Surprise, surprise - business groups balk at restrictions on golden handshakes

[balthazarr]

From: http://business.theage.com.au/busine...0318-926g.html

Business fury at moves to limit payouts
Katharine Murphy, Canberra
March 19, 2009
BUSINESS groups have reacted angrily to a Federal Government plan to stop executives receiving huge "golden handshakes" by giving shareholders a veto over termination payouts.

The Government has responded to escalating community outrage about executive largesse in tough economic times by attempting to cap termination payments of more than one year's base salary. Criminal sanctions will apply. Payouts now can be seven times total remuneration without shareholder approval.

The Government has also unveiled a wide-ranging inquiry into executive pay, headed by former competition watchdog Allan Fels - a man unpopular with business for his enforcement of trade practices law. Professor Fels told The Age his inquiry would consider a range of issues, including the taxation of executive pay.

But yesterday's pre-emptive strike by Canberra before the Fels inquiry - while welcomed by shareholders - was criticised by one of the Government's closest business advisers, Heather Ridout, and by one of the country's best-known company directors, Dick Warburton.

Mr Warburton branded yesterday's move "populist politics", while the Ai Group chief executive said the proposal risked "imposing a broad and permanent response to a temporary problem".

"Australian companies and the regulatory framework they operate under are not responsible for the current crisis … and they shouldn't be overregulated in response to it," Mrs Ridout said.

Mr Warburton said it was up to company boards to rein in excessive payouts.

Veteran company director and corporate governance authority Henry Bosch said the looming inquiry was a "political gimmick".

The Australian Chamber of Commerce and Industry expressed similar concerns. ACCI chief executive Peter Anderson warned against making decisions "in the hotbed atmosphere" generated by corporate excess in the United States.

But the looming crackdown was welcomed by unions and by the Australian Shareholders Association - although both groups warned more would need to be done.

Association chief executive Stuart Wilson said termination payments were a good place to start, and the move should curb exorbitant payouts, but he warned executives could exploit other loopholes.

"What we do know is that even before the ink is dry on the legislation there will be an army of lawyers and remuneration consultants looking for ways to avoid it," Mr Wilson said.

ACTU president Sharan Burrow said people were "outraged at the pay packages awarded to executives and directors at companies like Telstra, ANZ, Pacific Brands and BHP, who have all made thousands of workers jobless in recent weeks".

"Moves to curb excessive bonuses and remuneration are overdue and more needs to be done to break the link between executive pay and short-term investment decisions," she said.

Federal Opposition Leader Malcolm Turnbull indicated the Coalition was supportive of the move in principle, but criticised the Government's decision to hold an inquiry rather than unveil a definitive policy.

"After months of dismissing our call for shareholders to have a binding vote on senior executive remuneration, the Government has responded with another Rudd inquiry," Mr Turnbull said.

With PETER MARTIN, RUTH WILLIAMS

(my emphasis)

So business groups are jumping up and down about the government proposing limiting golden handshakes to no more than one year's remuneration. The heart bleeds - a friggin' year - how many of us plebs get redundancies of a year's pay?

'temporary problem', Riiiiiggghhhhttt...

[InfernoSR]

Should have been done decades ago IMO...