GuerdonNews® Volume 16 Number 1

February 2020

Dear reader,

 

Welcome to the February 2020 issue of GuerdonNews®

 

 In this calendar year's first monthly newsletter we: 

• Analyse ASX300 CEO pay increases

• Gaze into our crystal ball and forecast likely rates of executive and director pay increases, and key remuneration issues being addressed

• Describe the focus and panellists for the 14th annual Remuneration and Governance Forum on the 12th of March in Sydney and 20th of March in Perth

• Suggest that the newly proposed Financial Accountability Regime solves some BEAR-ish problems and creates some new ones

• Describe how research findings of CEO and CFO relationships may have pay governance implications  

• Suggest how the IASB’s proposal to provide clarity on non-GAAP reporting may not be applicable to some incentive performance measures

• Summarise how an important asset manager's decision to now vote directors off boards will be achieved

• Suggest that ISS's implementation of a  US director pay "2 strikes rule" may have merit for other applications

• Describe the improvements to the number of women on boards in Australia

• Alert you to the opportunity for making a submission to the parliamentary inquiry into ESS taxation

 

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.

ASX300 CEO pay trends 

Findings from Guerdon Associates disclosures analysis

More than half of ASX300 CEOs saw a decrease in their annual incentives. However, more than half received higher LTIs. We further break down and present pay trends across companies of varying size and in different sectors.

Read more

The outlook for director and executive pay in 2020   

Guerdon Associates' forecasts for the year

Guerdon Associates highlights important issues for 2020 and beyond. These include ESG, alternative remuneration frameworks and consequence management, among others. We also consider the likely rate of executive and director pay inflation. 

Read more

Remuneration and Governance Forum 2020

Non-financial risk management, and board discretion on executive pay 

Join Guerdon Associates and CGI Glass Lewis on the 12 March 2020 in Sydney and/or 20 March 2020 in Perth as we host our annual Remuneration and Governance Forum. Our panels and attendees include regulators, board directors and institutional investors.  

Read more

The Financial Accountability Regime

BEAR-like requirements will be extended to all financial services companies

The proposed FAR legislation will define expand the list of accountable persons to include middle management, and will permit up to a million dollar fine on these souls. It prescribes remuneration deferral on all Accountable Persons' variable pay. There is a hint that the definition of variable pay may actually be workable. But if not, do not worry as it also seems to encourage doing away with incentive pay, and consequently deferral.

Read more

A new CFO may be an incumbent CEO's best friend 

At least this is what is inferred in recent CEO pay and performance research

Recent research shows that CEOs tend to have higher compensation when their companies have recently hired CFOs. The research attributes this to the  influence an incumbent CEO has over her newly hired CFO to manage earnings to meet or beat targets. 

Read more

Better disclosures for non-GAAP measures

Seeking greater clarity in financial statements

The IASB proposes to make financial statements clearer by requiring disaggregation of information. Income statements will have new defined subtotals and performance measures used by management will need to be further explained. 

Read more

State Street will now vote out directors

A big stick instead of just engaging on ESG matters

State Street Global Advisors is set to vote against company directors who are not serious about tackling sustainability. To this end, it is introducing a scoring system called R-Factor. It indicates how well companies are managing ESG issues. It may tempt boards to consider how index fund AI and robots will read their disclosures as well, as or in lieu of, focusing on meaningful ESG.

Read more

ISS adopts a 2 strikes policy for US director pay

An interesting model that could be employed elsewhere 

ISS seeks to discourage excessive director compensation by issuing negative recommendations for board members who approve such pay. 

Read more

Women in the Boardroom

Women, keep rattling that lock

There was improvement in the percentage of women on boards globally. Australia follows this trend and appears to perform relatively well. 

Read more

Employee Share Scheme taxation

The government seeks feedback

The effectiveness of changes made in 2015 to ESS taxation is being investigated by a parliamentary committee, and submissions are being sought. 

Read more

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Latest GuerdonData® Updates

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

Virgin Money UK PLC 

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.

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