Welcome to the July 2020 issue of GuerdonNews^®

 In this newsletter we:  

• Preview ASIC's troubling remuneration governance review findings 

• Preempt investor, proxy adviser, and ASIC requirements for looking though government support to underlying profit, and hence executive incentive payments

• Summarise ASIC’s guidance on board executive pay discretion given the pandemic

• Describe a recent basis for a financial re-statement and implications for discretion and pay malus

• Describe the basis of a financial re-statement applicable to the majority of ASX 200 companies with malus conditions

• Provide an ESG guide to financial services companies – courtesy of our Swiss sister firm

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.

ASIC’s briefing on its remuneration governance review 

Findings are troubling 

The ASIC taskforce found that executive pay discretion is not applied outside of APRA regulated boards. Boards fail to manage conflicts of interest, information is biased, and committees do not share information. Given these troubling findings, we provide a checklist a remuneration governance review checklist.

Read more

JobKeeper impact on profit and incentives 

Investors and proxy advisers want to know

Investors and proxy advisers are particularly keen to understand the impact of government support on earnings, especially as it may impact executive incentive payments. Some have about-turned and indicated that TSR cannot be relied on as a fair arbiter of executive incentives. Meanwhile ASIC is not keen for companies to report what profit might have been without the pandemic, but it seems to be okay with describing the impact of government pandemic support in financial accounts.

Read more

ASIC guidance for exercising pay discretion during pandemic

Four key elements for a robust governance framework

ASIC has released an information statement to assist boards on their consideration of pay discretion arising from the pandemic. To strengthen remuneration governance, ASIC recommends boards outline scenarios that would trigger discretion, obtain additional sources of information, manage conflicts and improve communication.   

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Financial re-statements and malus

Dust off malus policy 

Most ASX 200 companies now have executive remuneration malus policies. Most of these permit discretion to be applied in the event of a financial "mis-statement". Given "mis-statements" are rare under Australian standards, we thought a recent "re-statement" example may assist boards recognise when that malus policy may need dusting off and application.

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COVID-19 pay adjustments in ASX 200 companies

No second pay wave in sight

The pandemic prompted a first wave of remuneration adjustments among ASX 200 company executives and directors. The end date of the adjustment for over half of these companies has come and gone. New announcements of adjustments have declined since April. At this rate a full recovery (of executive and director pay, at least) is in sight.

Read more

A guide to implement ESG in financial services

Lessons from our Swiss office

Through interviews conducted with the heads of the top financial services companies in Switzerland, our Swiss sister company has drawn up a 4-step guide for board consideration of ESG.

Read more

Latest GuerdonData^® Updates

Updates to GuerdonData^®  this month include disclosures from the following 3 companies: 

Collins Foods Ltd, Fisher & Paykel Healthcare Corporation Ltd, Metcash Ltd 

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.