Business lobby goes into bat for golden handshakes
By Clancy Yeates | smh.com.au | 26 August
Thirteen of the top 20 ASX companies have policies setting termination pay at a year's salary or less, research from the Australian Council of Super Investors found.
Another five companies top up one year's pay with extra bonus payments, while one, Wesfarmers, sends off departing chiefs with two years' base pay.
Only one of the ASX top 20, Westfield, makes purely "discretionary" termination payments set by its remuneration committee, ACSI said.
The research was presented yesterday to a Senate inquiry into proposed legislation which would force companies to seek shareholder approval before making payouts larger than one year's base pay.
Under the present rules, companies can issue a golden handshake worth up to seven times a year's base pay before being required to seek shareholder approval.
Business groups have claimed the proposed legislation will prevent Australian companies from attracting top executive talent.
But the chief executive of ACSI, Ann Byrne, said its study of the ASX 20 showed the proposed legislation was not a radical move.
"If you look at the top 20 companies ... of those, 13 already use one year. We think this is already very reasonable ... It's not something that's terribly controversial," she said.
However, peak business groups continue to warn against the legislation.
They argue it will hold Australian businesses back in the race for executive talent and could, perversely, push up other types of pay.
A director of the Australian Bankers' Association, Nicholas Hossack, said ASCI's findings showed corporate Australia was listening to investors' concern over excessive payouts.
"What boards are showing is that they are responding to pressure that's coming from shareholders," Mr Hossack told the committee.
The chief executive of the Australian Institute of Company Directors, John Colvin, warned the legislation would put local firms at a disadvantage to overseas rivals who could offer talented executives bigger severance packages.
Mr Colvin said a termination payment three times a year's base pay was standard in the US. A separate survey also published yesterday showed small shareholders are sick of excessive executive pay.
Eighty per cent thought executive remuneration packages were excessive, a survey of 1600 retail shareholders conducted by Global Proxy and the Melbourne Institute said.
First published by Smh.com.au on August 26 2009
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