Submission to the Productivity Commission Inquiry on Director and Executive Remuneration in Australia

The global financial crisis (GFC) has brought renewed scrutiny of executive remuneration, although concerns regarding trends in executive remuneration are not new.

As in the past, a key focus of the current debate is the amount of remuneration paid to executives relative to the pay of average wage and salary earners. But significant attention is also paid to circumstances where companies have underperformed or failed and there appears to have been little link between executive pay and performance.  In addition to these issues, the GFC has raised questions about the role of remuneration structures in rewarding excessive and unsustainable risk taking that has economy-wide consequences.

It is interesting to observe that the tone of the debate on executive remuneration in Australia appears similar to that in many other countries, notwithstanding the fact that the performance of the Australian economy and its businesses has continued to be among the best in the world.

The BCA believes there are important issues which deserve more attention and that there is a need to promote a wider understanding of the drivers of executive remuneration and company performance.