Business cautious over executive remuneration regulation

by 19 Mar 2009

Employer groups have warned against making decisions about regulation of executive remuneration in a hotbed atmosphere of community sentiment against the corporate excesses in the US, that gave rise to the global economic crisis.

Peter Anderson, chief executive of The Australian Chamber of Commerce and Industry, said Australian business owners and managers, many of whom work hard for only modest returns (especially in small business), share in that community sentiment, and are on the receiving end of the economic downturn.

“However, executive remuneration is not an area that naturally lends itself to regulation by the state, and proposals need to be considered in an objective manner lest they be counterproductive,” he said.

“There is considerable risk with government regulating private reward especially in an economy like Australia’s that needs to be internationally competitive, no matter how imperfect the private sector or individuals may be.”

He said the review announced by the government needs to recognise the limits of what the state can and should do in this area, and focus its attention on the appropriate duties and role of directors and shareholders, and the adequacy of existing accountability structures.

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