The AMWU is concerned that a new law aimed to curb excessive self-rewarding by corporate executives and directors does not go far enough.

At a time when corporations may still hide behind the corporate veil to avoid paying workers’ entitlements – such as superannuation and redundancy payments, leave and even wages owing – it is imperative that the inclination of corporations to disproportionately reward those with power is constrained.

The AMWU has detailed its concerns in a submission to the Senate Standing Committee on Economics inquiry into the Corporations Amendment (Improving Accountability on Termination Payments) Bill.

“The AMWU and its members have long rejected the lassiez-faire attitude to corporate regulation which has caused a disjunction between executive and non-executive remuneration to grow exponentially in recent years”, the submission states.

While the AMWU welcomes the Bill in general, the submission calls for further regulation to redress the culture of excessive executive pay, benefits and power within a corporation which comes at the expense of the welfare of its workers and the wider community in which it operates.

In particular, the submission calls for mechanisms for measuring executive pay, such as making executive pay restraint a condition of  receiving government subsidies or contracts; curbing excessive pay through tax; and capping executive pay at twenty-five times that of the company’s lowest-paid employee.

The Bill itself aims to address excessive self-reward by company directors and executives by limiting the practise of rewarding executives with a ‘golden parachute’ when their employment expires. However, this is only one manifestation of a wider culture of disproportionate corporate payouts. Other problems inherent within this culture that are not addressed by the Bill are:

-    Pay or rewards other than termination payments, which may include non-monetary rewards;
-    Wider social concerns around the imbalance between executive and non-executive rewards, whether in regard to termination pay or remuneration in general;
-    The impact that unchecked corporate rewards have on global economic events, which we have recently seen to devastating effect.

The submission argues that if the Government truly values social equity and greater parity of remuneration and rewards for workers at all levels, it must further regulate the ability of company directors and executives to unduly influence their own remuneration and rewards.

As part of an overall push for greater social and financial equity in Australia, the AMWU is currently campaigning for changes to corporate law and federal protection schemes so that workers’ entitlements are guaranteed to be 100% secure. By curbing the ability of company directors and executives to determine their own remuneration and termination payouts, the Government will also be acting to protect workers’ entitlements from corporate mismanagement and self-interest.

A PDF version of this submission may be downloaded here