Putting the brakes on bosses’ bonus blow-outs

Public sector wage growth is also at a record low, at 2.4 per cent. Photo: Simon BoschThey were words to send chills up spines in boardrooms Australia-wide.
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The Commonwealth Bank’s annual report landed on Monday, bringing with it news that chief executive Ian Narev’s salary package had topped $12.3 million in a year when the bank was hit with a scandal in its life insurance division, CommInsure.

The news was met with hostility from both sides of politics. “We are returning to the 1980s adage that greed is good,” Labor Senator Sam Dastyari told Fairfax Media this week, suggesting Narev share his earnings with victims of the bank’s scandals. Just days earlier, Opposition leader Bill Shorten had spoken about a “fat cat bonus system”, as he continued to push for a royal commission into the banks, while Liberal MP Warren Entsch railed against “banking bastardy” as he called for a new tribunal.

With most of Australia’s big listed companies to shortly release their annual reports – and with them, the details of their executives’ pay packets – the outcry over Narev’s salary would have dashed any remaining hopes that executive pay would be a relatively low-profile issue in Australia this year.

Such outrage is a regular news-cycle staple; but this year, things are different. The constant threat of a royal commission hangs like a sword of Damocles over the financial services sector, with each new scandal and run of bad press adding to the case for such an inquiry.

The new parliament, set to return at the end of the month, is stocked with diverse and populist cross-benchers, several of which have already thrown cold water on the Turnbull government’s planned corporate tax cuts – already a tough sell at a time of wilting tax revenues. And a rising tide of anger over executive pay overseas – notably in the UK and US – is being closely watched here, as other governments move to crack down on executive excess with new regulations.

In a report on executive pay released in the UK this week, titled “Time to Listen”, consultants PricewaterhouseCoopers warned the corporate world that it needed to “find a way to respond to public concern about executive pay, or matters will be taken out of our hands”. (PwC’s business includes advising boards on the structure of remuneration packages and how much to pay executives and staff.)

In a note for Australian clients, it pointed to “political turmoil around the world”, which had “highlighted the concern among many that globalisation and free trade have left them behind”.

“There’s now an urgent need for “big business” to learn from this and start to rebuild public trust,” it warned.

But as far as some experts are concerned, at least one sector of “big business” in Australia has missed its chance. Former consumer watchdog Allan Fels, the architect of the “two strikes” rule that gives Australian shareholders a say on executive pay, told Fairfax Media this week that the scheme had failed to restrain executive pay at the banks, suggesting additional, special rules on remuneration may be needed for the financial services sector.

“The time has arrived for this to be considered,” he said.

Senator Dastyari says the generous pay packets showed that the influence of shareholders over executive pay was nowhere near as strong as it needed to be.

“Greed may be good for some but the rest are paying the price,” he says.

“When a small group of executives are becoming incredibly rich, and that gap between them and everyone is growing, long-term social problems will follow.

“We need to be looking at how we empower consumer and shareholders to have a greater say and make sure their voices are heard. We should be looking at international comparisons for how that’s done.” Home and away 

Overseas, anger at ever-swelling executive pay packets has been on the rise since the global financial crisis, especially in countries where taxpayers were forced to bail out companies.

Bernie Sanders, the self-described socialist who ran opposite Hillary Clinton for the Democratic nomination, railed against inequality and excess in Wall Street and corporate America, with income tax hikes for the rich a prominent policy. Both Presidential nominees, Donald Trump and Clinton, have promised to keep Wall Street in check.

In the UK, new Prime Minister Theresa May has tackled the issue directly, with a proposed crackdown on executive pay, including giving shareholders a binding vote. She has also proposed putting consumer and employee representatives on corporate boards, and making companies reveal the ratio between the salary of their chief executive and that of their average worker.

In Europe in 2014, as part of a wave of post-GFC reforms, the EU placed a cap on bonuses at financial institutions – limiting them to 100 per cent of fixed pay, or 200 per cent with the approval of shareholders.

Executive pay has been “extremely topical” overseas, says Emma Grogan, a partner at PwC, particularly in countries where banks were bailed out by governments. “It became a real political issue”.

In Australia, the situation is more nuanced. Allan Fels, architect of the ‘two strikes’ rule.

Already, at annual general meetings held earlier in the year, companies like Woodside Petroleum and Spark Infrastructure have been slapped with shareholder “strikes” over their remuneration reports. Tech company Reckon received an incredible 70 per cent shareholder vote against it.

Each company’s annual reports includes a remuneration report, a section detailing the structure and quantum of the company’s executive and director pay packets. The two strikes rule allows shareholders to vote against the remuneration report at the company’s annual general meeting; if 25 per cent of shareholders vote against two consecutive reports, a resolution is put forward to dump the board.

Annual reports are hitting the Australian Securities Exchange now, giving investors and the general public a clearer picture of where Australia stands on the global stage when it comes to executive salaries, as well an idea of how well executives have fared in the almost 10 years since the global financial crisis.

Last year saw a jump in strikes against listed companies, from 95 to 113 – the highest number in three years. The number of those that involved a second strike more than doubled, from 10 to 22. Seven of the companies who received strikes were in the ASX200.

The bulk of company annual meetings will take place in a couple of months, peaking in October.

Grogan says executives are receiving modest pay increases, if any, with new chief executives often placed on a lower pay scale than their predecessors. “We are still in a period of pay restraint in Australia,” she says.

It’s not just the fear of a shareholder strike that is driving this, Grogan says, “although that is there”. There were also discussions about “what is a fair outcome here, based on the year that we have had”.

The Australian Council of Superannuation Investors, which represents Australia’s powerful super funds, expects chief executive pay packets this year to continue on a downwards trend from 2008, when it reached dizzying pre-GFC highs.

But data collected by ACSI last year shows that while fixed pay fell by 1.1 per cent for ASX100 chief executives, bonuses rose 12 per cent. Bonuses also became more common, with the proportion of top-100 chiefs receiving a bonus reaching the highest level since 2008.

ACSI has pointed to bonuses – and whether they are truly “at risk” – as a key issue for investors. Chief executive Louise Davidson says more needs to be done to ensure executive bonuses reflect more than just “short-term profit numbers”.

“It’s about having a social licence to operate and [addressing] the lack of trust and scepticism that has built up in the community – particularly toward the banks – by seeing culture failure after culture failure,” she says.

Lawrence says it is now more likely for a chief executive to be fired in Australia than to not receive a bonus.

“Executives in Australia seem to be compensated for a risk that is not real,” he says.

“What is the worst thing that can happen to you as an executive of a large publicly listed company? You get fired with more money than most people earn in a lifetime.

“You might get bad stories written about you in the newspaper, but people look at that and think that’s not risk.”

PwC has advised boards’ remuneration committees to make “tough decisions” and only pay bonuses that are close to the maximum “for unambiguously outstanding performance”.

“Furthermore, on target annual bonuses should not be easily earned,” it says. “The percentage of ASX100 CEOs receiving less than 75 per cent of their target incentive has not exceeded 30 per cent over the past three years.

“These payments need to be seen by the public as truly variable, and to be varying in relation to transparent performance outcomes.” Bank on it 

Australia’s big banks were hit with another round of bad press this week, which in turn kept pressure on the Turnbull government and its opposition to a banking royal commission.

After details of Narev’s salary emerged on Monday, news broke later in the week that the big banks and Macquarie were being sued by US hedge funds over allegations of bank bill swap rate rigging.

Labor is considering ways of pushing for a royal commission through the parliament; while a motion in favour would easily clear the senate, two or more Coalition MPs would have to cross the floor in the lower house for it to pass.

Facing mounting pressure from the backbench and anger over Narev’s pay, Turnbull announced he would require the bosses of the big four banks to front the House of Representatives’ economics committee at least once a year. Treasurer Scott Morrison has also suggested he is open to some kind of bank tribunal, as urged by Warren Entsch. “What I find helpful about these suggestions, whether that particular outcome is supported or not, is they’re dealing with very specific problems,” he told Sky News.But whether this will examine the broader issue of how much the heads of Australia’s biggest banks – and companies – get paid remains unclear.

Fels, whose brainchild, the two strikes rule, came into effect five years ago, believes the scheme has helped reign in excessive pay, “though less so for banks”.

He says any royal commission into the banks should scrutinise bank pay arrangements “to ensure that they have incentives to act responsibly and to avoid excess”. He believes additional measures addressing excessive bank pay may be needed.

“Banks are privileged. They get a licence that entitles them to prudential protection. With that licence, should come a degree of obligation to act responsibly,” he says.

“This in turn should be reflected in pay incentives.”

The corporate sector, and its advisers like PwC, warn that increased regulation on salaries can have unforeseen and negative consequences. The UK government, for example, has argued that the EU’s bonus cap has merely led to a substantial increase in base salaries.

But these arguments are hard to make in the face of job losses, stagnant wage growth and public outrage. Worldwide, big business is on notice – respond to concerns about pay packages, or brace for the consequences. “In all developed countries there’s concern about executive pay,” Grogan says. “There’s an opportunity right now for organisations to take a position on that and address some of those concerns… or there is the risk of further regulation, which could fuel perverse outcomes”.

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Morgan Stanley accused of self-dealing at the expense of its workers

A former employee says Morgan Stanley knows exactly who should buy its worst-performing funds: the bank’s own workers.
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That’s the claim behind a lawsuit filed Friday accusing Morgan Stanley and its board of mismanaging the firm’s 401(k) retirement plan – the US equivalent to a superannuation fund – and costing 60,000 employees hundreds of millions of dollars. According to the complaint, which seeks to cover other workers, the company picked inappropriate and high-priced investments so that the bank would profit at the expense of its staffers.

The lawsuit in Manhattan highlights a friction that exists at financial-services firms that put employees into their own product. The suit cited several Morgan Stanley mutual funds included in the pension fund that fared worse than offerings from rivals. For instance, a small-cap growth fund underperformed 99 per cent of similar funds in 2014 and 94 per cent in 2015, according to the suit. ‘Staggering losses’

Morgan Stanley sought a financial benefit for itself while causing the plan’s participants “to suffer staggering losses of hundreds of millions of dollars,” lead plaintiff Robert Patterson alleged in the breach-of-duty lawsuit. The firm “treated the plan as an opportunity to promote Morgan Stanley’s own mutual fund business and maximise profits.”

Mary Claire Delaney, a Morgan Stanley spokeswoman, declined to comment on the claims.

Patterson is identified in the complaint as a Morgan Stanley retirement plan member from January 2011 to April 2014. His suit, ostensibly filed on behalf of the plan, seeks class action status for all who were enrolled in it from March 2010 to February 2016, including current and former employees. The plan manages $US8 billion ($10.5 billion) in assets, according to the complaint.

Management failed its duty to act in the best interest of plan participants by putting six Morgan Stanley mutual funds into the pension plan, some of which were “tainted” by poor performance or high fees, Patterson alleged. The suit seeks damages of $US150 million.

“Morgan Stanley selected their proprietary funds not based on their merits as investments, or because doing so was in the interest of plan participants, but because these products provided significant revenues and profits to Morgan Stanley,” Mr Patterson alleged. Worst Morningstar rating

Plan participants wanting to invest in a mid-cap fund were offered only Morgan Stanley’s Institutional Mid-Cap Growth Fund, which held between $US200 million and $US300 million in assets, according to the complaint. Investment advisory firm Morningstar gave that fund its worst possible rating for investors seeking to hold it for just three to five years and only a slightly better rating for those who wished to keep it for a decade, Patterson said.

Employees were also charged millions of dollars in higher fees for company mutual funds than Morgan Stanley’s outside clients, Patterson said. For instance, an international stock fund charged retirement participants the equivalent of 0.88 per cent of assets under management, almost double what a similar-sized outside client would be charged.

Morgan Stanley’s investment-management business creates funds for institutional and retail clients and has $US406 billion in assets under management. Daniel Simkowitz took over the business, one of three main divisions alongside the investment bank and wealth management brokerage, in October.


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Donald Trump in the White House is the biggest risk to the world economy

You were concerned of what the Brexit would do to the world economy? Be afraid if Donald Trump enters the White House. Photo: Evan Vucci/APOnce upon a time, elections were dominated by the economic cycle. “It’s the economy, stupid” became Bill Clinton’s maxim, and one which all politicians could follow.
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If growth was good and unemployment low, the ruling party was typically a shoo-in, while a recession would lead to a hasty exit for the government of the day. Simple.

Suddenly the world works in the other direction – the economy is dominated by elections.

Geopolitical risk, the catch-all term for anything from elections to wars, is now in the driving seat.

The big event of the summer was June’s Brexit referendum. Apocalyptic forecasts of an immediate crash for the UK economy have not come true so far, thankfully, with the earliest indicators pointing to robust growth.

After all, Britain’s exit from the European Union has not yet occurred. The vote has implications for the rest of the EU and for world trade, with the outcomes far from certain. A slowdown seems likely.

Next up is the US presidential election in November when Hillary Clinton clashes with Donald Trump.

As far as financial markets are concerned, the outcome broadly matches the politicians’ own campaign – Clinton is a known quantity while Trump wants a radical new approach.

Trump inexpicably even drew a mysterious equivalence between himself and the Brexit referendum with this cryptic tweet: They will soon be calling me MR. BREXIT!— Donald J. Trump (@realDonaldTrump) August 18, 2016

As an outsider once seen in Washington as a joke, Trump’s election is not now unthinkable – a little like Brexit, which was dismissed as impossible by chunks of the political elite even on the eve of the vote.

The votes have some similarities. Here are the key economic risks. Protectionism

Core to Trump’s campaign is a scheme to set the US apart from the world, closing borders and protecting local industries.

As a pitch to blue-collar workers it seems successful – those who worked in manufacturing and have seen their pay packets squeezed or their jobs lost have a clear grievance with cheap imports.

Globalisation has also been an enormous force for good in the global economy, however, with the rise of emerging markets massively boosting growth. Even workers who feel they have lost out from world trade have benefited through cheaper goods and greater choice, whether it be on the supermarket shelf, the technology in their homes or travel choices.

Extra barriers to trade with China in a bid to make US-manufactured goods more competitive would harm other Americans directly, driving up costs and cutting choice and quality.

Shutting down trade growth would dent growth in the US and the rest of the world – it is a major risk of a Trump Presidency.

In contrast, Brexit’s impact is more nuanced. The outcome of trade talks with the EU are far from certain, though there are clear risks. Britain will lose out if exports are subject to EU tariffs, while EU customers will suffer if they pay the tax. The market for services is more significant for the UK, as the City of London needs EU customers, and they need the City.

But there is another side to the coin – the rest of the world. Outside the EU, Britain may create its own trade deals.

Again these are uncertain and will take time to negotiate. The long-term potential is for a powerful boost to trade with countries including China, India and the US, and the Government seems keen to embark on those discussions as quickly as possible.

There is clear room for gains from Brexit, if negotiations go well – Trump’s policies, by contrast, appear more negative for the world. Immigration

Trump’s most famous policy is to build a giant wall across the US-Mexico border. His idea to ban Muslims from entering the US is also an eye-catcher.

Economically speaking, migration is a big positive. Extra resources mean more growth, and allowing workers to move to the best-paying jobs means more value is created, benefiting workers, employers and customers. Large-scale migration is not always popular in the host communities, however, turning a boon in the economics textbooks into a real-life political battleground.

The risks posed by Brexit and Trump are similar. More than 2 million EU workers are employed in Britain currently even as unemployment has tumbled to below 5 per cent. While a crackdown on non-EU migration means the number of workers from the rest of the world has held relatively flat in recent years, strong growth in the UK economy has sucked in workers from across the EU.

Cutting off that supply would choke off growth, harming the UK just as much as Trump’s would harm the US. Russia

Security concerns loom large. Trump has questioned whether or not America’s Nato allies have “fulfilled their obligations to us”. If not, he hints, the US may not come to their aid.

At a time when Russia is rampant in Ukraine and active in Syria, this is not reassuring to countries in the Baltics, and clearly economies can only thrive in peaceful conditions.

Leaving the EU poses fewer risks.The EU has few centralised defence arrangements. Britain will remain in Nato and, as a former home Secretary, Theresa May is keen to keep joint operations to fight crime and terror. Nuclear war

Fears of nuclear war largely faded with the end of the Cold War so it almost feels like a joke, or perhaps the scare-mongering of the most partisan Clinton fan, to mention the ultimate weapons of mass destruction.

Yet it is it is Donald Trump who reportedly asked for reasons he should not use them, since the US has a large stock. The idea is unimaginable with any other candidate, as the deterrent has remained untouched for decades.

Even if he was elected, the use of nukes seems wildly implausible, but the fact that the idea can be discussed shows his extraordinary unpredictability and so illustrates the outright fear his election could create.

Brexit was a surprise to markets and is likely to dent the economy. Yet in the long term there are a range of ways it could end up enhancing economic growth, assuming level politicians in London and Brussels play straight with each other.

President Trump would be far more of a wild card, and his stated goals are so damaging to foreign economies – and ultimately his own – that clearly the biggest geopolitical risk of the year is yet to come.

If he really did win power and enact some of those policies, the importance of “the economy, stupid” would reassert itself brutally quickly.

The Daily Telegraph London

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West Coast Eagles confident they can win pivotal match against Adelaide Crows without Nic Naitanui

The Eagles’ Nic Naitanui holds his injured knee on the bench during the match against Hawthorn on Friday night. Photo: Getty Images/AFL MediaPerth: West Coast don’t have to wait long to see how they will go against the top sides without injured ruckman Nic Naitanui.
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The Eagles travel to Adelaide to play the second-placed Crows on Friday night in the last round of home-and-away season.

Both sides will need to win, with home finals for each still up for grabs.

Naitanui will miss the rest of this season and probably all of 2017 as well, after he injured an ACL in the Eagles’ 25-point win over Hawthorn on Friday night.

The tall Crows line-up will provide West Coast coach Adam Simpson with a good opportunity to test his limited options for covering his No.1 ruckman.

But key defender Jeremy McGovern is confident the Eagles can carry the momentum they have built in the past two weeks, despite the loss of their key big man.

“It is deflating. Nic is one of my teammates and a ripping fella. I don’t want to see that happen to anyone, let alone one of my teammates,” McGovern said.

“You don’t like seeing it, boys going off injured, especially knees. They are a fickle thing.

“He’s one of our pivotal players. But we’ve had to deal with being without him for a few games this year, which gives you a lot of confidence too – we’ve had to deal with it, so I think we’ll be fine.”

After being criticised for not being able to beat sides above them on the ladder this season, the Eagles have beaten Greater Western Sydney and Hawthorn in the past two weeks.

The win against the reigning three-time premiers on Friday was by far the Eagles’ best four-quarter performance of the year. The week before, they scrambled to a rare win away from home against a top-eight side. That probably cost the Giants a top-four finish.

Those wins did come with Naitanui back in the side after a six-week absence due to heel surgery, and he did kick the match-winner against the Giants, but West Coast won five of the games in which he was sidelined.

McGovern would normally be considered an apt support for Scott Lycett, who will again take over the first ruck position. But with Eric Mackenzie and Mitch Brown struggling to regain their places in the side, McGovern has become the Eagles’ most reliable key defender. He’s surely in contention for All-Australian selection this season.

Given the forward line that the Crows boast – including talls Taylor Walker, Josh Jenkins, Tom Lynch and McGovern’s younger brother Mitch – Simpson may not be able to use McGovern too far up the ground.

But McGovern said he was ready to do whatever was needed to ensure his side progressed deep into the finals.

“Yeah (I pinched-hit) a few times, but Scott Lycett has stood up this year when Nic has been missing and done a great job,” he said.

“I have complete confidence in him, with (Fraser) McInnes and (Jon) Giles also playing good football in the WAFL (as other options).

“But If I have to go in there, I’ll go in and play my role.”

The chance to play that role almost came much earlier than expected, when Lycett also limped from Domain Stadium late on Friday night.

With Naitanui already sitting on the bench with crutches, McGovern wouldn’t have been the only one thinking the worst.

“I was also on the bench when Scott came off and I was thinking, “Far out, I’m going on here”. Throw the shin pads on and I’m going back out,” McGovern said.

“I was pretty glad that he was able to go back out there.”

Probably not as glad as Simpson.

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Winx wins Warwick Stakes on Randwick return

No doubt: Jockey Hugh Bowman rides Winx to win the Warwick Stakes at Royal Randwick. Photo: bradleyphotos南京夜网419论坛 A surprise performer: Winx ran 32.89 seconds home for her final 600m. Photo: bradleyphotos南京夜网419论坛
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There wasn’t a moment of doubt with Winx in the Warwick Stakes at Randwick on Saturday.

Ridden with confidence by Hugh Bowman, she sat to the outside of Rebel Dane in total control of the group 2, waiting for the jockey’s signal to act.

At the 300 metre mark, Rebel Dane was flat out, as were the group of stayers behind her. Winx was still on the bridle.

She eased to the front and Bowman moved to give her more rein at the 200m mark and she put 3½ lengths on her rivals, Hartnell running into second and Rebel Dane holding on another three-quarters of a length back.

“I don’t think even you know how good she is,” Rebel Dane’s trainer Gary Portelli said to Chris Waller. “We let him go and quicken as good as I thought we could and she was still jogging. That was amazing.”

Hartnell’s trainer John O’Shea added: “She a champion. There is no disgrace in what [Hartnell] did.”

The clock matched the praise from rivals as Winx ran 32.89 seconds home for her final 600m.

“Jeez, did she,” Waller said when confronted by the time. “You get to see the best of her on raceday. I had a lot of respect for Rebel Dane. He  is a very good 1400m horse and she was just there and had him covered.”

There was never a doubt on Winx’s quality but now the question will be is she better as a fully mature mare. This was the sort of performance that suggests she is.

It was a Black Caviar-like performance, taking every runner out of their comfort zones, then dragging them along with her.

It was why 9135 punters showed up, 700 arriving in the half hour before Winx’s command performance.

“That is the heats of the Olympics over and done with and we just have the semi-final and final to come,” Waller said.

“You never really know where horses are the way I train. That’s just our system and we take them along quietly and just gradually build.

“Her track work has been great, trials have been adequate and she has been brilliant the last week or so.”

Bowman was again surprised by Winx, who has delivered him his biggest wins in the Cox Plate and Doncaster.

“I don’t think she’s been as quick under me as she was today when I let her go,” Bowman said “I’m starting to get used to her and getting to know her more and more each time.

“Usually there are horses around me and I’ve got something to run down and I’m focusing on her and the horses around me but today, because I had the better of Rebel Dane at the 300m, it was just me and her.

“When she let down, it was a special feeling and I’m looking forward to feeling it again.”

Bowman tried to temper his enthusiasm for Winx because of the small field of mainly stayers.

“It’s hard not to get carried away with this mare, she really is something special,” he said. “It’s just an honour to be on her back.”

Winx will be back at Randwick for the Chelmsford Stakes in two weeks, when the crowd is sure to swell. Hartnell will follow her there, but his aim will be the Metropolitan on the long weekend in October.

“He is back and he loves this track and I can’t wait to get him up to those trips where he is suited,” hoop James McDonald said.

Queen Elizabeth Stakes winner Lucia Valentina ran fourth and Kerrin McEVoy gave her a pass mark.

“She got a little bit out-sprinted when Winx went and I just had to help her through that cut-up ground around the corner, but the best part of her race was her last furlong and a half, so that’s a good sign moving forward,” he said.

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Smart sprinter may need time.

While Darren Weir is convinced that his sprinting three-year-old, Ken’s Dream, who was victorious in Saturday’s $120,000 McKenzie Stakes, has a bright future, the trainer maintains it may not be this spring that we see the best of the youngster.
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Ken’s Dream, just having his second race start on Saturday, led throughout to defeat a smart field and tackling listed company for the first time.

“I looked at him in the yard before the race and he just looked light then, so I’m just wondering whether to stop him now or go forward. I think that’s the toughest part about assessing his win,” Weir said.

Weir maintains that Ken’s Dream is a high-class sprinter of the future, but whether it’s this spring or next autumn will be the question that Victoria’s finest horse trainer will have to ponder.

“You don’t see many horses win a maiden in the bush and then come straight into town and win in Melbourne. It takes a pretty smart horse to do that,” Weir said.

Jockey Dean Yendell believes the horse has an excellent future judging by the way he fought of late challenges in yesterday’s listed race.

“The plan was to sit outside the leader or even be one by one but I was then happy to find we’ve got the lead,” Yendell said.

“They started to put a bit of pressure on with 500 metres to go so I had to get on my bike and get rolling and he responded well.

“He’s still very new and he’s got so much upside. He’s learning how to cope with racing and, at the moment, he’s like a kid’s pony so the future is going to be bright.”

At the top of the straight, it appeared that Dam Ready was going to genuinely challenge Ken’s Dream but under strong riding, he managed to overcome the challenge.

The winner started at $2.30 favourite and was too strong for Dam Ready, with Throssell in third.

Deal Master stuck to his guns to be fourth but never looked a genuine threat of overcoming the winner.

Ken’s Dream had his first race start in the northeast of Melbourne at Echuca but showed at Moonee Valley that he was indeed a horse of the future.

Weir said that he’d not pushed Ken’s Dream but the horse had shown significant ability at home at his Ballarat base.

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New education authority in NSW with power to close schools and run inspections

“It’s about finding where there might be weaknesses”: Adrian Piccoli. Photo: Daniel Munoz A powerful new education authority is aimed at lifting standards in schools. Photo: Fairfax Media
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A new, beefed-up independent education authority will have the power to close non-compliant schools and conduct random unannounced inspections in Catholic, private and public schools, in major changes announced by the NSW education minister Adrian Piccoli on Friday.

The Board of Studies, Teaching and Educational Standards, known as BOSTES, will be renamed the NSW Education Standards Authority and given enhanced powers to lift school compliance and teacher quality with the ultimate aim of improving student results.

Independent schools will be subject to an increased number of random and risk-based audits, and the agency will have the power to formally warn and ultimately deregister any school not meeting regulatory requirements.

On teacher standards, the authority’s inspectors will be trained in special curriculum areas to conduct classroom observations, in some cases down to the level of detail of ensuring students’ workbooks properly reflect the official curriculum.

“The board ought to make schools nervous around school registration requirements, and it ought to make teachers nervous around teaching standards,” said Mr Piccoli.

“It’s not punitive, it’s not about closing schools down, it’s about finding where there might be weaknesses and helping schools address those weaknesses in their systems.”

Issues such as a rapid turnover of school boards or senior staff, concerns about finances, very poor academic results or a rush of parent complaints are the sort of things that would trigger the authority’s attention and potentially lead to risk audits and school inspections.

BOSTES, which was formed from the merger of the Board of Studies and the NSW Institute of Teachers in 2014, has responsibility for the school curriculum, the HSC and teaching and regulatory standards in NSW schools.

The new changes come out of a review of BOSTES chaired by Emeritus Professor Bill Louden, which was also critical of BOSTES for “needlessly duplicating” national reforms in regulation and curriculum areas, saying the board’s regulatory processes are “currently administratively burdensome for schools, teachers, employers and indeed for BOSTES itself”.

The changes will involve “a reorganisation of resources”, according to BOSTES President Tom Alegounarias. The authority’s efforts will be focused on schools where there is a high risk of problems, while devolving some of the administrative burden of compliance to principals.

Mr Alegounarias, who will become the part-time chair with a chief executive beneath him in the new structure, cited the highest achieving education jurisdictions globally as a target for NSW.

“It’s about setting our targets against international standards. How do we get to Shanghai, how do we get to Finland?”

Proof the reform has worked would be “a big bump” in the state’s NAPLAN results in the next few years, he said.

But Mr Piccoli cautioned that the changes to BOSTES on their own were not “a silver bullet” for lifting student results.

“It’s about information: what are the weaknesses and what do we need to do to target those weaknesses?” Mr Piccoli said.

The authority will also be required to more frequently review and update syllabuses, particularly in information technology and STEM subjects.

BOSTES’ 23-member board will be cut to less than 14 in a move likely to irritate some stakeholders.

Mr Piccoli said the powerful agency, operating at arm’s length from government, schools and universities, would ensure that curriculum, assessment, school registration and teacher standards were all working together to improve the quality of education in NSW.

The changes have been welcomed by the Association of Independent Schools NSW and the Catholic Education Commission of NSW, as well as the NSW Business Chamber.

Dr Geoff Newcombe, representing independent schools, said the new governance framework was a considerable improvement, and welcomed the authority’s random and spot inspections power. “To move it from a compliance role to look more at the impact of the teaching in the schools is a really good thing,” he said.

But the NSW Teachers Federation was not nearly as enthusiastic, saying it “noted” the release and would have more to say after closely examining the details.

The changes to BOSTES follow other reforms aimed at lifting teacher quality in NSW such as minimum entry standards to teaching degrees.

This story Administrator ready to work first appeared on Nanjing Night Net.

Walton family fortune soars as Wal-Mart raises earnings forecast

Jim Walton (from left), Alice Walton and Rob Walton talk on stage during the annual Wal-Mart shareholders meeting in June. Photo: Jason Ivester/The Arkansas Democrat-Gazette via APThe world’s richest family just got a little richer after Wal-Mart Stores, the world’s largest retailer, increased its earnings forecast.
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Wal-Mart’s shares rose 1.9 percent on Thursday, boosting the Walton family’s net worth to $US127 billion ($165 billion), a 19 per cent increase since year-end. That’s more than the national GDP of Hungary.

By comparison, Amazon boss Jeff Bezos has seen his fortune rise 12 per cent in 2016 to $US67 billion. The Waltons collectively own 52 per cent of Wal-Mart.

The latest gains came after the retail giant ratcheted up its expectations for its full-year earnings growth after its second-quarter financial results surpassed forecasts. Its shares are up 21 percent year to date – marking a reversal from the nearly 30 per cent decline in 2015. Wal-Mart’s online sales growth started climbing again and executives struck a positive tone about how its efforts to pay its workers more and push down prices at its stores were attracting more shoppers.

Although there are still mounting troubles in Walmart’s UK operations, stores in its home market notched their eighth consecutive quarter of positive sales growth, standing out from retailers like Target and Macy’s, which lament stagnating sales and the increasing tendency for consumers to be persnickety with where they spend their money.

Since taking the helm in 2014, Wal-Mart boss Doug McMillon has cut prices and improved customer service while pouring money into online operations to stem shopper defections to Amazon.

The Waltons – Alice, Christy, Jim, Lukas and Rob Walton – are the world’s richest family. They’re ahead of Bill, Charles and David Koch, who have a combined $US106 billion fortune owning oil refining conglomerate Koch Industries, and Microsoft founder Bill Gates and his family, who control $US89 billion according to the Bloomberg Billionaires Index .


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Medibank Private’s health scare

New Medibank CEO Craig Drummond: “What we have been doing in and around the customer is unacceptable.” Photo: Wayne TaylorAustralia’s largest health insurer, Medibank Private, has given investors a pretty worrying prognosis: industry growth is weakening and it is losing market share. The treatment? It’s time to look after customers.
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On the face of it, the 12 months to June 2016 looked like a bumper year for earnings as management capitalised on the first full year of operations following the insurer’s $5.7 billion government privatisation.

But the second half showed that growth is slowing, and the company’s new chief executive Craig Drummond is expecting 2017 won’t be much better thanks to “continued market share loss”.

Investors reacted swiftly and decisively to the statement, pushing the insurer’s share price down more than 6 per cent in morning trading.

If the prospect of growth hitting a brick wall wasn’t enough of a concern for Drummond, there’s also the prospect of legal action from the Australian Competition and Consumer Commission over its allegations of engaging in misleading conduct, making false or misleading representations to customers and engaging in unconscionable conduct.

All this – the ACCC says – was an attempt by the insurer to plump up its profit and maximise the value of the company as it prepared for its November 2014 privatisation and sharemarket listing.

It seems clear Medibank is now paying the price for allegedly treating its customers disdainfully. Drummond revealed on Friday that customer numbers had been hurt in the wake of the scandal over the insurer’s conduct, and this trend has continued in the 2017 financial year.

He didn’t put any numbers around how much this has cost the company in terms of customer numbers, revenue or profit, in part because there’s a series of other issues including IT problems and the general level of affordability and value of health care insurance contributing to the outcome.

But with an increase in the number of lapsed policies during the year and a decline in the number of new ones, Medibank’s customer base fell by 2.5 per cent and the number of customers using its main Medibank brand fell by an even larger 3.8 per cent. .

The weakness in customer numbers has led to a fall in revenue growth in the second half.

Drummond told analysts that “it is still a very good business… [but] what we have been doing in and around the customer is unacceptable.” Going forward, the company plans to “hold people [management] to account” by including customer service in the way they are measured for bonuses.

In some respects, the entire industry is facing challenges as people have started to save on their hospital cover, due in part to policy premiums having risen for years at a significantly higher rate than inflation.

Medibank’s overall annual profit was up 46 per cent, but most of this was due to cost savings after the insurer’s privatisation – the low-hanging fruit that many former government-owned companies get by pushing a commercial broom through their businesses.

That fruit has now been mostly plucked. In the December half, Medibank also got a big earnings tailwind from lower growth in its customers’ use of hospital services, something which happened across the industry. But it looks like this tailwind is now barely a breeze.

Drummond, who started at Medibank only a few months back, knows a thing or two about the importance of customer satisfaction. He came from the National Australia Bank – which as one of the country’s big four banks is subject to regular public customer satisfaction ratings.

This story Administrator ready to work first appeared on Nanjing Night Net.

Lendlease unveils double-digit growth

Lend Lease new offices at Barangaroo tower 3,in Sydney, Australia. Photo: Anthony JohnsonGlobal developer and infrastructure group Lendlease has unveiled a 13 per cent rise in net profit to $698.2 million, based on high residential settlements, the current construction boom and rising forward construction contracts.
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With its cranes dotting the skyline of most capital cities, the group has said it is well placed heading into the 2017 fiscal year with “financial strength and diversity, and visibility of earnings”.

Lendlease’s most visible development, the $6 billion Barangaroo project at Sydney’s Darling Harbour, was a major contributor to the residential settlements, which were up 7 per cent to 4,790 units.

Work has also started on the new Crown resort at Barangaroo, which sits near the three commercial towers and apartments on the site. Lendlease has also recently moved into its new offices at Barangaroo which still has some space to lease in the last office tower, still under construction.

Lendlease never give earnings forecasts, but analysts said, based on the figures released for the full year and the forward contracts, they are predicting about 7 per cent earnings growth for the 2017 financial year.

Chief executive, Steve McCann said Lendlease settled over 1,200 apartments with non-settlements at less than 1 per cent versus the historical average of closer to 3 per cent.

“The forward sale of three major commercial buildings, two at International Quarter London and one at Darling Square in Sydney, has further de-risked our development exposure,” he said.

The Australian construction result was robust with earnings before interest tax, depreciation and amortisation (EBITDA) margins up by more than 1 percentage point to 3.7 per cent. The Investments segment, representing 37 per cent of operating EBITDA, continues to deliver solid recurring style earnings.

The construction backlog revenue of $20.7 billion was up 20 per cent and the funds under management of $23.6 billion, up 11 per cent.

During the year Lendlease boosted its unlisted funds business with a new $400 million managed investment vehicle.

The group’s overseas business results were mixed, reflecting the different speeds of the world’s economies.

In Europe, the EBITDA increased to $180.1 million from $129.5m, up 39 per cent on the previous corresponding period.

Brokers said positively contributing to 2016 growth was a 110 per cent increase in property development EBITDA from $66.3 million in June 2015 to $139.5 million in June 2016 due to the international quarter sell-down. This however was offset by reduction in EBITDA across infrastructure development, construction and investment management business units.

In the  Americas, EBITDA of $104.5 million was down about 33 per cent from the 2015 year of $155.4 million due to a material fall in construction earnings from $116.9 million to $56.4 million as a result of the roll-off of work in the military housing sector.

​Macquarie Equities analysts said operating cashflow of $853 million compares to negative $166.6 million in 2015 which is a good outcome and should go some way to alleviating concerns on settlement risk of apartment product. Cash flow has been a negative for Lendlease for the last few years given the high amount of production capital.

“Whilst enjoying a better re-rating of late, the Lendlease share price has lagged in the last 12 months reflecting fears of significant apartment defaults which will derail an otherwise very strong earnings and cash flow profile in our view. With today’s result indicating the cash is coming in and the stock still trading on about 11 times earnings,” the analysts said.

A final distribution of 30¢ per stapled security was declared, taking the full year distribution to 60¢ per stapled security, payable on September 14.

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