Executive Pay and Loyalty

Intl - Australia

Equity Compensation
Golden Handshakes

Say on Pay - see generally: Binding Say on Pay
  • 2014.Sept.14  Australia's CEO Pay Ratio Gap Narrows - Improved Practices ReportedThe headline in this Guardian article may involve CEO pay ratio (down from 94 times 2007 average worker pay to 63 times the 2013 average). The data came from an annual pay survey performed by the Australian Council of Superannuation Investors (ACSI). Nevertheless, the real insights come from discussion about the reasons for fewer unfavorable say on pay votes. ACSI's CEO Gordon Hagart reportedly offered the following explanation for more favorable shareholder say-on-pay votes: 
Specific improvements include the major reduction in termination payments, more demanding bonus hurdles, longer performance measurement periods, and an end to the culture where bonuses are seen as entitlement rather than reward for outperformance.
  • "Two Strikes" Rule Working [in Australia], with Glass Lewis reporting "Although over 100 companies faced the grim prospect of a “second strike”, only 13 companies actually received a “second strike” in the recently completed Australian proxy season (and only 2 had their board spill resolution approved). This seems to indicate that shareholders are taking this newly-granted responsibility quite seriously. Furthermore, companies are as well , as indicated by the increased dialogue and subsequent policy and design reform."
Legislation Proposed.  See Business Insider News Report (2011.3.3), reporting that the bill would give "shareholders the opportunity to remove directors if the company’s remuneration report has received a ‘no’ vote of 25 percent or more at two consecutive annual meetings."
Shareholder Approval
  • 2012.June.2  "CEO pay revolt threatens Xstrata merger" (BusinessDay), which begins "XSTRATA shareholders are threatening to scupper a $US90 billion ($93 billion) friendly merger with Glencore after scheme documents revealed the chief executive, Mick Davis, stands to collect up to £75 million ($119 million) over the next three years, including retention payments without any performance hurdles." More info directly below.
  • 2012.May.31  M&A Closing "At Risk" from Aussie Shareholder Approval Requirement for Retention. Also r See  See also the Wall St. Journal in the article titled "Retention Tension Risks Xstrata-Glencore Deal" reporting that -- 
    • "Shareholders already feel Xstrata's executive pay is too high: 37% of them voted against the company's 2011 pay package at its recent annual general meeting. The retention package needs approval from 50% of shareholders to pass, but Glencore can't vote, meaning only 33% of Xstrata's shareholders are required to vote it down." 
    • "If that happened, it would lead to the whole merger being called off—which raises the stakes for investors supportive of the deal but not of the pay package." 
Stock Award Plans
  • 2012.Aug.8  Compliance Issues for Multi-national Employers -- see DLA alert (noting the availability of a securities law exemption if stock award grants will be made to less than 20 employees over 12 months, or only to executive officers).