encourage index funds to be more active in stewardship. 

Read more

ASX Listing Rules amendments impact executive remuneration

Effective now

The ASX Listing Rules and Guidance Notes updates call for more detail in certain remuneration disclosures. Voting changes are also made, along with notice requirements for equity grants. 

Read more

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Latest GuerdonData® Updates

Updates to GuerdonData®  this month include disclosures from the following 9 companies: 

Aristocrat Leisure, Eclipx Group Ltd, Elders Ltd, Graincorp Ltd, Incitec Pivot, National Australia Bank, Orica Ltd, Pendal Group Ltd, Technology One 

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.

Copyright © 2019 Guerdon Associates

ISSN 1834-8300