02 October 2015
Asia Pacific/Australia
Equity Research
Australian ESG/SRI – AGM
Series
Environmental, Social and Governance (ESG) Research
WOR: Awards even if share price falls 49%
■
We have reviewed the WorleyParsons (WOR.AX) Remuneration Report
for the Annual General Meeting on 27 October 2015.
Figure 1: Summary of remuneration issues
No significant changes in STI plan:

!
3 year average STI aw arded as a % of m axim um opportunity:
0%
No significant changes in LTI plan:
All directors up for election broadly considered independent:


!
!
Board discretion exercised:
No
CEO Pay Increase <5% (base, STI and/or LTI) for FY15:
Value of LTI clearly disclosed at face value:
Target range "in the m oney" for LTI grant:
Credit Suisse Environmental, Social
and Governance (ESG) research seeks
to focus on sustainability and
accountability factors that are then
integrated into the investment process.
Research Analysts
Sandra McCullagh
61 2 8205 4729
[email protected]
>30% of directors are fem ale:
Average director tenure w ithin 4 - 6 years:
Source: Company data, Credit Suisse research
■
■
■
■
WOR Performance*:
1 yr
TSR (%)
-35% -48% -34%
3 yr
5 yr
Relative (%) vs ASX100
-37% -84% -63%
×
×
The CEO has requested his fixed pay of $1.6mn be reduced by 10% for FY16,
a positive. No STI or LTI has been received /vested for the past three years.
FY16 STI has a rights award with no normal STI financial hurdles: Due
to a lack of vested incentives over recent times, the Board is proposing to
lower the threshold for financial to vest in the FY16 STI. The Board has
stated it wants 'more certainty of growth in Executives' shareholding', so is
also seeking approval to award 50% of the CEO's base salary as share
based performance rights, deferred over two years, with the number of units
to vest dependent on share price movements (rather than financial
gateways), with the ability for the units vesting to double for a doubling of
share price (and no vesting for a halving of share price). However, shares
will be awarded even if the share price falls up by 49%.
EPS hurdles 'out of the money': We estimate that the hurdle of 4%–8%
CAGR EPS above CPI (we assume 2% CPI) is 'out of the money' for both the
FY14 and FY15 grant. Consensus CAGR for the FY14 grant is -12.5% and
-3.4% for the FY15 grant. The FY15 grant was 'in the money' at the time of the
grant, but the poor performance for FY15 places it well 'out of the money'.
Four directors up for election at the upcoming AGM: Mr Faunschiel is
seeking a fifth term on the board (currently 12.6 years' tenure). Ms Wang
Xiao Bin is CFO and Executive Director of China Resources Power Holdings
Company Limited. We do not generally support Non-executive Directors who
have a full-time executive career elsewhere.
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST
CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do
business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a
conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in
making their investment decision.
CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS
BEYOND INFORMATION®
Client-Driven Solutions, Insights, and Access
02 October 2015
Summary
■
We have reviewed the WorleyParsons (WOR.AX) Remuneration Report for the
Annual General Meeting on 27 October 2015.
Figure 2: Summary of CEO remuneration
Fixed pay:
WOR
AGM 27-Oct-2015
$1.6mn (0% change from FY14). CEO has volunteered a 10% pay cut for FY16.
Short term incentives:
The maximum STI opportunity is $2.4mn for FY15 (150% of base salary)
The CEO received 0% of the maximum STI opportunity for FY15 ($0mn)
The 3-year average STI award for the CEO is 0% of the maximum STI opportunity - ie no STI over the
past 3 years
Financial measures - (60%) - Group NPAT (gateway), cash collection
Non-financial measures - (40%) - HSE performance, culture change, business plan
Long term incentives:
Changes planned for FY16 to lower gateway to 80% of NPAT, with maximum extended to 120% of
budget (from 110%). Deferral will reduce to 2 years (from 3 years), with vesting of units linked to share
price movements.
The maximum LTI opportunity is $1.333mn for FY15 (at Face value) which is 83% of base salary
Relative TSR against an international and Australian peer group of 26 companies.
CAGR EPS growth of 4-8% above CPI.
The performance period is 4 years
The FY16 LTI grant for approval at the upcoming AGM has a maximim value of $1.2mn (10% lower
than FY15). The reason for the decline is the 10% pay reduction for the CEO.
No changes to FY16 LTI.
Remuneration vote:
For vote at prior AGM 98.8%
Board discretion:
CEO shareholding:
962,178 shares
(626% base salary)
Source: Company data, Credit Suisse research
Board
■
Four directors up for election at the upcoming AGM: Mr Erich Fraunschiel, Dr
Chris Haynes, Ms Wang Xiao Bin and Mr Jagjeet Bindra are up for election at the
upcoming AGM. Mr Faunschiel is seeking a fifth term on the board (currently 12.6
years' tenure) but the Notice of Meeting does not explicitly address this issue. Ms
Wang Xiao Bin is CFO and Executive Director of China Resources Power Holdings
Company Limited, listed on the HK Exchange. We do not generally support Nonexecutive Directors who have a full-time executive career elsewhere, due to workload
and longevity concerns. Mr Chris Haynes is also a Director of WPL, a key customer for
WOR in the past. The Board has assessed that he is independent. The Notice of
Meeting does not explicitly deal with this issue.
■
Board size appears large: The board has 10 directors (Figure 3), which we consider
to be large. Based on our analysis in a previous note published here, we have found
board sizes of between six to eight members for companies below A$5bn market
capitalisation have out-performed companies with both smaller and larger boards over
2008–2013.
■
Board renewal and tenure: The Board has appointed one independent director in the
past three years. Four directors now have tenure greater than 10 years, with median
tenure at 6.7 years. We believe succession planning must remain a priority for the
Board. The Board considers the three long serving directors, apart from the Chairman,
to be independent.
■
Chairman not independent: The Chairman is not considered independent, being the
former CEO (retired 2012) and a substantial shareholder. He also has more than 10
years' tenure on the Board. The Corporate Governance statement addresses this
issue, indicating that most peers have the former CEO as Chairman and that the
strong industry and customer links are beneficial to WOR (Figure 6). The Board has
appointed a Lead independent director.
Australian ESG/SRI – AGM Series
2
02 October 2015
■
Directors' skill matrix. WOR provides a detailed skills matrix for the Board (refer
Figure 4). The updated ASX principles and recommendations, which suggest listed
companies disclose a board skills' matrix, apply to companies that commenced their
financial year in July 2014 and onwards.
■
Director workload: We raise the concerns above about the workload of Ms Wang
Xiao Bin due to her CFO and Executive Director role elsewhere. We note Ms
Catherine Livingstone has a heavy workload with less than 30 days to devote to each
of her listed positions. She is the Chairman of TLS, and has a range of commitments to
seven other organisations, including as president of the Business Council of Australia.
We count a chairmanship as equivalent as two appointments due to the higher
workload involved (Figure 9).
Figure 3: Directors up for Election, Tenure and Independence
Director
John Grill
Ron McNeilly
Andrew Wood
Eric Fraunschiel
John Green
Larry Benke
Catherine Livingstone
Jagjeet Bindra
Wang Xiao Bin
Chris Haynes
Median_tenure
Average_tenure
Tenure on Board Gender
Nov-02
Nov-02
Oct-12
Mar-03
Nov-02
Jul-10
Jul-07
Jul-15
Dec-11
Jan-12
median
mean
Independent
12.9 Male

12.9 Male Yes - tenure >10 years
3.0 Male

12.6 Male Yes - tenure >10 years
12.9 Male Yes - tenure >10 years
5.2 Male

8.2 Female

0.2 Male

3.8 Female

3.7 Male

6.7
7.6
Position
Chairman, former CEO
Deputy Chair, Lead independent
CEO
NED - up for re-election
NED
NED
NED
NED - up for election
NED - up for re-election
NED - up for election
Source: Company data, Credit Suisse research
Australian ESG/SRI – AGM Series
3
02 October 2015
Figure 4: Disclosed Director Skills Matrix
Figure 5: Disclosed director diversity
Source: Company data
Source: Company data
Figure 6: Board Composition – tenure
Figure 7: Board Composition – gender diversity
First term
20%
More than
three terms
40%
Female
20%
Second Term
30%
Third Term
10%
Source: Company data, Credit Suisse research
Australian ESG/SRI – AGM Series
Male
80%
Source: Company data, Credit Suisse research
4
02 October 2015
Figure 8: Director Committee Membership
Committee Membership
Director
John Grill
Ron McNeilly
Andrew Wood
Eric Fraunschiel
John Green
Larry Benke
Catherine Livingstone
Jagjeet Bindra
Wang Xiao Bin
Chris Haynes
Audit & Risk
Nominations
HS&E
Remuneration




Chair









Chair

Chair
Source: Company data, Credit Suisse research
Figure 9: Director Workload
Director
John Grill
Ron McNeilly
Andrew Wood
Eric Fraunschiel
John Green
Larry Benke
Catherine Livingstone
Jagjeet Bindra
Wang Xiao Bin
Chris Haynes
Independent
executive
1
1
Total workload - based on annual report (Chair is 2x)
Chairmanships
Working days
Directorships Other Total
/Executive
per
1
2
4
57.5
1
1
230.0
1
1001
0
1
1
230.0
2
2
115.0
2
2
4
57.5
1
1
5
8
28.8
3
3
76.7
1
1001
0
2
2
115.0
Other Significant
Boards
QBE
TLS
China Resources Power
WPL
Source: Company data, Credit Suisse research
Australian ESG/SRI – AGM Series
5
02 October 2015
Remuneration Report
Remuneration structure
Figure 10: Comparison of current and recent pay structures for CEO
Item
Base pay:
Short term incentive:
Long term incentive:
FY13
$1.6mn
FY14
$1.6mn
FY15
$1.6mn (up 0%)
Disclosed target:$0mn
Disclosed target:$0mn
Disclosed target:$1.6mn
0% of base salary
0% of base salary
100% of base salary
Maximum:$2.4mn
Maximum:$2.4mn
Maximum:$2.4mn
150% of base salary
150% of base salary
150% of base salary
Comments
CEO volunteered for 10% pay
cut in FY16.
Disclosed
Disclosed
Disclosed
value:$1.33333333333333mn
value:$1.33333333333333mn
value:$1.33333333333333mn
(83% of base salary)
(83% of base salary)
(83% of base salary)
Mix (Base:STI:LTI):
Total compensation:
Time horizon – (max):
Maximum value - face
value:$1.33mn
(83% of base salary)
Maximum value - face
value:$1.33mn
(83% of base salary)
Maximum value - face
value:$1.33mn
(83% of base salary)
Maximum:
Base:30% STI:45% LTI:25%
Maximum:
Base:30% STI:45% LTI:25%
Maximum:
Base:30% STI:45% LTI:25%
Maximum
compensation:$5.33mn
≤2 years (maximum
compensation):85%
≥3 years (maximum
compensation):15%
Maximum
compensation:$5.33mn
≤2 years (maximum
compensation):85%
≥3 years (maximum
compensation):15%
4 times base
Maximum
compensation:$5.33mn
≤2 years (maximum
compensation):85%
≥3 years (maximum
compensation):15%
4 times base
Minimum shareholding:
CEO Shareholding (at
financial year end):
Remuneration Advisor:
962,178 shares
(626% base salary)
Auditor:
EY
AON Hewitt (benchmarking
exec
EYpay)
EY
Notable instances of board
discretion being used:
Source: Company Data, Credit Suisse research
■
■
The CEO has requested that his fixed pay of $1.6mn be reduced by 10% for
FY16, a positive.
Changes to incentive structure for FY16: Due to no vesting of LTI and no STI, the
Board is reviewing the remuneration structure for FY16, with an expected bias to more
incentives, in line with peers. Given the lack of vesting of incentives is cited as a
problem, we are not sure how increasing the level of incentives, in itself, will result in a
better and more aligned incentive structure. Refer to our section of the Share Price
Performance Rights for further information, as well as the Short-term Incentive section.
Figure 11: Total maximum compensation
Figure 12: Proportion of maximum compensation vesting
<2= years and 3+ years
$6,000,000
100%
90%
$5,000,000
$4,000,000
LTI - Maximum - face
value
$3,000,000
STI-Maximum
80%
70%
60%
≥3 years (maximum
compensation):
50%
$2,000,000
40%
≤2 years (maximum
compensation):
Base salary
30%
$1,000,000
20%
$-
10%
2013
2014
2015
2016
0%
2013
Source: Company data, Credit Suisse research
Australian ESG/SRI – AGM Series
2014
2015
2016
Source: Company data, Credit Suisse research
6
02 October 2015
Short-term incentive
Figure 13: Comparison of current and previous STI for CEO
Item
CEO achieved:
Performance measures:
Gateway:
FY13
$0mn
FY14
$0mn
Financial: (60%) - Group
Financial: (60%) - Group
NPAT (gateway), cash
NPAT (gateway), cash
collection
collection
Non-Financial: (0%) - HSE
Non-Financial: (40%) - HSE
Non-Financial: (40%) - HSE
performance, culture change, performance, culture change, performance, culture change,
business plan
business plan
business plan
90% of target NPAT
90% of target NPAT
90% of target NPAT
Comments
Financial: (0%) - Group NPAT
(gateway), cash collection
Disclosure on performance
hurdles:
% of maximum awarded:
-
-
0%
0%
Notable exclusions:
0
0
Disclosure on performance
against hurdles:
-
-
Yes - 1/3 deferred into equity
for three years
Yes - 1/3 deferred into equity
for three years
Deferral:
FY15
$0mn
Gateway lowered to 80% in
FY16
Limited- Disclosure that 90%
of budget is gateway and
outperformance is 110% for
financial hurdles
0%
0
Limited-Only NPAT achieved
and % of STO awarded is
disclosed
Yes - 1/3 deferred into equity FY16: 1/3 deferred into equity
for three years
for two years with number of
rights vesting impacted by
share price movements.
Source: Company data, Credit Suisse research
■
The CEO and executives received no STI again, as the group NPAT gateway was
not met. The gateway required that 90% of the board approved Group NPAT was met.
The maximum STI is achieved if 110% if budget is met.
■
In FY16 the gateway will be removed and the STI will start vesting at a lower 80% of
target (down from 90%), with the upside now lifted to 120% of budget for financial
KPIs. Refer to the section on Share Price Performance Rights for more information on
planned changes for FY16.
■
The CEO has one of the highest requirements for minimum shareholding at four
times base salary.
Figure 14: STI scorecard for FY15 STI
Source: Company data
Australian ESG/SRI – AGM Series
7
02 October 2015
Long-term incentives
Figure 15: Comparison of current and recent LTI for CEO
Item
Number of performance rights:
FY14
How calculated:
Basis of calculation:
Performance hurdle 1:
Vesting for performance hurdle 1:
Peer group
Performance hurdle 2:
Vesting for performance hurdle 2:
Analyst forecasts:
Performance period:
FY15
60,688
Comments
83,232
Face value
Face value
83.3% of base salary
83.3% of base salary
Relative TSR
Relative TSR
50% weighting
50% weighting
At 50% percentile: 50% vesting
At 75th percentile: 100% vesting
At 50% percentile: 50% vesting
At 75th percentile: 100% vesting
Bespoke Australian and international
peer group
CAGR EPS growth
Bespoke Australian and international
peer group
CAGR EPS growth
50% weighting
50% weighting
4% above CPI: 50% vesting
4% above CPI: 50% vesting
8% above CPI: 100% vesting
8% above CPI: 100% vesting
Consensus: -12.5% (was 2% as at
last year)
Credit Suisse: -11.5% (was -0.3% as
at last year)
4 years
Consensus: -3.4% (was 8.2% at time
of grant)
Credit Suisse: -2.5% (was 6% at time
of grant)
4 years
Hedging allowed:
Clawback mechanism:
Participation:
Treatment in the event of
departure:
No
No
Yes
Yes - from deferred STI and unvested
LTIU
Board discretion to allow portion to
remain on foot
Source: Company Data, IBES, Credit Suisse research
■
In FY15, the CEO received 83,232 performance rights awarded at face value,
valued at ~83% of his base salary (i.e., $1.33mn).
■
No changes to LTI structure in FY15: The performance hurdles remain Relative TSR
and CAGR EPS, both over four years.
■
EPS hurdles out of the money: We estimate that the hurdle of 4%–8% CAGR EPS
above CPI (we assume 2% CPI) is 'out of the money' for both the FY14 and FY15
grant. Consensus CAGR for the FY14 grant is -12.5% and -3.4% for the FY15 grant.
The FY15 grant was 'in the money' at the time of the grant, but the poor performance
for FY15 places it well 'out of the money'.
■
No prior LTI vested for either the Relative TSR hurdles of the CAGR EPS hurdle.
Figure 16: LTI RTSR peer group
Source: Company data, Credit Suisse research
Australian ESG/SRI – AGM Series
8
02 October 2015
Figure 17: Four-year CAGR EPS
WOR.AX
Credit Suisse ($/share)
Consensus ($/share)
4-year CAGR
Credit Suisse
Consensus
FY10A
1.19
1.19
FY11A
1.22
1.22
FY12A
1.41
1.41
FY13A
1.31
1.31
Reference to grant year
FY14A
1.07
1.07
FY15A
0.80
0.80
FY16F
0.73
0.73
FY17F
0.80
0.77
FY18F
0.97
0.93
-2.6%
-2.6%
FY11
-9.8%
-10.0%
FY12
-15.2%
-15.0%
FY13
-11.5%
-12.5%
FY14
6.0%
10.0%
-2.5%
-3.4%
FY15
6.0%
10.0%
Target range - minimum
Target range - maximum
Source: Company data, IBES, Credit Suisse estimates
Figure 18: Historical LTI vesting and performance
Source: Company data, Credit Suisse research
Voting on Remuneration Report
■
Strong For vote at prior AGMs.
Figure 19: AGM Remuneration Report voting
For resolution:
Against resolution:
Shares on issue (mn)
Portion voted
FY12
FY13
FY14
99.4%
99.6%
98.8%
0.6%
0.4%
1.2%
246.5
60%
Source: Company Data, Credit Suisse research
Australian ESG/SRI – AGM Series
9
02 October 2015
Share Price Performance Rights
■
Deferred STI to be issued with share price multiplier: At the upcoming AGM, the
board is seeking he approval from shareholders to grant the CEO 100,175 share price
performance rights (SPPR) as part of the deferred FY16 STI, valued off the face value
of shares at $7.26 (10-day VWAP prior to FY15 results). This is equivalent to 50% of
his base salary (or one-third of the maximum STI). These rights can convert into twice
the number of WOR shares, depending on movements in the share price over the twoyear vesting period to end of FY17, as described in the STI section and reproduced
below:
o
The number of rights that vest depends on the movement in the share price over
the two-year period, rather than any STI financial gateway. So not only do
executives benefit or lose from the share price movement, the number of shares
they eventually get is adjusted proportionally. The mechanism is sometimes called
market stock units. The upside is capped at double the rights for a doubling of the
share price. If the share price halves (or more), none of the deferred rights vest. In
between, the number of shares that vest is in proportion to the increase or
decrease in the share price.
■
No usual performance hurdles – can still get some equity if share price falls by
49%: The resolution to grant the above deferred SPPR in FY16 does not have the
usual performance hurdles that the previous deferred cash incentives had. Previously,
one-third of any STI would be awarded in deferred equity. Given there were no recent
STIs paid, there has been no deferred equity. Now it seems that this award will be
made prior to testing for the FY16 STI and is not subject to the performance hurdles
for the STI. So it effectively an award of SPPR that have a share price multiplier or
reduction attached. The share price can still fall by 49% and the CEO will be awarded
49% of the 100,175 rights (albeit they will be worth 49% less also). WE would expect
such an award that has upside for share price movements (i.e. like an option) should
have no award for share price downside.
■
There is no resolution to issue FY16 LTI. No changes have been made to the LTI
plan for FY16.
Australian ESG/SRI – AGM Series
10
02 October 2015
ESG metrics
Figure 20: Analyst and MSCI ESG views
MSCI IVA (ESG) Rating AAA
Credit Suisse View
TP ESG Risk (%): 0
TP Risk Comment: No ESG impact included in Target Price.
7.7
6.7
5.7
4.7
MSCI IVA Risk: Neutral
3.7
2.7
Environment Social
Governance
Stock
Local Sector
Country
Global Sector
MSCI IVA Risk Comment: We are comfortable with WOR's AAA
rating. WOR has limited exposure to operational, regulatory
and environmental risks versus its peers.
Source: MSCI ESG Research, Credit Suisse Research
MSCI ESG
■ MSCI ESG rates WOR as "AAA". Our analyst has a "Neutral" outlook on that rating.
Target Price Impacts from ESG
■ We do not include an impact in our target price for ESG.
Australian ESG/SRI – AGM Series
11
02 October 2015
Previous ESG research
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Publishing date
Recent Australian ESG Research
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28-Sep-15
El Niño in 2015? Implications and impact
Jul-15
Key ESG risks and megatrends: What keeps our energy analysts awake at night?
30-Jun-2015
ESG-α Series: Finding Alpha in ESG
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Key ESG risks and megatrends: What keeps our utilities analyst awake at night?
2-Jun-15
NVN-FDC merger: An ESG 101
8-May-2015
Australian Investment Strategy - The anatomy of activism in Australia
17-April-15
South32 demerger: An ESG 101
2-April -15
AGL: I can see clearly now
19-Mar-15
Australian ESG/SRI - Risks in payday lending and goods rental
3-Mar-15
Australian ESG/SRI - Relative TSR across oil and gas companies-punishing for the oil price or performance?
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Australian Wagering Sector - Quantifying an adverse impact of Greyhounds
18-Feb-15
Australian SRI/ESG Research – Safety: What gets measured gets managed
4-Feb-15
Quantitative ESG/SRI Research Optimal board member numbers produce the best shareholder returns
5-Sep-14
Companies respond: Why is discounted fair value used?
22-Jul-14
Use of discounted fair value in awarding long term incentives - is it fair?
11-Jun-14
Activist opportunities in Australia
18-Nov-14
Australian SRI/ESG Research – The banking sector: Resolving "too big to fail"
9-Sep-14
Santos - Social Licence to Operate Challenges leads to Project Risk Re-rating
3-Jul-14
ORG: The facts in a nutshell
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AGK: What about the vocal minority?
11-Mar-14
AGK: Delays at Gloucester
26-Feb-14
AGK: Goings on at Gloucester
19-Feb-14
Initiations with integrated ESG analysis
Transurban (TCL.AX) – Network advantage and investment horizon arb
9-Sep-15
Premier Investments (PMV): A fully valued growth story
4 –Sep-15
AWE (AWE) - The one I love, belongs to someone else
7-Aug-15
Capitol Health (CAJ) – Scan reveals valuation upside
27-Jul-15
Ridley (RIC) – Growth potential in a pure-play agri-business
23-Jun-15
CIMIC (CIM) – Cost out, cash conversion and capital management
13-Jun-15
Eclipx (EXC) – Management-driven turnaround and transformation
1-Jun-15
South32 (S32) – Initiate at Neutral, target price $2.50
19-May-15
Aurizon (AZJ) – Ex-growth (for now), time to return capital
19-May-15
Tassal Group (TGR) _ Good long term growth at a reasonable price
11 May-15
Brambles (BXB) – Social network coming to pallets
20-Mar-15
BWP Trust (BWP) – Overshooting valuation
27 Jan-15
Sirius Resources (SIR) – Fully priced, but a bright future
18-Dec-14
BigAir (BGL) – BigAir – Blue Sky
3 Dec-14
Seymour Whilte (SWL) – Infrastructure upswing = 24% 3 years EPS CAGR
2 Dec-14
Huon Aquiculture (HUO) – Strong company, strong industry
2-Dec-14
ICars Asia (ICQ) – Substantial revenue opportunities
1-Dec-14
Medibank Private (MPL) – A healthy outlook is no insurance for a high PE
26-Nov-14
Asaleo (AHY) – Absorbs everything but cash
14-Nov-14
Australian ESG/SRI – AGM Series
12
02 October 2015
Report name
Publishing date
Mantra (MTR) – A Mantra that works
14-Nov-14
Drillsearch (DLS) – We found oil in a hopeless place
5-Nov-14
AIO, QUB, TOL, Fortunes in fragmented Aussie Transport
14-Oct-14
Healthscope (HSO) – Brownfield of dreams
3-Sep-14
Dulux (DLX) - Initiating with a $6.25 Target Price and Outperform rating
20-Aug-14
M2 (MTU) – A 16% organic growth story on 11.2x P/E; uncovering what the bears have missed
5-Aug-14
GWA Group (GWA) – Need more certainty in the growth profile
23-Jul-14
Dick Smith Holdings (DSH) – Initiating with a $2.08 per share target price
14-Jul-14
NIB Holdings (NHF) – Growth in a healthy industry
4-Apr-14
Sydney Airport (SYD) – Attractive fundamentals, but fully priced in
14-Mar-14
OceanaGold (OGC) – Strong cashflow, multi-asset gold company at fair value
7-Feb-14
Pact Group (PGH) – Diversified, defensive and inexpensive
28-Jan-14
GDI Property Group (GDI) – Initiate with an Outperform
27-Jan-14
2015 Australian ESG/SRI – AGM series:
Australian ESG/SRI - AGM Series - ABC: FY14 EPS hurdles "in the money" with considerable upside for CEO for beating
4-May-15
consensus
Australia ESG/SRI – AGM Series - AGL: Full vesting for departing CEO, new LTI for FY16
27-Aug-15
Australia ESG/SRI – AGM Series - ALQ: EPS growth target range is "in the money" for FY16 grant
29-Jun-15
Australian ESG/SRI - AGM Series - AMC: Outgoing CEO cash settled LTIs
25-Sep-15
Australian ESG/SRI - AGM Series - AMP: Change to face value for FY15 LTI is positive
13-Apr-15
Australian ESG/SRI - AGM Series – ANN: LTI EPS hurdles "out of the money"
8-Sep-15
Australian ESG/SRI AGM Express Series: - APA (available on request)
28-Sep-15
Australia ESG/SRI – AGM Series - AST: EPS and ROIC targets for FY15 LTI grant "out of the money"
29-Jun-15
Australian ESG/SRI - AGM Series - ASX: Increase in pay at risk; EPS hurdles out of the money
31-Aug-15
Australian ESG/SRI - AGM Series- AWC: Focused on base pay and retention
21-Apr-15
Australian ESG/SRI - AGM Series – BHP: Special resolution impacts on franking credits
31-Oct-15
Australian ESG/SRI - AGM Series - CAR: FY15 LTI may now be "out of the money"
30-Sep-15
Australian ESG/SRI - AGM Series - CCL: Large increase in FY15 LTI
24-Apr-15
Australian ESG/SRI AGM Express Series: - CGF (available on request
28 Sep-15
Australian ESG/SRI - AGM Series - COH: Tough forfeiture of most LTI for departing CEO
24-Sep-15
Australian ESG/SRI - AGM Series - CSL: increase in "at risk" pay with challenging EPS stretch
23-Sep-15
Australian ESG/SRI - AGM Series - CSR : Rigid EPS target range "out of the money" for FY16 grant
19-Jun-15
Australian ESG/SRI - AGM Series - CTX: Rewarding out-performance, though transparency could be improved
17-Apr-15
Australian ESG/SRI - AGM Series – CWN: FY15 LTI hurdle reached
25-Sep-15
Australian ESG/SRI - AGM Series - GPT: Total Return performance measure for long term incentive rewards outperformance
13-Apr-15
Australian ESG/SRI - AGM Series - HGG : Major changes to FY15 LTI award
2-Apr-15
Australian ESG/SRI - AGM Series - ILU: Management feels the pain from depressed mineral sands prices
6-May-15
Australian ESG/SRI AGM Express Series: - IAG (available on request)
12-Sep-15
Australian ESG/SRI - AGM Series: - JBH: Lower FY16 LTI hurdle "in the money"
30-Sep-15
Australian ESG/SRI - AGM Series: - JHX: Board Succession Concerns
30-Jul-15
Australian ESG/SRI - AGM Series – MPL: LTI hurdles "in the money"
24-Sep-15
Australian ESG/SRI - AGM Series - MQG: Long vesting period enhances alignment
1-Jul-15
Australian ESG/SRI – AGM Series – MTS: Concerns with incentives "out of the money"
11-Aug-15
Australian ESG/SRI - AGM Series – NCM: Fatalities impact on STI
1-Oct-15
Australian ESG/SRI - AGM Series - ORG: FY16 adds ROCE measure
24-Sep-15
Australian ESG/SRI - AGM Series - ORI: Return on Capital hurdle is 'in the money' for the FY15 grant
4-Feb-15
Australian ESG/SRI – AGM Series
13
02 October 2015
Report name
Publishing date
Australian ESG/SRI - AGM Series – OSH: Fatality reduces STI outcome for CEO
30-Apr-15
Australian ESG/SRI - AGM Series – OSH: Fatality reduces STI outcome for CEO
30-Apr-15
Australian ESG/SRI - AGM Series - QBE: Larger FY15 maximum compensation, though less short-term focused
13-Mar-15
Australian ESG/SRI - AGM Series - RIO: Incentivising out-performance for the longer term
16-Apr-15
Australian ESG/SRI - AGM Series- SCG: LTI performance hurdles not disclosed in advance
21-Apr-15
Australian ESG/SRI - AGM Series – SKI: Move to four year performance period for FY14 LTI is positive
6-May-15
Australian ESG/SRI - AGM Series - STO: Management are feeling the pain of the decline in oil price
7-Apr-15
Australian ESG/SRI – AGM Series - SUN: Incoming CEO's pay lower
24-Aug-15
Australian ESG/SRI - AGM Series - SYD: LTI added to the CEO's remuneration structure for FY15
29-Apr-15
Australian ESG/SRI - AGM Series – TCL: FCF hurdles depend on Express Lanes ramp up
18-Sep-15
Australian ESG/SRI - AGM Series – TLS: FY16 LTI FCF hurdle raised substantially
18-Sep-15
Australian ESG/SRI - AGM Series - WFD: Performance hurdles not disclosed in advance
30-Apr-15
Australian ESG/SRI - AGM Series - WPL: Discounted fair value results in 100% higher FY14 LTI
26-Mar-15
2014 Australian ESG/SRI – AGM series:
Australia ESG/SRI – ABC: Incoming CEO salary reduced
7-Feb-14
Australian ESG/SRI - AGK: LTI hurdles do not seem appropriate
7-Oct-14
Australia ESG/SRI – ALL: Discounted fair value results in 94% higher LTI grant for FY13
7-Feb-14
Australia ESG/SRI - AIO: Poor disclosure of performance hurdles
29-Oct-14
Australian ESG/SRI – ALQ: FY15 EPS Growth Hurdle Range Extended-still 'in the money'
15-Aug-14
Australian ESG/SRI - AMC: RoAFE hurdles easily 'in the money' for the third consecutive year
3-Oct-14
Australian ESG/SRI – ANN: EPS growth target range is 'in the money' for FY14 and FY15 LTIs
29-Sep-14
Australia ESG/SRI – ANZ: STI awarded above target – disclosure could be improved
2-Dec-14
Australia ESG/SRI – APA: No remuneration vote; Board succession plan concerns
2-Oct-14
Australian ESG/SRI – ASX: CEO rewarded for short term performance - less focus on long term
9-Sep-14
Australian ESG/SRI - ARI: EPS CAGR target well 'out of the money'
5-Nov-14
Australian ESG/SRI - AZJ: Changes to FY15 LTI following First Strike
29-Oct-14
Australian ESG/SRI - BEN: CEO salary focused on retention
16-Oct-14
Australian ESG/SRI - BHP: Five year performance period and board discretion is positive
6-Nov-14
Australian ESG/SRI - BLD: Increased ROCE hurdle for FY15 grant signals optimism from the board
23-Oct-14
Australian ESG/SRI – BOQ: LTI award remains 'on-foot' for departed CEO
18-Nov-14
Australian ESG/SRI - BPT: CEO retirement vesting concerns
18-Nov-14
Australian ESG/SRI - BSL: Is relative-TSR the best performance measure for a business facing volatile conditions?
5-Nov-14
Australian ESG/SRI – BXB: Long-term incentive tied to high quality growth and shareholder returns
23-Sep-14
Australian ESG/SRI –CBA: Customer satisfaction features heavily in 'at risk' remuneration
27-Oct-14
Australian ESG/SRI – CGF: Low absolute TSR hurdle for FY14 LTI
13-Oct-14
Australian ESG/SRI – CSL: Performance in line with peers and consensus forecasts to deliver 75% of the FY14 LTI
19-Sep-14
Australian ESG/SRI – CRZ: CRZ: Disclosure on 'remuneration at risk' could be improved
8-Oct-14
Australian ESG/SRI – CWN: Board shows discipline in maintaining EPS hurdles over FY11-FY14
29-Sep-14
Australian ESG/SRI - DLX: LTI based on EPS gateway and relative TSR
8-Dec-14
Australian ESG/SRI - DOW: Transitional LTI scheme strongly slanted towards 'outperformance'
21-Oct-14
Australian ESG/SRI – DUE: LTI measure of distributions not best for CEO
17-Oct-14
Australian ESG/SRI – DXS: Robust FY14 LTI structure
15-Oct-14
Australian ESG/SRI – EGP: 33% lower base for incoming CEO
13-Oct-14
Australian ESG/SRI - FLT: CEO total expected pay increases 20%; still good value
7-Oct-14
Australian ESG/SRI - GMG: EPS target range for the LTI not disclosed in advance in full
12-Nov-14
Australian ESG/SRI – GNC: 50% of the LTI opportunity converted to STI plan for FY14
14-Feb-14
Australian ESG/SRI – HVN: Non-financial measures dominate 'at risk' remuneration
12-Nov-14
Australian ESG/SRI – AGM Series
14
02 October 2015
Report name
Publishing date
Australian ESG/SRI – IAG: LTI ROE hurdle could be higher
13 Oct 2014
Australian ESG/SRI – IFL: Low gateway for LTI
18-Nov-14
Australian ESG/SRI – ILU: ROE Growth hurdle 'out of the money' for FY13 grant
13-May-14
Australian ESG/SRI - IPL: Exclusion of significant items results in STI award
5-Dec-14
Australian ESG/SRI - JBH: Board succession concerns; new CEO pay lower
7-Oct-14
Australian ESG/SRI – JHX: High level of board discretion on CEO pay appears to be exercised with restraint
8-Aug-14
Australian ESG/SRI – LEI: Departing CEO set to receive 516% of base salary
7-May-14
Australian ESG/SRI –MGR: Lower ROIC hurdles for the FY15 grant
18-Nov-14
Australian ESG/SRI – MQG: Low disclosure on profit scheme that dominates salary mix
24-Jul-14
Australian ESG/SRI – MTS: Rewarded for turnaround
7-Aug-14
Australian ESG/SRI – Lower compensation for the incoming CEO
3-Dec-14
Australian ESG/SRI – NCM: LTI structure departs from the norm
17-Oct-14
Australian ESG/SRI – NVT: Unique remuneration structure focused on economic profit
21 Oct-14
Australian ESG/SRI – ORA: Performance 'in-line' with consensus forecasts and peer group will result in 69% of the FY15 LTI 1-Oct-14
being achieved
Australia ESG/SRI – ORI: Return on Capital hurdle is 'in the money' for the FY15 grant
21-Jan-15
Australia ESG/SRI – ORG: Use of discounted fair value results in 92% higher LTI award
2-Oct-14
Australia ESG/SRI – PPT: LTI EPS hurdle appears achievable
16-Oct-14
Australia ESG/SRI – PRY: Board independence concerns
20-Nov-14
Australia ESG/SRI – QAN: Short-term pain for CEO
9-Oct-14
Australian ESG/SRI – QBE: 20% of FY14 STI Opportunity for ROE 38% below consensus
25-Mar-14
Australian ESG/SRI – RHC: FY15 LTI 529% of base salary
6-Nov-14
Australian ESG/SRI – SEK: Focused on the long term more so than the norm
19-Nov-14
Australian ESG/SRI – SGM: Lowered EPS hurdles 'in the money' for FY15
5-Nov-14
Australian ESG/SRI – SGP: FY15 EPS target range easily 'in the money'
14-Oct-14
Australian ESG/SRI – SHL: Higher compensation and easier hurdles for FY15
10-Nov-14
Australian ESG/SRI - SUN: FY14 STI received does not reconcile with disclosed performance outcomes
7-Oct-14
Australian ESG/SRI – TAH: Disclosure could be improved
14-Oct-14
Australian ESG/SRI – TCL: Use of discounted fair value results in 49% over-allocation of performance rights
24-Sep-14
Australian ESG/SRI – TLS: Free cash flow return on investment target range
15-Sep-14
Australian ESG/SRI – TOL: Salary composition slanted towards STI
7-Oct-14
Australian ESG/SRI - TPI: Incoming CEO set ambitious EPS hurdles
15-Oct-14
Australian ESG/SRI – TTS: No performance based LTI
14-Oct-14
Australian ESG/SRI – TWE: EPS growth target range is 'in the money' for FY15 LTI grant
2-Dec-14
Australian ESG/SRI –WBC: Incoming CEO's remuneration to be lower and more aligned to the longer term
27-Nov-14
Australia ESG/SRI – WES: LTI is entirely based on relative performance
7-Nov-14
Australia ESG/SRI – WOR: EPS growth hurdle 'out of the money'
2-Oct-14
Australia ESG/SRI – WOW: Outperformance required for LTI vesting
17-Nov-14
2013 Australian ESG/SRI – AGM series – available on request
Previous Australian ESG research
Australian ESG/SRI – MSCI ESG rating changes – WPL makes AAA; healthcare stocks down two notches
13-Aug-13
Australian ESG/SRI – TWE: Executive remuneration may contribute to share price overhang
16-Jul-13
Australian ESG/SRI – LEI appoints new independent directors – an analysis of LEI's latest Board composition
21-Jun-13
Australian ESG/SRI – Too late to stop; Too late to start: winners and losers from CSG – our views on the ESG issues
associated with current and prospective CSG projects
10-Apr-13
Australian ESG/SRI – An update on safety
28-Feb-13
Australian ESG/SRI – Water handling increases LNG capex
25-Feb-13
Australian ESG/SRI – AGM Series
15
02 October 2015
Report name
Publishing date
Australian ESG/SRI – Impact of NSW policy on AGK CSG carrying value
25-Feb-13
Australian ESG/SRI – MSCI SPN upgrade changes Utilities outlook – our views on ESG issues in the Utilities sector in Australia
13-Feb-13
Australian ESG/SRI – ESG issues to watch in 2013 – our key ESG issues for 2013
31-Jan-13
Australian ESG/SRI – Banks down, REITS up, RIO down to BB – an update on key ESG stock calls, MSCI IVA rating
changes and ESG Target Price impact changes
21-Jan-13
Australian ESG/SRI – ESG in the Media Sector – our views on ESG issues in the Media sector in Australia
27-Nov-12
ESG changes in stocks calls and analyst views – an update on key ESG stock calls, MSCI IVA rating changes and ESG
Target Price impact changes
24-Oct-12
ESG overlay on key stock calls”- our view on the analysts’ outlook for MSCI IVA ratings on
27-Sep-12
$21.4bn in ESG concerns on Australian stocks” - our first view of the impact on analysts’ Target Prices
2-Jul-12
Recent Global ESG Research
What’s New in ESG? Volkswagen emissions issue spreads to Europe, Corporate Governance
25-Sep-15
What’s New in ESG? Fat: the new health paradigm; overfishing and sustainable fisheries
18-Sep-15
Fat: the new health paradigm
17 Sep-15
What’s New in ESG? Impacts of plastics on seabirds; The complex world of LNG explained
11-Sep-15
What’s New in ESG? Global Population Forecasts; El Nino Update
4-Sep-15
What’s New in ESG? ESG: European Diversity Quotas, Urban Congestion
28-Aug-15
What’s New in ESG? ESG: The Family Business- Central European Utilities - Doom & Gloom Revisited, Oil & Gas in the Arctic
21-Aug-15
What’s New in ESG? ESG: French Environmental Services, Female Graduates
14-Aug-15
El Niño in 2015? - Implications and impact
Jul-15
What’s New in ESG? ESG: The Family Business- The Value of Small Cap Family Companies
22-Jul-15
What’s New in ESG? Weekly Bulletin: Millennials & Driving; Global Life Insurance: Impact of DoL Fiduciary Rule
17-Jul-15
What’s New in ESG? Weekly Bulletin: The Family Business Model, Gender pay gap in UK academia
10-Jul-15
Research Institute - The Family Business Model
Jul-15
What’s New in ESG? Weekly Bulletin: BP Reaches Settlement, ESG/SRI Key Risks and Megatrend
3-Jul-15
What’s New in ESG? Weekly Bulletin: Japanese Corporate Governance Code, Finding Alpha in ESG
26-Jun-15
What’s New in ESG? Weekly Bulletin: Vedanta - Cairn merger: assessing the impact
19-Jun-15
What’s New in ESG? Weekly Bulletin: Themes in Energy Efficiency
12-June-15
What’s New in ESG? Weekly Bulletin: Extreme Weather, UK’s rapidly changing demographics
5-June-15
What’s New in ESG? Weekly Bulletin: California almond farming & the drought, Selfies & the dividend trade
29-May-15
What’s New in ESG? Weekly Bulletin: The Energy Subsidy Debate, Solar Primer
22-May-15
What’s New in ESG? Weekly Bulletin: The diversity of politics, India Utilities Sector: Renewable energy integration
15-May-15
What’s New in ESG? Weekly Bulletin: Solar Farms in Europe, Positive Election Outcome for UK Utilities
8-May-15
Credit Suisse ESG Spotlight –Weekly Bulletin: The Pope and ESG, China, Power Sector - Reforms Bite!
4-May-15
Credit Suisse ESG Spotlight –Weekly Bulletin: Activist Investor Involvement & Building Energy Efficiency Update
24-April-15
Credit Suisse ESG Spotlight –Weekly Bulletin: The Florange Law and UK Waste: Downstream pricing risk intensifies
17-April-15
Credit Suisse ESG Spotlight –Weekly Bulletin: Automotive Technology Insights: Automation
10-April-15
Credit Suisse ESG Spotlight – Weekly Bulletin: UK Utilities - General Election Potential Outcomes - Renewable Subsidies
27-Mar-15
Credit Suisse ESG Spotlight – Parking A-lot overseas
20-Mar-15
Credit Suisse ESG Spotlight – China Utilities Reform Primer - Light and darkness down the road
13-Mar-15
Credit Suisse ESG Spotlight – China Environment Sector
6-Mar-15
Credit Suisse ESG Spotlight – Global Banks - TLAC: Towards a Global Resolution Regime
27-Feb-15
Credit Suisse ESG Spotlight – Weekly Bulletin: European Economics - European Public Finances in 2015
20-Feb-15
Credit Suisse Global Investment Returns Yearbook 2015 Responsible investing: Does it pay to be bad?
10-Feb-15
Credit Suisse ESG Spotlight – A Demographic View on Macro Policy
9 –Feb-15
Credit Suisse ESG Spotlight – Weekly Bulletin: European Diversity Quotas - We need another 400 women directors
23-Jan-15
Credit Suisse ESG Spotlight – Weekly Bulletin: Global Solar - 2015 Outlook
16-Jan-15
Credit Suisse ESG Spotlight – Weekly Bulletin: Weekly Bulletin: China Wind Power Sector
9-Jan-15
Australian ESG/SRI – AGM Series
16
02 October 2015
MSCI Disclaimer
Australian ESG/SRI – AGM Series
17
02 October 2015
Companies Mentioned (Price as of 01-Oct-2015)
Woodside Petroleum (WPL.AX, A$29.76)
WorleyParsons (WOR.AX, A$6.24, NEUTRAL[V], TP A$8.0)
Disclosure Appendix
Important Global Disclosures
The analysts identified in this report each certify, with respect to the companies or securities that the individual analyzes, that (1) the views
expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her
compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
3-Year Price and Rating History for WorleyParsons (WOR.AX)
WOR.AX
Date
23-Oct-12
11-Feb-13
13-Feb-13
21-Feb-13
03-Apr-13
17-May-13
14-Aug-13
05-Sep-13
09-Oct-13
20-Nov-13
26-Feb-14
27-Aug-14
04-Nov-14
20-Jan-15
25-Feb-15
26-Aug-15
Closing Price
(A$)
25.33
25.45
25.82
26.18
24.17
19.50
22.65
21.80
22.10
16.00
17.13
17.88
13.39
8.89
9.86
8.13
Target Price
(A$)
25.75
26.66
27.45
27.70
27.70
23.30
23.70
26.60
26.10
17.10
17.80
17.20
13.00
11.00
10.00
8.00
Rating
U
N
O
N
O*
N
U
U N D ERPERFO RM
N EU T RA L
O U T PERFO RM
O
N
* Asterisk signifies initiation or assumption of coverage.
The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's
total revenues, a portion of which are generated by Credit Suisse's investment banking activities
As of December 10, 2012 Analysts’ stock rating are defined as follows:
Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months.
Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.
Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months.
*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which
consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and
Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European rating s are based on a stock’s total
return relative to the analyst's coverage universe which consists of all companies covered by the an alyst within the relevant sector, with Outperforms representing the
most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and non-Japan Asia stocks, ratings
are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U. S. and Canadian
ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within
an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 1 2-month rolling dividend yield. An
Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned
where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of ass ociated risks. Prior to 18
May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, wh ich was in operation from 7 July
2011.
Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications,
including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other
circumstances.
Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24
months or the analyst expects significant volatility going forward.
Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or
valuation of the sector* relative to the group’s historic fundamentals and/or valuation:
Australian ESG/SRI – AGM Series
18
02 October 2015
Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.
Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.
Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months.
*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cov er multiple sectors.
Credit Suisse's distribution of stock ratings (and banking clients) is:
Global Ratings Distribution
Rating
Versus universe (%)
Of which banking clients (%)
Outperform/Buy*
56%
(32% banking clients)
Neutral/Hold*
29%
(38% banking clients)
Underperform/Sell*
13%
(31% banking clients)
Restricted
2%
*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most c losely
correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determine d on a relative basis. (Please refer to
definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.
Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the
market that may have a material impact on the research views or opinions stated herein.
Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer
to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-andanalytics/disclaimer/managing_conflicts_disclaimer.html
Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot
be used, by any taxpayer for the purposes of avoiding any penalties.
Price Target: (12 months) for WorleyParsons (WOR.AX)
Method: Our target price of $8/share for WorleyParsons is based off an 11x FY16 P/E. This multiple is based off a 30% discount to historic levels of
~16x, due to the unprecedented uncertainty in the business' earnings profile
Risk:
The risks associated with our $8 target price forecasts and valuation for WorleyParsons is continued growth in the E&C market and higher
commodity prices to underpin project development. Margins on new tenders, Cord project execution, the appreciating A$/US$ and
ongoing project deferments present the greatest short term risk to earnings and valuation.
Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the
target price method and risk sections.
See the Companies Mentioned section for full company names
Important Regional Disclosures
Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.
The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse
does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events.
Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares;
SVS--Subordinate Voting Shares.
Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not
contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.
For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.creditsuisse.com/sites/disclaimers-ib/en/canada-research-policy.html.
As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.
Principal is not guaranteed in the case of equities because equity prices are variable.
Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.
To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important
disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research
analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the
NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a
research analyst account.
Australian ESG/SRI – AGM Series
19
02 October 2015
Credit Suisse Equities (Australia) Limited .................................................................................................................................. Sandra McCullagh
CSEAL Analysts involved in the preparation of this report may be co-located with Credit Suisse Emerging Companies (CSEC) analysts.
Important MSCI Disclosures
The MSCI sourced information is the exclusive property of Morgan Stanley Capital International Inc. (MSCI). Without prior written permission of
MSCI, this information and any other MSCI intellectual property may not be reproduced, re-disseminated or used to create and financial products,
including any indices. This information is provided on an "as is" basis. The user assumes the entire risk of any use made of this information. MSCI,
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