Welcome to the September 2012 issue of GuerdonNews®

In this issue we:

• Appreciate the refinement of Australian Shareholder Association draft executive remuneration guidelines released yesterday, although wish the introductory remarks could be improved
• Look at New Zealand executive pay trends
• Note that a policy that allows clawback of sign-on payments has been introduced for the first time by a big global bank
• Look at the Canadian inquiry into regulating proxy advisers from an Australian experience
• Track progress on improvements to new LAFH allowance taxation law

We conclude with the latest on executive and director remuneration disclosure updates available on the GuerdonData® on-line database and references to Guerdon Associates in the news media since our last newsletter.

New Australian Shareholder Association draft guidelines

Refinement on the previous guidelines welcome

The Australian Shareholder Association guidelines were released in draft form yesterday. Comment is required within seven days!

The good news is that the ASA appears to have a more nuanced approach to executive remuneration in its guideline discussion. However, this is marred to an extent by hyperbolae and inaccuracy in the introductory “editorial”, and a prescriptive tabular description of the guidelines.

New Zealand executive remuneration

Trends and insights

We cross the ditch to review the extent of (long white) clouds over New Zealand executive pay governance, with the assistance of the most up to date data and local expertise.

House Committee recommends changes to Australian LAFH Allowances & Benefits bill

Now in the Senate

We have had problems with the poor drafting of the original LAFH taxation bill.

Fortunately, the House of Representatives Standing Committee on Economics agreed with us. It has recommended a number of significant changes to clarify and simplify the government’s proposed LAFHA changes. As a result, the government has conceded during the lower house session on 21 August to modify the proposed changes.

Deutsche Bank to claw back sign on payments

1st mover disadvantage in the “Prisoner’s Dilemma”

The Financial Stability Board review of remuneration issues that may have facilitated the global financial crisis identified several factors whereby key risk takers received incentives that allowed them to share the upside while limited the exposure to the downside for excessive risking taking. One of these was the practice of job-hopping. A risk taker would jump ship, usually into the arms of a competitor bank at a higher pay level, before his/her sins of the past become known. Exacerbating the problem was the practice of making the banker “whole” for any forgone payments incurred by changing employers.

Deutsche Bank is the first of the global systemically important banks to act, and allow clawback of sign on payments.

Regulating Proxy Advisory Firms

Should Australia follow the Canadian lead?

The most recent regulator considering action on proxy advisers is the Canadian Securities Administrators (the CSA). In June they requested comments from market participants on concerns raised about services provided by proxy advisory firms and their impact on Canadian capital markets in order to determine if, and how, Canadian securities regulators should address these concerns.

Guerdon Associates looks at the issues raised by the Canadians from an Australian perspective.

Latest GuerdonData® Updates

Updates to GuerdonData® include disclosures from the following 87 companies:

ARDENT LEISURE GROUP , ABACUS PROPERTY GROUP, CRUX LIMITED, Atlas Iron Limited, ASCIANO GROUP , AUSTRALIAN INFRASTRUCTURE FUND, ANSELL LIMITED, AUSTRALIAN PIPELINE TRUST, Ausdrill Limited, ASX LIMITED, AUSTRALIAN WORLDWIDE EXPLORATION LIMITED, BILLABONG INTERNATIONAL LIMITED, BEACH PETROLEUM LIMITED, BURU ENERGY LIMITED, BLUESCOPE STEEL LIMITED, CARDNO LIMITED, CHALLENGER FINANCIAL SERVICES GROUP LIMITED, Carsales.com.au Ltd, CSL LIMITED, DECMIL GROUP LIMITED, DRILLSEARCH ENERGY LIMITED , DOWNER EDI LIMITED, DEXUS Property Group, ECHO ENTERTAINMENT GROUP LIMITED, FKP PROPERTY GROUP, FLIGHT CENTRE LIMITED, FORTESCUE METALS GROUP LTD, FAIRFAX MEDIA LIMITED, FLEXIGROUP LIMITED , GOODMAN FIELDER LIMITED, GWA GROUP LIMITED, INSURANCE AUSTRALIA GROUP LIMITED, IOOF HOLDINGS LIMITED, IMF (AUSTRALIA) LTD, JB HI-FI LIMITED, MATRIX COMPOSITES & ENGINEERING LIMITED, MINCOR RESOURCES NL, MOUNT GIBSON IRON LIMITED, MINERAL RESOURCES LIMITED, MURCHISON METALS LTD , MONADELPHOUS GROUP LIMITED, MESOBLAST LIMITED, M2 TELECOMMUNICATIONS GROUP LIMITED, PERSEUS MINING LIMITED, Platinum Asset Management Limited, QR NATIONAL LIMITED, RAMELIUS RESOURCES LIMITED, SAI GLOBAL LIMITED, ST BARBARA LIMITED, SEDGMAN LIMITED, SEEK LIMITED, SIMS GROUP LIMITED, SMS MANAGEMENT & TECHNOLOGY LIMITED, STARPHARMA HOLDINGS LIMITED, SUNCORP-METWAY LIMITED, Seven West Media Limited, Southern Cross Media Group Limited, TABCORP HOLDINGS LIMITED, Tassal Group Limited, TELSTRA CORPORATION LIMITED, TOLL HOLDINGS LIMITED, TRANSPACIFIC INDUSTRIES GROUP LTD, THE REJECT SHOP LIMITED, TRANSFIELD SERVICES LIMITED, TATTERSALL'S LIMITED, WEBJET LIMITED, WORLEYPARSONS LIMITED, WOTIF.COM HOLDINGS LIMITED, WATPAC LIMITED, BRADKEN LIMITED, COCHLEAR LIMITED, TRANSURBAN GROUP, STOCKLAND, CREDIT CORP GROUP LIMITED , GOODMAN GROUP, TELECOM CORPORATION OF NEW ZEALAND LIMITED, ASTRO JAPAN PROPERTY GROUP, INFIGEN ENERGY, KINGSGATE CONSOLIDATED LIMITED, LEND LEASE CORPORATION LIMITED, MEDUSA MINING LIMITED, PERPETUAL LIMITED, NEXTDC LIMITED, PALADIN RESOURCES LIMITED, SARACEN MINERAL HOLDINGS LIMITED, SILVER LAKE RESOURCES LIMITED, and Aspen Group

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. Click on the “More Info” button below.

Guerdon Associates in the news

“Remuneration cuts reach boardrooms”, Patrick Durkin, Luke Forrestal, and Michael Smith, Australian Financial review, 21 August 2012, p.13 and p. 17

“BlueScope chief latest to forgo bonus”, Leonie Lamont, The Sydney Morning Herald, 14 August 2012, p.1

“Pay cuts not firing may be answer”, Joanna Heath, The Australian Financial Review, 11 August 2012, p.4