Malcolm Turnbull has a unique take on populism, he eschews talk of petrol prices and the cost of groceries and instead turns his attention to the cash management trusts and meddling with shareholders’ rights. His latest gambit is nothing more than smoke and mirrors, repackaging stuff that already exists, and ignoring the reason that it’ll never work.
Malcolm’s latest idea to ingratiate himself with ‘Mum and Dad investors’ (what a condescending stupid term that is) is a proposal that shareholders be allowed to determine executive pay as a way to curb excessive salary packages. On the surface this seems like a good plan, and you’d ask why no-one’s thought of it before, but the reality is this is nothing more than spin.
Firstly, most companies already require shareholders to approve executive and board payments. These are generally determined by a remuneration committee which is charged with ensuring the conditions are appropriate, based on the company’s size, performance and what the conditions are like at their competitors. So the reality is that for the most part, Turnbull’s plan wouldn’t actually give shareholders any more rights than they have now. The only place that this would make a difference is in smaller listed companies, where outrageous compensation for execs is less of a problem anyway.
Secondly, by framing his plan the way he has Malcolm Turnbull is hoping to play off the ignorance of the average shareholder about where they fit in the shareholder registry. Small shareholders make up a tiny part of a large companies share registry, the bulk of the shares in Australia are held by financial institutions like super funds or investment houses. Traditionally, institutional investors always vote with the board. When the motions regarding executive pay come up at corporate AGMs there is usually a flurry of activity on the floor as people rush to decry the latest increase in the CEO’s pay, but when the vote comes the measure is passed with over 90% of the votes in favour. This wouldn’t change one bit under the Turnbull plan.
This latest plan is nothing more than grandstanding, Turnbull knows it, he just hopes that you and I won’t.