||Issue No. 238||17 September 2004|
Interview: True Matilda
Politics: State of Play
Industrial: Capital Dilemmas
Unions: Rhodes Scholars
National Focus: Rennovating the Lodge
International: People Power
Economics: A Bit Rich
History: Mine Shafts
Safety: Sick Of Fighting
Organising: Building a Wave
Poetry: Anger In The Bush(es)
Review: The Battle Of Algiers
Culture: The Word On The Street
The Locker Room
Invest In Dignity!
One Rule for Qantas
Airline unions have promised to campaign against the largesse, which would give directors the right to increase non-executive fees from $1 million to $2.5 million a year.
Australian Services Union official, Linda White, said her organisation would by urging members and fund managers to vote against the resolution at next month's annual general meeting in Brisbane.
Qantas revealed this week that it had paid chief executive officer, Geoff Dixon, $6.09 million for the 2004 year, up from the $1.67 million he took home after the company sustained a loss last year.
Chairman Margaret Dixon lifted her earnings from $372,000 to $484,000 last year.
Qantas is asking shareholders to return her and fellow non-executive directors James Packer, Particia Cross and Mike Codd to the board.
The union campaign against Qantas comes a year after a team of academics shattered the link between gold-plated remuneration and company performance.
They found executive pay levels had exploded from 22 times average weekly earnings in 1992 to 74 times average weekly earnings in 2003. And in the finance sector the figures were 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 found that excessive pay levels actually coincided with lower bottom lines.
"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 of Sydney University's School of Business said.
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 began to deteriorate.
Their figures suggested that any company paying its CEO more than $800,000 was on a bad bet.
Unions were considering a range of reforms to address executive greed 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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