Institutional investors and directors have come a long way in 4 years – agreement on key issues at our latest remuneration forum

The fourth Remuneration Forum sponsored by Guerdon Associates with CGI Glass Lewis, was held on 3 May at Allen Arthur Robinson’s Melbourne offices, and brought together over 60 non-executive directors, management, institutional investors and proxy group/governance advisers.  The financial sector regulator, APRA, was also represented.


The forum reviewed the government’s response to the Productivity Commission report on executive remuneration, and board remuneration committee capability requirements.


As with past forums, some of the differences between board directors and their companies’ investors shocked first time attendees.  After a few moments reflection, we found ourselves providing assurances that we have come a long way since the first forum in 2006. 


And indeed we have.  This year’s forum emphasised the agreement amongst stakeholders on several key matters, notwithstanding the varying perspectives from which they view executive remuneration –


·          Criticism of the government’s refusal to remove termination of employment as an automatic trigger for the taxation of unvested equity, as recommended by the Productivity Commission, and supported by APRA


·          Principles-based regulation is far preferable to black letter law, the unintended consequences of which mean it is often ineffective or even counter-productive; recent examples include the termination payments legislation and the proposed clawback provisions, which are likely to encourage increases in fixed pay.


·          Boards must not be too beholden to management, and remuneration committee members must have the skills, knowledge and experience to enable them to make an effective contribution (and provide an effective check on management), with the assistance of external advisers, as required


·          Remuneration committees must be able to explain remuneration to shareholders, to other stakeholders, to employees and to regulators; remuneration committees must also be able to engage with stakeholders in relation to the effects of their remuneration strategy.


A summary of the remuneration forum proceedings is available HERE

© Guerdon Associates 2024
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