The Productivity Commission discussion draft makes an important contribution to public understanding and debate on executive pay in Australia.
The BCA welcomes the commission’s conclusion that there is not a general system failure in terms of executive remuneration governance across Australia’s listed companies.
The BCA strongly supports the recognition of the central role of boards in determining executive pay. Remuneration structures need to be company and context specific, and determination of executive remuneration is best left to boards who are, in turn, answerable to shareholders.
Many of the recommendations put forward in the discussion draft reflect best practice and seek to enhance the adoption of best practice approaches in a manner consistent with company-specific circumstances. The BCA endorses this approach and, with certain qualifications, supports the intention of most of the recommendations proposed.
But the BCA strongly opposes draft recommendation 15 (the ‘two-strikes’ test) and draft recommendation 1 (the ‘no vacancy rule’).