Executive pay still a sore point
(28 March 2019 – Australia) The Australia Prudential Regulation Authority this week signalled it could force boards to place less emphasis on shareholder return when setting bank executive pay packets, with more weight to be put on non-financial targets.
The disagreement between investors over how best to structure executive pay has resulted in company directors calling for the regulator to step in and help boards withstand short-term pressure from investors by encouraging a more “holistic” view of pay and performance.
However industry players have made it clear that there is no single formula for getting banker pay right.
While the inclusion of non-financial metrics has mostly been welcomed the need for them to be transparent and measurable is critical.
Board ability to withhold bonuses and claw back pay in instances of poor conduct was cited by many in the industry as key to avoiding protest votes from shareholders over executive pay.