Guerdon Associates examined the Minimum Shareholding Requirement (MSR) policies of executives in the ASX 100. Data was recorded from the latest available company Annual Reports.

Firstly, our report analyses MSR policies in the ASX 100. It is then broken down by GICS Sector and Market Capitalisation.

Table 1: Presence of MSR policies and guidelines in the ASX 100

CEO			Executives
Policy	Guideline	No policy or guideline	Policy	Guideline	No policy or guideline
67%	7%	26%	67%	6%	27%

 

Two thirds of companies in the ASX 100 have a defined MSR policy for both CEOs and executives. Approximately a quarter have not disclosed any policy or guideline.

Downer EDI has disclosed an MSR guideline for the CEO but not for any other executives.

Despite not having a formally disclosed MSR policy or guideline, IGO and Sonic Healthcare have a statement within their Annual Reports explicitly encouraging executives to hold shares.

Table 2: MSR policies and guidelines in the ASX 100

	CEO		Executives
Statistic	Years to Achieve	Stated Minimum as % of Fixed Remuneration	Years to Achieve	Stated Minimum as % of Fixed Remuneration
Count	74	73	73	72
Average	4.88	187%	4.89	112%
25th percentile	5	100%	5	75%
50th percentile	5	150%	5	100%
75th percentile	5	200%	5	100%

 

The median MSR as a percentage of Fixed Remuneration is 150% for CEOs and 100% for other executives. The most common requirement is for the MSR to be obtained within 5 years.

Macquarie Group did not disclose the MSR policy as a percentage of fixed remuneration. Executive Directors are required to hold a value equal to 5% of aggregate profit share allocations for each of the last five years, or 10 years for Executive Committee members.

Ten companies with an MSR policy or guideline did not disclose the number of years given to achieve. Oz Minerals requires the MSR policy to be met within a “reasonable period”.

By GICS Sector

Tables 3 and 4 below show the differing MSR policies and guidelines within the ASX 100 by GICS sector.

Table 3: Presence of MSR policies and guidelines by GICS Sector

	Company	CEO			Executives
GICS Sector	Count	Policy	Guideline	No policy or guideline	Policy	Guideline	No policy or guideline
Communication Services	5	40%	0%	60%	40%	0%	60%
Consumer Discretionary	9	44%	11%	44%	44%	11%	44%
Consumer Staples	6	83%	17%	0%	83%	17%	0%
Energy	6	67%	0%	33%	67%	0%	33%
Financials	16	69%	13%	19%	69%	13%	19%
Health Care	7	71%	0%	29%	71%	0%	29%
Industrials	11	64%	27%	9%	64%	18%	18%
Information Technology	6	50%	0%	50%	50%	0%	50%
Materials	22	68%	0%	32%	68%	0%	32%
Real Estate	9	89%	0%	11%	89%	0%	11%
Utilities	3	100%	0%	0%	100%	0%	0%
All	100	67%	7%	26%	67%	6%	27%

 

The Communication Services sector was the least likely to disclose an MSR policy or guideline. One hundred percent of Utilities companies disclosed an MSR policy. This was closely followed by 89% of Real Estate companies.

Seven sectors did not have an MSR guideline. Of the sectors with an MSR guideline present, up to 27% of companies within the sector disclosed a guideline.

Table 4: Average MSR policies by GICS Sector

 

The highest average MSR requirements were found in the Information Technology sector. For CEOs, this was 367% of TFR and 300% of TFR for other executives, which is significantly higher than any other sector.

The Industrials sector had the lowest average MSR requirement for CEOs and Executives, at 120% and 69% respectively.

The average years given to achieve the MSR ranged between 4 and 5.25 years.

By Market Capitalisation

The below table summarises the differing MSR policies by market capitalisation quartiles, as at the 1^st of March 2023.

Table 5: Average MSR policies by Market Capitalisation

 

The upper quartile has the highest minimum shareholding requirements. On average, CEOs in the upper quartile have an MSR of 255% of Fixed Remuneration. Executives have an average MSR of 155%.

Across all quartiles, the minimum requirements for the CEO were significantly higher than for other executives.

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