Issues on the Mind of Boards, CEOs and their Advisors

Remuneration planning over the coming two years

  • Implications of the Coalition’s budget and reduced tax for the least well-paid.
  • Implications of parliamentary approvals in relation to low income earners tax rates
  • Fair Work Commission’s decision on the minimum wage.

– Impact of the above on foreshadowed adjustments to fixed pay reviews in the 2019 Financial Year and beyond

  • Implications of the deferral of tax concessions for major corporations for a number of years
  • Implications of the above on funds available for investment by major corporations in innovation, new initiatives and wage adjustments
  • Implications of the above on employment levels
  • Implications of the above on major corporates’ decisions in relation to business growth and employment growth in Australia as distinct from offshore locations
  • Strikes against Remuneration Reports and rationale
  • Changing shareholder perspectives when voting against the Remuneration Report
  • Prior rejection of incentives based on cultural, behavioural and employee engagement KPIs

-Implications of the Royal Commission into the financial services sector including the criticality of culture, corporate ethics and behavioural attributes of employees

  • Emerging questioning of the level of Board engagement in the review of commercial practices and the mitigation of risk including compliance risk with regulatory guidelines.

– Do the above issues being widely canvassed and raised by Counsel at the Royal Commission flag the prospect of Board’s requiring a separately staffed Secretariat managed by a Head of a Board Office reporting to the Board Chair and serving Board Committees on a breadth of issues relevant to their accountabilities?

  • Would such an initiative increase Director visibility of corporate activity and reduce their dependence on access to the C-Suite?

– Do issues raised flag a requirement for greater involvement and time commitment of Directors?

– Are these issues only relevant to the ASX 100 or ASX 200?

-What are shareholder expectations and what is their willingness to pay for improved governance and forensic oversight?

– What topics do emerging issues raise in relation to the capabilities of the CEO, CFO, General Counsel and members of major corporates’ leadership teams?\

  • Emerging questions in relation to Board Composition

 -Continuing and focused discussion on Director capability, experience and skillsets

– Discussions in relation to Directors’ capacity to serve on multiple Boards given the increasing requirement for more forensic engagement in risk mitigation and the design of reward programs cascading throughout the organisation, not simply restricted to KMPs.

  • What implications do the above issues have in relation to the frequency and nature of Board Effectiveness Reviews?

 -Should Board Effectiveness Reviews thoroughly consider the capability of Board members and the alignment of those capabilities with the organisation’s needs and shareholder expectations?

– Should there be a different weighting of consideration given to major/institutional shareholders, the review process of proxy advisers and the resources drawn upon by Board and corporate advisers?

– Does the myriad of issues being flagged in the Royal Commission and other observations by regulators including ASIC and APRA, raise questions for Government stewardship and oversight?

-Do these questions include the requirement for those standing for membership of parliaments and local government to have open disclosure in relation to the capability requirements of office and the capabilities and experience possessed by those standing for public office?

  • Should similar questions be addressed and publicly disclosed in respect of those holding Ministerial office?

-Should these questions cascade to a clear definition of the requirements of the support staff supporting a Minister and senior officers in government departments and government businesses?

– What are the implications in respect of the current gap between public sector pay and private sector reward?

– To what extent does pay attract the most capable?

  • To what extent do governments require an increased share of the most experienced and capable executives?

 – Should their search for talent be local or international?

– Should employment be subject to fixed periods of service?

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