Australian plan to curb CEO pay merits consideration
Here’s an idea that would, despite being far from foolproof, seem to be worth at least considering in the U.S.: Australia’s law to require significant corporate shareholder majorities to approve CEO compensation plans.
“One of the world’s more complicated schemes to tamp down CEO pay is getting a test in Australia this fall. Since last July, Aussie corporate boards have had shareholders voting on CEO pay. But this advisory “say on pay” has a twist. A board that fails to get 25 percent of shareholders to bless its CEO pay two years in a row has to face a shareholder vote on whether to give the entire board a heave-ho and elect a new one. Last year, 108 firms failed to hit that 25 percent mark. Now boards seem anxious to avoid two-time loser status. CEO bonuses at top Australian firms have dipped 20 percent since last year. But execs, activists add, are still playing games: Aquila Resources chair Tony Poli had his most recent annual pay reported as $572,000. He actually took in $169 million.”