Today's report of the Coalition walking away from global efforts on executive remuneration is both concerning and illustrative of just how out of touch they really are.
The Leader of the Opposition needs to clarify whether or not the Coalition supports global efforts, including legislation before the Australian parliament to better align executive remuneration with shareholder interests instead of rewarding excessive risk-taking.
The global economic recession has highlighted increasing community demand to ensure that executive remuneration packages are appropriately structured.
The Rudd Government is acting to ensure regulation of executive pay keeps pace with community expectations.
The Government currently has legislation in the Senate that increases the level of shareholder scrutiny in relation to the payment of 'golden handshakes' or termination benefits. The Productivity Commission's Inquiry into executive remuneration is currently underway, with its interim report due shortly.
Joe Hockey's comment today that 'executive pay is an issue for shareholders since they are the owners of the company' is at odds with the Coalition's amendments to the Government's executive termination payments legislation.
The Coalition hasn't yet worked out whether it supports more or less shareholder scrutiny of executive remuneration.
During the last parliamentary sittings, the Coalition moved amendments to the Government's termination payments legislation that would have the effect of reducing - not increasing - shareholder scrutiny of termination payments.
Coalition Senators called the legislation a 'kneejerk reaction' and 'regulatory overreach', yet the Leader of the Opposition and now the Shadow Treasurer continue to argue that shareholders need to be given more of a say.
So the question for the Leader of the Opposition today is 'what's it going to be?'
- Does the Coalition support global efforts through the G20 to reform the regulatory frameworks around executive remuneration?
- Does the Coalition support the Government's legislation that will have the effect of empowering shareholders to be able to reject excessive termination payments that may not be shareholders' best interests?
23 September 2009