Welcome to Edition 48 of Boardroom Brief.
This is a service specifically targeted at the needs of busy non-executive directors. We aim to give you a “heads up” on the things that matter for NEDs in the week ahead – all in two minutes or less.
KEY BOARDROOM BRIEF
ASIC reports on the 2017 AGM season. The 2017 AGM season for S&P/ASX 200 listed companies was significantly less tumultuous than the 2016 season, with fewer ‘strikes’ on remuneration reports - down from 11 first strikes in 2016 to 5 in 2017 and thought to be driven by company changes to remuneration structures (reducing complexity, withholding bonus payments and emphasising non-financial targets). Votes against director election resolutions were, however, up; commentary suggesting shareholders are using such votes as a means of voicing dissatisfaction with company performance. The greater focus by both shareholders and proxy advisers on environmental, social and diversity issues last year is an emerging trend we can expect to continue into 2018. The challenge for Directors will be assessing when and how best to proactively engage with shareholders and proxy advisers on potential areas of concern in order to ensure optimal Board performance. Ultimately, AGMs serve as a critical opportunity to enhance the long-term performance and corporate value of a company – so directors should embrace shareholder engagement at them and prepare thoroughly for them. Boards should also note ASIC’s encouragement for all resolutions to be conducted by poll (rather than by a show of hands) and its observation of a potential trend towards hybrid AGMs (allowing for voting in person or online). You can read ASIC’s Report here.
ASIC sues CBA for rate rigging. Against the backdrop of settlements agreed with ANZ and NAB last year and an ongoing court action against Westpac, ASIC announced last week that it has now initiated legal proceedings against CBA for its alleged role in manipulating the bank bill swap reference rate (used by the Australian financial market to price loans). CBA rejects the allegations and plans to defend the case. Directors of financial services companies will be aware from previous editions of Boardroom Brief that the sector is likely to remain in regulators’ sights throughout 2018.
THE WEEK AHEAD
Bond sell-off. At the time of writing, the ASX was on its way to the worst trading day for 2018 on news of a sell-off in US bond markets: potentially a harbinger of inflation in the US. Traders will no doubt be looking for more signals in the next week.
RBA’s Statement on Monetary Policy Released this Friday. The RBA’s Board will hold its first 2018 meeting tomorrow. The RBA’s Statement on Monetary Policy (released on Friday) is not expected to reveal a major policy shift; its views on Australia’s GDP growth profile, consumer spending and inflation likely to remain the same. There is a broad consensus, too, that the RBA will restate its ‘on hold’ policy for interest rate rises.