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Executive Remuneration in Australia
Author(s) -
Fels Allan
Publication year - 2010
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/j.1835-2561.2010.00081.x
Subject(s) - remuneration , shareholder , incentive , executive compensation , salary , accounting , business , context (archaeology) , payment , agency (philosophy) , principal–agent problem , corporate governance , economics , finance , market economy , paleontology , philosophy , epistemology , biology
A fierce debate is raging about the legitimacy of executive pay rises. Australia's chief executive salaries are not as high as in the United States and the big European economies, but between 1993 and 2007 there was a sharp rise in remuneration. Most of the rise came in the form of incentive payments. In the Australian context, the size of the executive salary is closely linked with the size of the company. The evidence is mixed about how efficient executive remuneration has been, but what is clear is that the responsibility to ensure it is appropriate resides with boards, and that there is a need for greater shareholder participation. Accordingly, it is recommended that shareholders have a greater ‘say on pay’, and that two successive ‘no’ votes on remuneration by shareholders will have formal consequences for boards. The challenge is to improve agency between shareholders and management, and between shareholders and boards. An evolutionary approach is proposed.