AS a pack of reporters thrust their dictaphones in front of Troy Buswell late last week, the treasurer remarked that it reminded him of something other than a press conference.
AS a pack of reporters thrust their dictaphones in front of Troy Buswell late last week, the treasurer remarked that it reminded him of something other than a press conference.
“Actually when I ran the city to surf this is what things looked like at the end," he quipped.
The questions he faced would prove as tiring as the 12-kilometre run - the reporters were there to talk about executive pay.
The release of the annual report for government superannuation provider GESB gave the issue of executive pay a local focus, as the document revealed its chief executive, Michele Dolin, had received a $160,000 pay rise.
To rub salt into the wound, workers perusing their super providers' annual reports will find most mainstream funds recorded double-digit losses in 2008-09.
Over the course of the week, a pledge by the treasurer to try and get the pay rise unwound was replaced by a frustrated acknowledgement he didn't have the authority to do so, as the GESB board had control over pay rates.
It also emerged that the more than 40 per cent pay rise was actually put in place by the board in January 2008, under the previous state government's watch.
Mr Buswell met with GESB chairman Phil Harvey on Thursday afternoon to debate the issue. Mr Harvey rejected the former's calls to revoke the increase and will be more than a little uncomfortable if he seeks an extension in his own tenure - when the treasurer can again wield control.
“I expressed to him in no uncertain terms my view that a one-off $160,000 pay rise was impossible to justify and I asked that they reconsider their position in relation to that," Mr Buswell said.
“The chairman gave no indication to me at that time that the board would reconsider their position, indeed he continued to defend and justify the $160,000.
“I'm concerned that, at the moment, we effectively have a board responsible to the government who are acting as if they are the board of an independent entity."
Mutualisation plans for GESB are under review by the state government, so Ms Dolin is still a public servant.
If the state government adopts an alternate model to mutualisation, it has warned executive pay will be reeled in.
“I can assure you that if the mutualisation process doesn't occur we would leave no stone unturned to ensure that the CEO's salary is determined in line with normal public sector senior salary determinations," Mr Buswell said.
Late Friday, the GESB board defended its stance, arguing that the chief executive's salary appropriately reflected the risk profile of the role and the complexity of the $9.5 billion fund.
The GESB board sought remuneration advice from the Hay Group, and there were calls by those at the press conference to make the report public.
Or, perhaps the calls were to have the Hay Group also do a flattering report for the journalists in the room.
A federal perspective
‘IF you pay peanuts, you get monkeys' is a loose summary of the view held by The Australian Institute of Company Directors, in regards to executive pay.
It is generally supportive of the Productivity Commission's draft report on executive pay, which has just been released.
The release of the draft report can be viewed in the context of world leader condemnation of the exorbitant executive salaries taking much of the blame for the global financial crisis.
Nonetheless, the commission has not recommended that remuneration be subject to salary caps or prescriptive regulation, which it concludes would be unworkable and have harmful economic impacts.
Instead, the draft signals a greater focus on corporate governance and engagement with shareholders.
The institute is, however, concerned with a couple of the draft proposals, including the "two strikes, you're out" policy, which may hand significantly more power to shareholders.
The draft proposal says that where a company's remuneration report receives a 'no' vote of 25 per cent or higher, then the board would be required to report back to shareholders in the subsequent remuneration report explaining how shareholder concerns were addressed and, if they have not been addressed, the reasons why.
If a company's subsequent remuneration report receives a 'no' vote above a prescribed threshold then all members of the board would be subject to re-election.
“Such a 'say on pay' policy, while perhaps superficially attractive from a shareholder engagement perspective, could open a Pandora's box of unintended consequences for both boards and shareholders," the institute's chief executive John Colvin said.
The commission's formal recommendations are due out at the end of the year.
A Riskmetrics study, commissioned by the Australian Council of Superannuation Investors, found that higher paying overseas jobs weren't luring local chief executives offshore, which is the oft-quoted reason for very high remuneration.
The risk management and corporate governance group said less than 3 per cent of executives depart for overseas postings, 13 per cent go to another Australian company, while termination and retirement account for 70 per cent of departures.
