Leading superannuation body, the Australian Council of Superannuation Investors (ACSI), has called for a change in chief executive pay and disclosure and has labelled some CEO termination payments as “too generous”.
In a media statement by ACSI, the council said it supports the introduction of UK-style proposals that provide for the outstanding term of a contract to be paid in “phased” termination payments.
These payments will cease when an executive finds another position.
Currently ASX regulations require companies to disclose the contractual terms – including termination conditions – of appointments.
“Corporations should also include the potential value of the termination payout for the senior executive, in order to eliminate the element for shareholders in the future,” said ACSI.
The proposal to implement the UK formula follows the council’s call for reform to provide the same shareholders with a greater say in termination benefits.
In addition to the proposed implementation, ACSI flagged that benefits worth more than a 12 months base salary should receive the green light by shareholders.
Currently existing caps under sections 200F and 200G of the Corporations Act allow more than seven times annual remuneration, subject to shareholder approval.
ACSI considers this to be “too generous”.
“Corporations should not pay excessive and unreasonable termination payments in circumstances where the termination is a consequence of poor and inadequate performance,” noted the ACSI statement.
ACSI recently released research surrounding CEO pay in the top 100 Australian listed companies. The council engaged ISS Governance Services to conduct the research.