The apparently ceaseless growth of executive remuneration is a clear case of market failure. For years we have been told there’s a link between high executive salaries and bonuses and a company’s performance and its ability to attract top talent. The financial crisis has shown both arguments to be, at least, problematic.

In the events of the last six months, the interests and shareholders and the community have been closely aligned as companies have collapsed, confidence has been undermined and the ranks of the jobless have grown. But there remains a disconnection between a corporate regulatory framework that relies on shareholders to supervise remuneration, and the interests of the wider community.

Excessive executive remuneration is corrosive and undermines public confidence in business, regardless of the benefits for shareholders. It is a problem hidden from sight during boom times, but one which comes painfully into prominence when the good times end.

Australian businesses, like their overseas counterparts, have demonstrated a marked reluctance to halt the rise in executive remuneration. Institutional shareholders have not used existing regulatory mechanisms to do it for them. It is time Governments intervened to give concrete regulatory expression to community concerns.