Comments on: Qantas report stands like a beacon of poor corporate governance http://www.crikey.com.au/2009/10/22/qantas-report-stands-like-a-beacon-of-poor-corporate-governance/ now with extra source Sun, 12 Feb 2012 07:51:14 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: John Bennetts http://www.crikey.com.au/2009/10/22/qantas-report-stands-like-a-beacon-of-poor-corporate-governance/#comment-42628 John Bennetts Fri, 23 Oct 2009 05:10:53 +0000 http://www.crikey.com.au/2009/10/22/qantas-report-stands-like-a-beacon-of-poor-corporate-governance/#comment-42628 Another Crikey list? Those companies whose shareholders are at war with their Boards. Another Crikey list? Those companies whose shareholders are at war with their Boards.

]]> By: MichaelT http://www.crikey.com.au/2009/10/22/qantas-report-stands-like-a-beacon-of-poor-corporate-governance/#comment-42429 MichaelT Thu, 22 Oct 2009 06:28:35 +0000 http://www.crikey.com.au/2009/10/22/qantas-report-stands-like-a-beacon-of-poor-corporate-governance/#comment-42429 Don't forget that those 'substantial shareholders' who voted for the remuneration report presumably include the managers and directors who will benefit! This also needs to be banned, and this is the 4th draft recommendation of the Productivity Commission. Unfortunately the Commission has not gone the next step and recommended that the shareholder votes should be binding. This appears to be on the grounds that it would infringe the primary function of the Board to hold Management accountable. However it is clear from the gross inflation of executive pay over the past decade or so that Boards have failed to act on behalf of shareholders when considering exeuctive pay. Only giving the power to shareholders will get over this intractable manifestation of the agent-principal problem. Don’t forget that those ‘substantial shareholders’ who voted for the remuneration report presumably include the managers and directors who will benefit!

This also needs to be banned, and this is the 4th draft recommendation of the Productivity Commission.

Unfortunately the Commission has not gone the next step and recommended that the shareholder votes should be binding. This appears to be on the grounds that it would infringe the primary function of the Board to hold Management accountable.

However it is clear from the gross inflation of executive pay over the past decade or so that Boards have failed to act on behalf of shareholders when considering exeuctive pay. Only giving the power to shareholders will get over this intractable manifestation of the agent-principal problem.

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