The Greens are pressuring the Government to introduce a new amendment into the executive pay bill that would restrict the amount a CEO can be paid to just 30 times the average wage of that company’s employees.
The move comes just months after the Greens proposed similar amendments in January, although at that time Brown was advocating a cap of $5 million.
The move comes as the Government wants to pass laws that would allow shareholders to hold greater sway over executive remuneration packages, with rules that would place a company board up for re-election if pay packages are rejected twice in a row by 25% of investors.
The bill passed the House of Representatives yesterday and has now moved to the Senate.
Brown has told the Australian Financial Review the new bill does not contain enough to restrict salaries and that introducing a wage cap will be a “good incentive to keep employees’ wages at a fair level”.
The result would mean the more a company pays its employees, the more money the CEO can receive.
If a company’s employees were receiving the average Australian wage – which according to the ABS comes in at roughly $66,000 – the CEO could earn up to about $1.9 million.
“We think the bill is not strong enough and we are looking at amendments to cap CEO’s salaries at 30 times above the average wage of a company’s employees,” Brown said. “It provides a good incentive to keep employee’s wages at a fair level.”
The move could mean the Government may be forced to side with the Coalition on this issue in the Senate if the Greens don’t back down, but this would mean it would have to accept an amendment that would lower the power of shareholders.
The Coalition introduced an amendment yesterday that would see executives put up for re-election only after 25% of total shareholders vote against a remuneration package, rather than just 25% of those shareholders who vote.
Secretary to the treasurer David Bradbury said in Parliament yesterday such an amendment would mean that if less than 50% of shareholders voted at an annual general meeting, then the current laws “can never work”.
But despite its protests, the Government may be forced to accept such a plan if the Greens stays on course with its calls for a salary cap amendment.
However, a Greens spokesperson said this morning the party supports more power for shareholders.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
