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(February-2004) ACSI angered by NAB mess
The Australian Council of Super Investors has hit out at the National Australia Bank in calling for listed companies to ensure that their disclosure in annual reports promoting effective corporate governance is matched by their policies and practice.
ACSI executive officer, Phillip Spathis says that while large pay-outs made by companies to senior executives continue to be a significant problem, this should not deflect attention from other issues relating to failings of governance and management of risk.
“What recent events at the National appear to show is that key risk management oversight functions, a cornerstone of effective governance, were not properly effected in the organisation,” he says.
Spathis says that investors are entitled to understand why the board and respective board committees of the National Australia Bank were not effectively involved in the oversight of the bank’s risk control process.
“Over the last six months, a number of senior corporate sector leaders have criticised what they call a ‘tick a box’ response to promoting better corporate governance practice. For example, a number of companies have previously been critical and dismissed investor concerns regarding directors holding a significant number of directorships in ASX-listed corporations,” he says.
Spathis says that investors are constantly being reminded that CEOs are paid high salaries to reflect their high levels of responsibility.
“These CEOs earn in a week what the average worker makes in a year, but as evidenced with the National Australia Bank pay-out to Frank Cicutto, their termination pay-outs are clearly out of step with reasonable community expectations,” he says.
Spathis says ACSI’s concerns have been compounded by the reality that the average tenure of CEOs in Australian listed companies is four years and that over the past two year, 25 per cent of the top 100 companies’ CEOs have left the organisations.
AUTHOR
Mike Taylor
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