Chapter 1: Greed, accountability and say on pay
Regulations introduced by the UK government in 2002 and legislation introduced by the Australian government in 2004 aimed to improve board accountability for executive remuneration practices within listed companies, in an eff ort to curb excessive remuneration payments. Both jurisdictions adopted the same regulatory solution: a mandatory remuneration report within the annual report and a mandatory annual advisory vote at the annual general meeting (AGM) of the company to ‘adopt’ the report. The initiatives of 2002 and 2004 did not occur in a vacuum, but were a natural progression from earlier attempts to address the same challenges. These new legislative initiatives were promulgated into a ‘regulatory space’ that was already rich with attempts to infl uence executive remuneration accountability and practice. They would only ‘work’ to the extent that they mobilised and held accountable the existing players in that space to change remuneration practices: institutional shareholders, remuneration consultants, boards of directors of listed (quoted) companies and their remuneration committees. In making laws on executive remuneration, governments in liberal economies such as the UK and Australia walk a policy tightrope: whether to allow company boards to exercise their powers of management free from government constraint, or to choose to regulate this conduct to address the general public’s concern with executive greed.