AMP Limited (AMP); IAG Finance (New Zealand) Limited (IAN):
AMP’s decision to dump bonuses for executives and review its entire remuneration scheme has underlined the deep problem confronting the financial services sector: no one seems to know exactly what, and more importantly how, their people should be paid. And while the Australian corporate landscape is dominated by a one-sizefits-all approach to paying its top brass, dynamic remuneration structures that reflect different industries with different risk profiles are needed to ensure executives and others in the business are suitably paid. That is the view of Pru Bennett, Blackrock’s Asia-Pacific Hong Kongbased head of corporate governance and responsible investment. She tells The Australian Financial Review that at a board level, some remuneration committee chairs ‘‘try to please all without coming up with what’s right for the company and then communicating it to shareholders’’. IAG chief executive Peter Harmer also said last week that the insurer would be reviewing its remuneration arrangements, saying that the ‘‘oldfashioned approach to compensation does not work any more’’. These moves come as the ‘‘twostrikes’’ rule, which was designed to hold directors accountable for executive salaries and bonuses and solve issues of overblown pay, continues to be bedded down after its 2011 introduction. Under the rule, shareholders can trigger a board spill if over 25 per cent of shareholders vote against a remuneration report at consecutive general meetings.
Downer EDI Limited (DOW); Spotless Group Holdings Limited (SPO):
Spotless is planning to announce more than $300 million in new contract wins as proof that chief executive Martin Sheppard’s strategy of targeting more profitable deals is working following a $1.2 billion takeover bid from Downer EDI. Downer’s shares rebounded on Monday as the stock was offloaded at $5.55, rising 17¢ to close at $5.72 after crashing by 21 per cent on Friday following a disappointing equity raising for the proposed Spotless buyout. But the stock remains below the crucial $5.95 mark – the price institutional investors paid to participate in the $1 billion equity raising.
Flight Centre Travel Group Limited (FLT); Webjet Limited (WEB):
Exclusive | Airbnb has put travel companies such as Flight Centre and Webjet on notice that it intends to expand beyond accommodation to owning the ‘‘entire travel experience’’, a move that threatens to disrupt the entire industry. Airbnb’s US-based product chief, Joe Zadeh, who is in Sydney to launch the initiative formally, said: ‘‘We see ourselves as moving into offering the entire trip, from where you stay, to what you do and even how you get there.’’ $US30 billion ($39 billion) sharing economy giant Airbnb has put travel companies such as Flight Centre and Webjet on notice that it intends to move beyond accommodation to owning the ‘‘entire travel experience’’ – in a move that will threaten incumbent players with the spectre of disruption.
Harvey Norman Holdings Limited (HVN); Funtastic Limited (FUN):
Billionaire retailer Gerry Harvey is still venting his fury at ‘‘enemy’’ short sellers, as ASIC investigates Harvey Norman’s 2015/16 accounts off the back of concerns raised last year by proxy adviser Ownership Matters. Of course the last person to blame short sellers for all the world’s ills was Slater & Gordon chairman John Skippen , and wasn’t he on the right side of history? Oh… Skippen, of course, was previously Harvey Norman’s CFO. What are the chances? As well all know, these things happen in threes and there was yet more bad news for Harvey on Monday. Funtastic, which Harvey owns 40.3 million shares in (or 5.2 per cent), announced it was delisting, having shrunk so such minnow-dom the compliance costs aren’t worth it. To think Archer Capital offered 80¢ a share, or $132 million, for the toy company in 2008. The stock closed on Monday at a princely 1¢. News Corp’s co-chairman Lachlan Murdoch also owns 6.6 per cent of Funtastic, having bought in after Archer’s offer fell over.
National Australia Bank Limited (NAB); Westpac Banking Corporation (WBC):
NAB and Westpac are under fire for sheeting interest rate rises for property owners back to higher funding costs, when analysis shows many funding costs have fallen. NAB and Westpac are under fire for sheeting interest rate rises for property owners back to higher funding costs, when analysis shows many funding costs have fallen. The banks say, however, that the mix of their funding is changing and that the measures being used by analysts and the Reserve Bank of Australia do not necessarily reflect the prices they are paying. Over the past two weeks each of the big four banks has raised rates by between three basis points and 117 basis points for a range of loans for both owner-occupiers and investors.
Rio Tinto Limited (RIO):
Rio Tinto’s mid-year dividend may be almost four times higher than last year, thanks to its surging free cashflow, strong balance sheet and limited growth plans. That’s the view of respected UBS resources analyst Glyn Lawcock, who says Rio’s interim dividend in August may be greater than $US1.65 a share. That compares with the $US1.25 final dividend the company paid in February and the US45¢ it made in August 2016, when tumbling commodity prices had the world’s resources giants bracing for an extended period of pain.
Santos Limited (STO):
The theory that investors in the Queensland LNG projects may want compensation if they are forced to divert gas into the local market has strengthened after Santos chief executive Kevin Gallagher said the GLNG partners had a right for their investment to be protected. Mr Gallagher pointed to a ‘‘value impact’’ for the partners in Santos’ $US18.5 billion ($24.3 billion) GLNG venture and said ‘‘the issue of compensation then needs to be addressed’’ if gas was taken from the LNG export venture to supply the east coast market.
Vocus Group Limited (VOC):
Bell Potter Securities has taken Vocus Communications out of the lightlytraded Macquarie Telecom Group. As Street Talk reported on Monday, the broker built a $40 million book and lined up a bunch of fund managers to buy Vocus’ long-held stake in the telecommunication and hosting services company. The trade was eventually done at $12.20 a share, which was a 6 per cent discount to the $13-ashare closing price.
(Source: AIMS)
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