On Our Radar
These issues are on our radar right now:
Pay for value
Quantum of reward, gaming of performance hurdles, critically examining accounting values used for equity incentives, tax neutrality between cash and equity pay, bonus deferral and clawback.
True and fair reporting
The veracity of “underlying” earnings numbers, incomplete disclosure of material litigation in contingent liability notes, liberal exemptions to reporting related party transactions, accounting inputs in fair value calculations for options grants and the disclosure of share purchases for executive incentive schemes.
Monitoring the impact of foreign strategic investors on control arrangements in ASX companies.
Critically examining the impact of the “business judgement rule” on directors’ duties, improving the visibility of non-executive directors to institutional investors, identifying the skill sets in existence on ASX boards, examining the impact of gender on board appointments and monitoring the ‘gene pool’ of board appointments.
Respecting pre-emptive rights, monitoring the fairness, transparency and efficiency of capital raisings, and tracking the fees charged by advisors and underwriters compared to the risk borne.
The integrity of the proxy voting regime, measuring the impact of securities lending on votes cast at AGMs, removing the arbitrage between the approval of shares issues to directors and the freedom to buy shares on-market without reference to shareholders, and curtailing the unfettered ability of ASX companies to issue shares as consideration for takeovers (reverse takeovers).
The laws relating to the disclosure of beneficial interests created by equity derivatives, improving the disclosure of ownership interests obtained through securities lending arrangements, removing the information and voting arbitrages between chapter 6 takeovers and schemes of arrangement.