‘Fat cats’ in Peters’ sightsFran O'Sullivan | New Zealand Herald
Winston Peters’ swingeing attack on Fonterra boss Theo Spierings’ $8.3 million pay packet could be the first real salvo in his self-advertised campaign to ‘clean up corporate New Zealand’.
There was little attention given to Peters’ campaign against alleged business “fat cats” while he was slugging it out on the election trail. But given the Spierings’ attack, it would be foolish to assume that the issue will disappear from his agenda once the next Government has been formed.
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What Peters is promoting is “say on pay” policies which would enable shareholders (including the cooperative members of Fonterra and other agri-coops) to veto pay increases for chief executives as well as directors. He has proposed an amendment to the Companies Act to give effect to this policy.
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In a December 2016 paper on the Columbia Law School Blue Sky Blog, Yvan Allaire (executive chair of the Institute for Governance of Private and Public Organisations), and Francois Dauphin, (IGOPP’s director of research) examined whether other countries should follow the UK.
They pointed out that a binding vote on executive compensation raised many technical issues: “Given the complexity of current compensation programs, what are shareholders voting on, and what does a negative vote really mean? In case of a negative vote, will the company carry on with its current policies, which may be worse than the proposed and rejected policies?”
Their view is that pay policies should be the preserve of the board.
“When egregious pay packages are given to executives, a say-on-pay vote, compulsory or not, binding or not, will always be much less effective than a majority of votes against the election of members of the compensation committee. But that calls upon large investment funds to show fortitude and cohesiveness in the few instances of unwarranted compensation which occur every year.”