Govt ready to claw back exec bonuses

The Federal Government has signalled it is prepared to move further than the Productivity Commission’s (PC) report on executive remuneration by actually clawing back bonuses if there is proof of a material misstatement in a company’s financial statements.

The Government’s willingness to move further than the PC report was made clear by the Minister for Financial Services, Chris Bowen, who said the Government supported nearly all of the PC’s recommendations including the ‘two strikes’ proposal.

However, he said the Government had decided to move further by moving to claw back bonuses.

Bowen said the Government understood why there was anger and concern in the community about the most excessive instances of executive pay. He added that the Government recognised the importance of putting in place policies that promoted transparent, accountable and responsible remuneration practices.

He said the Government would introduce legislation to implement the PC’s recommendations this year following receipt of public comment on an exposure draft.

The minister said the Government would also undertake consultation on the proposal to claw back bonuses paid to directors and executives in the event of a material misstatement of a company’s financial statement on the basis that, to the extent that pay packets are inflated by incorrect information, the money is returned to shareholders.