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Remuneration governance, communication and strike risk management

Remuneration governance, communication and strike risk management2018-11-27T15:05:46+00:00

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

  • 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…

  • Remuneration Reports and Risk Management – Being Prepared

    The two-strike rule has made the resolution on the Remuneration Report one of the highest focus areas for governance and transparency. It is in some ways the “cutting edge” for…

  • Government to make Employee Share Schemes user friendly

    The Government has recently released a consultation paper seeking comments from the public on changes to the Corporations Act disclosure regime that would make employee share schemes (ESSs) more user…

  • Who are KMP and Why?

    The apparent division into two compliance camps of Remuneration Report disclosure of KMP remuneration stems from classification of some executive roles as KMP and others as not. We offer clarification…

  • Using Terminology to Improve Communication

    Use of imprecise terminology in engagement letters, policies, plan rules and Remuneration Reports often leads to a lack of clarity regarding intended total remuneration packages (TRPs). Poorly expressed engagement letters…