Australia: Productivity Commission provides 400 page report on Executive Compensatopm

Link to Productivity Commission website - www.pc.gov.au

Investors differ on disclosure

A PLAN to push
institutional investors to disclose their voting records on executive
pay has met with a mixed response from super industry groups, with some
questioning the need for such a move and warning it could boost
compliance costs.

As part of its 400-page report
examining executive remuneration, the Productivity Commission last week
proposed that institutional investors - including superannuation funds
- disclose how they voted on remuneration issues put to shareholders at
company annual meetings, suggesting the information be provided at
least once a year in the format of the institution's choice.

It
said such a move could encourage more institutions to vote, potentially
boosting board accountability and ''engagement'' between boards and
shareholders on remuneration matters.

''The likely
consequential increase in voting would be consistent with the fiduciary
duty of institutional investors to their members,'' the commission
noted. ''Voting disclosure might also lead to more informed [potential]
investors. This could influence their decisions about which fund they
wished to invest in.''

But Association of Super
Funds of Australia (ASFA) chief executive Pauline Vamos said such a
move could increase costs as funds were under pressure to reduce fees.
She said AFSA members already disclosed their voting policies.

''The
cost burden eventually has to be paid for by members,'' she said.
''Whether to disclose how you voted, and the policy around that and the
reasons for that must be a matter for the trustee - we have got to be
careful not to have a one-size-fits-all approach.''

Members
of the Investment and Financial Services Association (IFSA) - which
mainly represents retail super fund managers - are required under its
charter to vote on all resolutions, and a spokesman said further
regulation was not needed.

But David Whiteley,
executive manager of industry super funds group Industry Super Network,
said disclosure of votes was probably inevitable in the long term. ''I
think it's inevitable that major institutional shareholders will be
required to vote and once that requirement comes in, they will
therefore be required to disclose how they

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