Remuneration governance, communication and strike risk management

Remuneration governance, communication and strike risk management2019-08-01T13:30:23+10:00

A handful of votes may make the difference – so good governance and stakeholder engagements are key

The Corporations Act amendments that took effect in 2011 created the need for a transparent remuneration governance framework, clear communication and engagements that go beyond mere compliance required to manage the strike/spill risks that many companies now face yearly.

Even if a strike against the remuneration report is not always necessarily linked to remuneration, it has also been shown that effectively addressing and disclosing remuneration governance does reduce the number of votes against the remuneration report.  When sometimes a handful of votes can make the difference, it is better to prepare and institute the right approaches to help ward off a crisis before it arise.

GRG has increasingly been assisting clients with managing their engagement with stakeholders on remuneration governance issues by offering the following remuneration governance-related services:

  • Engage with proxy advisors, fund managers, the Australian Shareholders Association and major shareholders to gauge attitudes and help resolve issues before they arise;
  • Review of remuneration disclosures and compliance to assess alignment with best practices and regulations;
  • Design and execute compelling shareholder KMP remuneration communication programs;
  • Review or draft compelling remuneration governance framework discussion papers, documentation and related policies;
  • Review of incentive plan measures and rules to minimise strike risks associated with the normal operation of incentive plans under varying circumstances;
  • Review or draft Remuneration Reports that are both legally compliant and provide the clear shareholder disclosures to enable them easily make more informed voting decisions on;
  • Drafting notices of meetings for AGMs and EGMs to address voting on both the Remuneration Report and approval of equity grants , as well as LTI plan approval allowing grants to be excluded from the 15% annual limit on new issues that can be made without approval;
  • Attend AGMs/EGMs to assist in responding to shareholders via presentations, Q&A or casual discussion;
  • Respond to Remuneration Report strike votes and comments made by shareholders to manage issues and satisfy legal requirements.

Recent GRG Remuneration Insights on this topic

  • Unlocking the Secret to Long Term Alignment

    Executives retaining large equity holdings in their employers promotes genuine long term alignment. However the many obstacles to this encourage the disposal of equity as soon as it vests to…

  • A Question of Independence

    In the light of the Hayne Financial Services Royal Commission, we explore what it means to be independent, and reflect on what it means for our own services and clients.

  • Demergers & Long Term Variable Remuneration

    Rarely do the rules governing long term variable remuneration (LTVR) plans specifically cover demerger or return-of-capital situations. In this Insight we identify various demerger situations and the principles that should…

  • Optimising Your Remuneration Report

    We look at the best Remuneration Reports observable in the market; hot trends; strategies to manage all the stakeholder pressures; how to streamline the report and ensure compliance – while…

  • Telstra – A Case Study in Misalignment

    Despite making significant changes and disclosures in a desperate attempt for damage control, Telstra recently received what looks to be a record strike against its Remuneration Report for an ASX…