Statement from BCA Chief Executive Katie Lahey
The Productivity Commission’s discussion draft on executive remuneration in Australia makes an important contribution to constructive public debate on executive pay.
Simplistic, one-size-fits-all approaches, such as pay caps, are not the answer. They will only erode the competitiveness of Australian listed companies and undermine economic performance in Australia.
The aim should be to encourage the strongest possible focus on remuneration that clearly aligns pay to company-specific strategies, objectives and outcomes that can be directly impacted by executives.
The challenge for boards is to ensure that remuneration strategies and goals are well communicated and transparent so that shareholders are confident that the strategies adopted are in their interests.
The BCA welcomes the commission’s conclusion that there is not a general system failure in terms of executive remuneration across Australia’s listed companies. In particular, we endorse the view that the way forward is not to bypass the central role of boards in remuneration-setting through prescriptive regulatory measures.
The marketplace for executive pay is becoming increasingly complex and competitive. It is not limited to publicly listed, but includes also privately owned companies and multi-national corporations.
Australian listed companies need the flexibility to attract and retain skilled and experienced executives in a competitive global market.
In pursing appropriate remuneration practices and outcomes, the BCA considers that effective, company-specific approaches need to be supported and highlighted.
The BCA values the thorough consultation undertaken by the commission and appreciates the focus in the discussion draft on good governance processes and enhanced accountability.