With the Federal Government yesterday introducing legislation to cap executive golden handshakes at one year’s fixed pay, the Australian Institute of Company Directors have again criticized the move. Despite the legislation merely giving shareholders the right to veto large payouts (boards can still pay departing executives as much as they like with shareholder approval), the AICD was unimpressed, with the Fairfax papers noting the AICD’s argument that the move will limit the ability for companies to attract overseas talent.
The AICD’s claims appear to be of minimal credibility. According to a RiskMetrics study, the vast majority of executives are promoted from within a company, rather than from overseas (only 18 percent of CEO appointments are overseas hires). Moreover, overseas executives who have managed Australian companies have had minimal success.