The NSW Labor Council today released ground-breaking research that shatters the link between high executive pay and return to shareholders.
The research, carried out by a team of academics headed by Dr John Shields from the University of Sydney’s School of Business, gauges the performance of Australia’s Top 100 companies in light of CEO remuneration.
The research finds the often-stated link between high executive pay and company performance does not exist. Against three criteria: return on equity, share price change and change in earnings per share, statistical analysis shows that high executive pay levels actually coincide with a lower bottom line.
The authors find that once executive remuneration exceeds 24 times the average wage, the performance of a company begins to deteriorate.
NSW Labor Council secretary John Robertson said the research takes the debate about executive remuneration to a new level.
“This research shows that executive pay is not just a moral issue; it is a shareholder issue and it is a job-security issue.
“For workers, it shows that an excessively paid CEO is likely to preside over a weaker company, meaning their jobs are less secure.
“It also raises significant questions about whether superannuation funds should be investing in companies who pay their CEOs outside the 1:24 matrix.”
The Labor Council will be holding a forum to discuss the report today from 9.00-12.30 pm at the Carlton Crest Hotel, 169 Thomas Street, Sydney
Speakers include Dr John Shields; federal opposition treasury spokesman Bob McMullan; shareholder activist Stephen Mayne and Australian Consumers Association’s Senior Financial Policy Officer Catherine Wolthuizen
For more details call John Robertson on 9286 1623 or 0407 457838 or Peter Lewis on 0413 873285