IMPROVING AUSTRALIA'S REMUNERATION FRAMEWORK

The Rudd Government has announced our response to the Productivity Commission’s final report in director and executive remuneration.

These are important reforms that will improve Australia’s remuneration framework by encouraging shareholder engagement, eliminating conflicts of interest, improving disclosure requirements and improving the design of remuneration policies.

The Labor Government has taken in to consideration the anger and concern in the community about the most excessive instances of executive pay. Labor will ensure that Australia’s regulation of director and executive remuneration remains ahead of international best practice.

The Government has supported nearly all of the PC’s recommendations, including the “two-strikes” proposal to strengthen the non-binding vote on remuneration. We’ve also decided to further strengthen several of the recommendations by expanding their scope and enforceability. The Government will also consider an additional proposal, not identified by the PC, to clawback bonuses paid to directors and executives in the event of a material misstatement in the company’s financial statements.

The Rudd Government has taken, and will continue to take, tougher action on the regulation of executive pay than any previous government. The Liberal Party for 11 years failed to act on the issue of executive remuneration, and even now we don’t know where they stand.

With these reforms, we will be putting in to place policies that promote transparency, accountability and responsible remuneration practices. Legislation will be introduced this year, following public consultation on an exposure draft.

This action complements recent initiatives to strengthen Australia’s remuneration framework, such as reforms empowering shareholders to reject excessive termination benefits or ‘golden handshake’ payments given to company directors and executives.

You can download the Rudd Government’s full response to the PC’s final report here. 

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