The Australian Council of Superannuation Investors (ACSI) has published updated advice on how it will be assessing public company directors’ behaviours and performance.
ACSI’s Chief Executive Officer, Ann Byrne has said that the “Governance Guidelines continue to give a clear insight into what behaviours and disclosures superannuation funds expect from the companies in which they invest,” noting that the issues “have been developed in consultation with the funds.”
ACSI has emphasised several issues regarding executive pay practices admonishing the practice of rewarding acquisitive behaviour or empire building where payment of bonuses are made for making acquisitions rather than the value delivered to shareholders instead of improved performance. It also criticised the payment of dividends to executives on unvested and unearned incentive shares and termination payments that provide reward for mediocre performance, or failure.
Ms Byrne reiterated that: “as long-term investors, ACSI’s member funds recognise that governance of Australian listed companies is a critical factor in determining the impact of long-term risks on super fund investment performance and
ultimately the returns of retirees.”
Ms Byrne also said that companies that exclude costs and impairments from bonus calculations was a particular concern commenting that, ” an impairment charge should not be excluded from the bonus calculations for the CEO and executive team which acquired the asset that has been impaired.”
The revised Governance Guidelines are available at www.acsi.org.au