You are using an older browser version. Please use a supported version for the best MSN experience.

Divisions emerge over NZX's proposal

NZN 12/04/2016 Paul McBeth

Institutional investors and listed companies were split on NZX's proposal to introduce more transparent reporting of non-financial measures and executive pay, submissions show.

The stock market operator on Tuesday released submissions on proposals to broaden governance rules for listed companies, before a wider review of listing rules this year. NZX wants to bring governance into line with best practice, based on Financial Markets Authority guidelines and those adopted by the ASX.

Among the proposals was whether to introduce guidance or recommendations for non-financial reporting covering environmental, social and corporate governance (ESG) and whether more detail on executive remuneration was needed.

"At most, NZX should include some commentary or guidance that issuers should consider reporting on non-financial matters that are relevant to their business, but we do not support including anything more prescriptive than that," law firm Chapman Tripp said in its submission.

Among the few listed companies in favour of greater disclosure were Kiwi Property Group, Z Energy and Auckland International Airport, who said more fulsome disclosure of ESG measures would give investors a greater understanding of their business.

Devon Funds Management and the Guardians of New Zealand Superannuation supported the introduction of measurable ESG policies that companies would measure themselves against, while the New Zealand Shareholders' Association said specific guidelines would be a step too far.

Executive remuneration disclosure also divided opinion. The Listed Companies Association said feedback from its members was mixed, and it had settled on recommending a high-level release of information which avoided commercially sensitive information that might relate to short-term incentives. Retirement village operator Ryman Healthcare said existing disclosure of $10,000 bands was sufficient.

Russell McVeagh said the NZX Code shouldn't go beyond what's required by the Companies Act on executive pay disclosure.

"We believe that issuers would have commercial sensitivity concerns about disclosing individual remuneration packages and that additional banded or consolidated reporting of remuneration, over and above the Companies Act requirements, would impose additional costs that would outweigh any value to investors," the law firm said.

However, investors wanted to see more disclosure around executive pay, including key performance indicators that could be clearly measured.

image beaconimage beaconimage beacon