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Issue No. 179 23 May 2003  

The Game’s Up
Research into executive pay commissioned by the NSW Labor Council makes explicit what most of us have suspected for some time: the multi-million packages are a rolled gold rort.


Interview: Staying Alive
CPSU national secretary Adrian O'Connell talks about the fight to keep the public service - and the union movement - alive.

Bad Boss: The Ultimate Piss Off
Wollongong workers on poverty-level wages are losing up to $5000 for taking toilet breaks, according to the union representing staff at a Stellar call centre.

Industrial: Last Drinks
Jim Marr looks at the human cost of the decision to close Sydney’s Carlton United Brewery

National Focus: Around the States
If Tampa told us that John Howard circa 2003 is the same spotted rabid dog from 1987, this week’s assault on Medicare confirms it reports Noel Hester in this national round up.

Politics: Radical Surgery
Workers are vitally interested in Medicare, not least because they traded away wage rises to get it. Now, Jim Marr writes, the Coalition Government is tearing apart the 20-year-old social contract on which it was founded.

Education: The Price of Missing Out
University students and their families will pay more for their education following the May Budget, writes Tony Brown.

Legal: If At First You Don't Succeed
Love is wonderful the second time around, goes the famous torch song. But is the same true for legislation? Asks Ashley Crossland

History: Massive Attack
Labour historian Dr Lucy Taksa remembers the general strike of 1917 to put the recent anti-war marches into perspective

Culture: What's Right
Neale Towart looks at a new book that looks at the failings of the Left, while reasserting the liberal project

Review: If He Should Fall
Jim Marr caught Irish folk-rock-punk legend Shane MacGowan at Sydney’s Metro Theatre. He was surprised but not disappointed.

Poetry: If I Were a Rich Man
Through a distortion in the time-space continuum, we have found a recording showing how people a few years into the future will deal with health care.

Satire: IMF Ensures Iraq Institutes Market Based Looting
The International Monetary Fund (IMF) has agreed to monitor the Iraqi economy to ensure that the reintroduction of looting into the economy conforms with free-market theory.


 War Declared on Mega Salaries

 Poms Prick Golden Parachute

 Picket Breaks Abbott

 Abbott: Unions are Winning

 Hotel Silences Poverty Witness

 We’ve Lost A Lion

 Nurses Refuse to be Shelved

 Boss Picks Porters’ Pockets

 Left, Right Meet at Sea

 ACTU Prescribes Pan Medicine

 Tycoon Tuned Out

 MUA Clout in Wollongong Punch-Up

 Pusey Roams Dark Side

 Activists Notebook


The Soapbox
What May Day Means to Me
Reader Marlene McAlear penned this tribue to May Day and worker solidarity.

The Toast
Labor Council secretary John Robertson's toast to the annual May Day dinner in Sydney.

The Locker Room
The Numbers Game
In life there is lies, damned lies and sporting statistics, says Phil Doyle - but who’s counting.

Brukman Evicted
ZNet's Marie Trigona reports from the streets of Argentina in the rundown to last week's presidential election.

The Costs of Excess
Some tall business poppies had their heads lopped this week as the laws of economic gravity applied their always chaotic theory.

 Hard Copy
 Bad Language
 Modern Management Theory
 Tom's Revival
 Off the Rails
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War Declared on Mega Salaries

Unions will wage a three-pronged assault on executive pay in the wake of research shattering the link between gold-plated remuneration and company performance.

The Labor Council of NSW will press for legislative change, greater activity by super fund trustees and grass-roots industrial campaigns to end the explosion in CEO pay which has jumped to 74 times the average weekly wage.

The research, conducted by a team of academics commissioned by the Labor Council, found that the often-stated link between high executive pay and company performance does not exist.

They found that executive pay levels had exploded in the past decade from 22 times average weekly earnings in 1992 to 74 times average weekly earnings today. And in the finance sector the figures are more perverse, CEOs earning 188 times the salary of customer service staff.

By analysing the performance of companies against three criteria - return on equity, share price change and change in earnings per share - the researchers actually found that high excessive pay levels actually coincide with a lower bottom line.

"If you look at the numbers, it is accurate to say the more you pay a CEO the worse the company performs and the less you pay the better it performs," researcher Dr John Shields for Sydney University's School of Business says.

Applying this analysis, the authors identified a performance-optimal range for executive remuneration of between 17 and 24 times average wage and salary earnings, beyond which the performance of a company begins to deteriorate. This means that any company paying CEO's more than $800,000 begins to be a bad bet.

Labor Council secretary John Robertson says research takes the debate about executive remuneration to a new level.

"This research shows that executive pay is not just a moral issue; it is a shareholder issue and it is a job-security issue. For workers, it shows that an excessively paid CEO is likely to preside over a weaker company, meaning their jobs are less secure.

A panel convened by the Labor Council found some common ground between Federal Opposition treasury spokesman Bob McMullan, shareholder activist Stephen Mayne and the Australian Consumers Association's Catherine Wolthuizen.

They highlighted the vital role unions can play, especially in their capacity as trustees of industry superannuation funds, which have significant holdings in the top companies.

Mayne said that industry and public super funds with union board representation account for $150 billion, or a quarter of Australia's total market share.

Robertson says the onus is now on the union movement to build on the research by campaigning with their members to raise pressure for political change to make company board's more accountable.

Time for Change

In the report, the authors identify a range of reforms to address the pay blowout and increase accountability, including:-

- Government use of purchasing policy to encourage firms with moderate executive packages..

- The Australian Stock Exchange's (ASX) regulatory functions are compromised, as the ASX is itself a privately listed company. These functions should be transferred to a fully independent entity such as the Australian Securities and Investment Commission (ASIC).

- Restricting the use and abuse of share options by means of a specified cap on the ratio of executive options to the company's total share issue and via the imposition of a minimum vesting period of three years.

- Action, including legislation, to make superannuation funds more accountable for executive pay decisions, with nominees required to report to members on executive pay decisions.

- Registration of all organizations providing commercial services in the field of executive remuneration, with annual reports required to a relevant statutory authority.

- And, introduction of more stringent disclosure requirements, requiring formal shareholder approval for all executive salary decisions.


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