Government to legislate on executive pay

Corporate executives will soon be hit with new laws curbing pay levels that are deemed to be excessive.

The Financial Services Minister, Chris Bowen, told  reporters in Sydney yesterday, that this would happen before the end of the year.

Mr Bowen also signalled that he will be be studying fat payouts, for executives,  in particular.

But he dismissed criticism from the Greens and the ACTU, who  both said the Productivity Commission went soft, on these issues, in its final report on the matter.

In that report, which the government received just before Christmas, the commission rejected executive salary caps, describing them as “unworkable.”

It made 17 recommendations the government, on ways in which excessive pay for executives might be curbed.(see www.pc.gov.au)

Corporate executives, who do not believe their pay is excessive, will still be relieved, at least, to find  that the government will now be considering this issue in a less highly charged environment than that which followed the share market crash.

When the government referred this issue to the Commission, early last year, public anger was running high, on these issues.

Mr Bowen said the Government had referred this issue to the Productivity Commission because it wanted it considered in a thorough and well considered manner.

“And that’s what the Productivity Commission has done,” he added.

” This Report follows consultation around the country, a range of hearings, consultation both before and after the Draft Report released last year.”

“We’ll be considering those recommendations and it’s our intention to respond in the first quarter of this year,

Mr Bowen added.

The Productivity Commission found that while Australia’s corporate governance is good by world standards, some pay practices had led to poor corporate performance.

That had damaged public confidence.

Mr Bowen also said the public rightly expects Governments to ensure  appropriate accountability and transparency in this area.

“…this Report provides the Government with a good basis for the next round of reforms,” he said.

But he admitted that there had been  bad examples.

These included of “poor salary practices” and “excessive termination pay in particular.”

” In some instances it’s hard to see the relationship between good corporate performance and salaries.

“In some instances, corporate performance has been very poor and salaries have been very high, Mr Bowen said.

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