The Federal Government’s Bank Executive Accountability Regime (BEAR) legislation risks undermining the authority of the boards of the major banks, according to the Australian Shareholders Association (ASA).
The ASA has used a submission to the Senate Economics Legislation Committee inquiry into the BEAR legislation to argue that while it supports tighter monitoring of the major banks, it is opposed to the undermining of the role of duly elected company boards.
“We strongly oppose the Government or governance agencies prescribing, in detail, remuneration structures for the private sector,” the ASA submission said.
“The ASA is of the view that increased accountability by ADIs and the framework for that accountability should not come at cost to the current corporate law framework whereby shareholders delegate the management of companies to boards, including the framework for remuneration of executive management,” it said.
It said that, in turn, boards were held accountable to shareholders for the remuneration framework and other aspects of company management.
“We oppose, therefore, the central premise of the bill which legislates the determination of aspects of remuneration,” the ASA said.
It said it did not see determination of executive remuneration as the role of government or the Australian Prudential Regulation Authority (APRA).
It said it had expressed previously and continued to express its concern that the legislation would distort remuneration structures in the entire financial services sector and would have unforeseen consequences in overlapping sectors.
