Compensation policies and reports

The practice of JSE-listed issuers,  when it comes to approving remuneration policy – an advisory vote by the board – may be too ‘tame’ when compared with the rest of the world.

That was the word from panelist David Couldridge, a senior investment analyst at Element Investment Managers, who commented on the second position paper* on policy remuneration by the Institute of Directors in Southern Africa (IoDSA).

Australia

“Australian practice compels boards to stand for re-election if remuneration policy is not approved upon the second attempt while the UK requires a binding vote,” says Couldridge.

“From the perspective of inspiring confidence in foreign investors, I believe it’s critical that we raise our game.”

KING IV

Issuers listed on the JSE have to publish their remuneration policy framework and report annually in terms of KING IV.  Principle 14 in paragraph 37 states “The remuneration policy and the implementation report should be tabled every year for separate non-binding advisory votes by shareholders at the AGM.”

Where such issuers have a dual listing of their shares these requirements may differ, adding a level of complexity we have to allow for.

It appears as if LSE-listed issuers are generally more open and forthcoming with information relating to the remuneration of directors and executives.   This is in sharp contrast with JSE-listed issuers, with a few exceptions.

Reviewing and assessing these reports is time-consuming and difficult. This has led to us  developing a proprietary framework of key performance indicators and scoring scales for the policy document and report respectively.

These scores will be published on our website, and be communicated to clients and issuers.

It also forms our views as regards our voting outcomes in respect of such issuers’ forthcoming AGMs.