Edited by Randall S. Thomas and Jennifer G. Hill
Chapter 17: Lessons from the Rapid Evolution of Executive Remuneration Practices in Australia: Hard Law, Soft Law, Boards and Consultants
Randall S. Thomas1 1 INTRODUCTION Executive remuneration is a hot topic in US corporate governance circles today. Hardly a day goes by without a prominent press report about the details of a particularly large compensation or severance package. Often the reporter’s theme is that American investors are at the mercy of an out-of-control process and that the legal and corporate governance systems in this country have completely broken down when it comes to CEO pay. For that reason, it is important to carefully examine the legal and corporate governance systems in other industrialized, wealthy nations to see how they have treated executive pay in the last decade, to determine if there is a better model available. Australia provides a particularly interesting comparison to the American system. Australia is one of the few western nations that was largely untouched by the global financial crisis of 2008–09, with its industrial and mining base left unscathed and the Australian dollar leaping impressively in value. Economic news has been largely good for the local economy. Nevertheless, the country chose to closely scrutinize executive remuneration and to enact many changes to its executive pay system that increased investor involvement in the process, some of which have been copied in the Dodd-Frank legislation recently passed by the US Congress. This chapter gives a dynamic overview of the key Australian corporate governance and legal rules that impact on executive remuneration practices at publicly traded Australian corporations. It has a special focus on the role of compensation...
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