Parliamentary Secretary to the Treasurer
14 September 2010 - 5 March 2012
Coalition Moves To Water Down Exec Pay Reforms
Proposed Coalition amendments to the Government's executive pay reforms would strip power from shareholders, said Parliamentary Secretary to the Treasurer, David Bradbury.
Under the Government's reforms, which are being debated in the Senate today, shareholders will have the opportunity to remove directors if the company's remuneration report has received a 'no' vote of 25 per cent or more of votes cast at two consecutive annual general meetings (AGM).
However, the Coalition has moved amendments to the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011 that would water down the two-strikes test, making the threshold 25 per cent of all shares on issue, rather than the number of votes cast at an AGM.
On average, only 58 per cent of shares are voted at an AGM, meaning the two-strikes test would be significantly diluted under these amendments.
"The Coalition's amendments would effectively strip shareholders of their power to have a say over the level of executive remuneration," said Mr Bradbury.
"These amendments would deliver more power to boards and make it almost impossible for shareholders to remove directors who fail to respond to their concerns over the level of executive pay.
"The Coalition's amendments would weaken the existing non-binding vote on executive remuneration and if less than 50 per cent of all shareholders showed up to vote, shareholders would never be able to register a 'strike'.
"Instead of providing incentives to increase the number of shareholders who participate in AGMs, the Coalition amendments would provide an incentive for boards to discourage shareholder turnout.
"Shareholders, as the owners of a company, take on the risk of investing their capital and share in a company's profits and losses, and the Gillard Government believes they deserve more say over how the pay of company executives is set.
"The Coalition should get out of the way of these important reforms and stand up for shareholders who want a greater say over executive pay."
20 June 2011