The Regulation of Executive Compensation

The Regulation of Executive Compensation

Greed, Accountability and Say on Pay

Kym Maree Sheehan

Using the model of the regulated remuneration cycle, and drawing upon evidence of its operation from interviews, voting data and remuneration reports from UK and Australian companies, the book demonstrates whether say on pay can operate successfully to both constrain executive greed and ensure accountability exists for company performance and decision-making.

Chapter 6: Australian remuneration practice – best practice?

Kym Maree Sheehan

Subjects: law - academic, labour, employment law


Three key diff erences exist in the annual review cycle for Australian companies compared with that for the UK as set out in Figure 5.1 in the previous chapter. First, if management briefs the consultants (which was common practice), a number of the decisions shown as ‘remuneration committee’ decisions in Figure 5.1 are actually made by management. In these circumstances, there could be an iterative process, as described by this Australian remuneration committee chair: Normally what I do is that I sit down with the HR GM here who is very good and very experienced. We’ll debate about what we are asking the remuneration consultants to do this year. Any bits of additional information we want. HR GM will then prepare the brief; I’ll have a look at it and say, ‘Yes: that’s what we agreed’ and the consultant will come in for a briefi ng. And occasionally, if it’s a bit out of the ordinary, I’ll be involved in the briefi ng . . . when the report comes in, HR GM will go through it, then HR GM and I will go through it. Then we’ll get the rem consultants in and HR GM and I together will debate it with them. So then I guess I’ve a lot of rem experience: as a former chief executive, I’ve had this debate for 20 plus years, so I’ve got experience of my own, plus I sit on a number of other boards. So I’ll go and have a debate sometimes with the rem people. Finally, it lands, and that will then make its way finally to the rem committee.

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