Australia to outlaw excessive 'golden handshakes' (1 Viewer)

[Graney]

CANBERRA (AFP) — Australia will outlaw excessive "golden handshake" payments to company executives, the government said Wednesday, amid outrage over bonuses collected by bosses of troubled US insurer AIG.

Treasurer Wayne Swan and Corporate Law Minister Nick Sherry announced the crackdown, under which termination payouts worth more than a year's base pay would require shareholder approval.

"What we have seen for the past decade, under laws we have inherited from the former government, is the retirement gold watch replaced by a truck load of gold bullion," Sherry said.

"That's why we have decided to take some strong and decisive action and carry our major reform in this area of golden handshakes," he told reporters in the Australian capital.

The move, unveiled after Canberra acknowledged public "revulsion" over huge executive salaries, will extend the rules to cover a wider range of executives and will slap criminal penalties on those who flout the laws.

"Golden handshakes, particularly when companies have not performed or where workers are being retrenched, are simply a means of rewarding failure and are absolutely unacceptable," Swan told parliament.

"So we are sending a very clear message to corporate Australia -- your actions are under scrutiny."

Current laws allow company directors to receive termination payments of up to seven times their total annual remuneration, which is often much more than base pay, before shareholder approval is required.

"Shareholder approval will now be required for a termination payment exceeding one year's base pay," Swan said.

In addition, the curb on pay-outs will be extended to cover all executives named in a company's remuneration report, rather than just its directors.

AFP: Australia to outlaw excessive 'golden handshakes'

Ridiculous populist move. The only effect this will have is to continue to drive talented executives overseas.

 

[Iron]

Good, let them go. What the remaining ones lack in greed, they make up for in principles - like loyalty and honour and duty and patriotism

 

[Barmble]

Ridiculous populist move. The only effect this will have is to continue to drive talented executives overseas.

Hopefully other countries will follow australia's actions.

 

[Lentern]

AFP: Australia to outlaw excessive 'golden handshakes'

Ridiculous populist move. The only effect this will have is to continue to drive talented executives overseas.

Because we particularly want people who are only out to line their own pockets at any cost and who are clever enough to get away with it?

 

[blue_chameleon]

About time I'd say. Rewarding those for leaving long established company's to capitulate and then riding off into the sunset could probably take a place in partly contributing to the GFC.

On the one hand, fundamentally I don't think government should interfere with remuneration limits. I also have massive issues with Nick Sherry as a human being.

On the other, the current arrangements obviously weren't working and leaving company's to fix the issue themselves was never going to work, for obvious reasons.

Ultimately though, this cap is only for termination payments doesn't appear to be affecting potential bonuses for those with continual service. I'll be waiting to see how the executive world views this.

 

[Graney]

Talent won't want to work in Australia when the renumeration is better elsewhere. The market works.

It's just another reason for talented people to leave Australia.

 

[SAVAK]

let the free market determine these decisions. Its not like the government has bailed out certain Australia companies, so why now all of a sudden?

 

[blue_chameleon]

Talent won't want to work in Australia when the renumeration is better elsewhere. The market works.

It's just another reason for talented people to leave Australia.

Fundamentally though, why would highly competent executives with proper ethical standings be concerned about how much they'll get paid when they leave a company?

If this legislation doesn't alter/affect remuneration for in-contract services to a company, I don't see that they should have valid reason to complain.

Is it right to have executives that are more interested in how much they'll receive after they leave as opposed to how much they'll receive whilst they are still under contract?

 

[blue_chameleon]

let the free market determine these decisions. Its not like the government has bailed out certain Australia companies, so why now all of a sudden?

Um, because they still aren't bailing out companies?

Would be interested in finding studies involving executives and how much consideration they give to the size of potential handshakes when evaluating remuneration levels of companies pre-contract.

 

[Graney]

Fundamentally though, why would highly competent executives with proper ethical standings be concerned about how much they'll get paid when they leave a company?

Everyone appreciates cash, and top executives are inherently always going to be extreme personalities, highly competitive and materialistic. It may be distasteful, but the nature of this type of work attracts people who are ruthless and demand only the best.

Is it right to have executives that are more interested in how much they'll receive after they leave as opposed to how much they'll receive whilst they are still under contract?

I doesn't matter what is right and wrong, it's just inherently true this can only negatively affect the number of executives who's first preference is to work in Australia. Morality is irrelevant, what's important is the real impacts of this decision.

 

[SnowFox]

$15M, seriously, $1M is enough in anyones books.

 

[Will Shakespear]

Rudd government - turning Australia into a backwater since...

oh wait, it already was, LOL

 

[SnowFox]

Rudd government - turning Australia into a backwater since...

oh wait, it already was, LOL

Dont like it? Piss off.

 

[Nebuchanezzar]

Talent won't want to work in Australia when the renumeration is better elsewhere. The market works.

It's just another reason for talented people to leave Australia.

That was a bit melodramatic, wasn't it? What does that mean we'll lose another Germaine Greer?

Companies won't fail because the "leftover" executives won't be talented enough to work for "reasonable" amounts of money. Your opposition is based soley on an utterly absurd assumption. Looks like other countries might follow suit as well - America is certainly rumbling in the same direction (albeit through taxes).

I say it's about time. If we can save wasting this money, all the while pissing off only Graney, waf, a few more batshit insane righties and a few fat company execs, then I'm all for it.

 

[blue_chameleon]

Everyone appreciates cash, and top executives are inherently always going to be extreme personalities, highly competitive and materialistic. It may be distasteful, but the nature of this type of work attracts people who are ruthless and demand only the best.

Being extreme personalities, highly competitive and materialistic is all fine in my books. I think whilst under contract and in service, executives should receive every penny they are worth for their efforts. After all, many have enormous pressures to deal with daily.

However, this still doesn't provide justification as to why, if they are receiving remuneration to their liking (which one would assume they would be, given the fact they accepted the terms of their employment contract), there is a need to remunerate them upon leaving the company to the tune of multiples of their yearly salary.

I doesn't matter what is right and wrong, it's just inherently true this can only negatively affect the number of executives who's first preference is to work in Australia. Morality is irrelevant, what's important is the real impacts of this decision.

Why is it inherently true?

I still can't get past the glaring question of why, executives that are confident in their abilities, would seek to place more importance on how heavy their parachute is if/when they jump from the building, rather than how much they are able to rake in through their term of contract.

I guess regardless of the answer to the above question, the obvious point here is that the markets have had ample opportunity to distance themselves from the practice of rewarding exiting executives of failing companies (eg. John Mulchany and his $20m payout whilst the share price of Suncorp plummeted), yet they have failed to move away from this practice.

Am I missing something here?

 

[Nebuchanezzar]

Capitalism: It works.

 

[blue_chameleon]

...all the while pissing off only Graney, waf, a few more batshit insane righties and a few fat company execs, then I'm all for it.

Haven't actually heard his views on this though, right?

 

[blue_chameleon]

Capitalism: It works.

Oh hai, Great Leap Forward! :wave:

 

[Nebuchanezzar]

Haven't actually heard his views on this though, right?

i basically picked out a name of a random bos liberal, comrade.

 

[Graney]

I think whilst under contract and in service, executives should receive every penny they are worth for their efforts. After all, many have enormous pressures to deal with daily.

I'd say this would be a good policy if executives salaries whilst under contract and in service are raised by an amount proportional to the amount that will be lost by lower golden handshakes.

If Australia has lower payouts to terminated executives, but higher ongoing salaries, with the overall longterm rewards being equal or greater than foreign nations competing for executive staff, this would a great policy to attract and keep good executives.

I suppose it's up to the individual corporations how they will choose to redirect the funds saved by lower termination packages for executives. Hopefully they will choose to redirect it into other schemes to attract executives and remain competitive.