POWERED BY MOMENTUM MEDIA
(July-2002) Corporate governance still lags
While Australia has adopted far superior corporate governance policies to Russia and most of Asia and Europe, it still lags behind America and Britain.
This was the view of Geof Stapledon, a director of Institutional Analysis, when he addressed the inaugural Australian Council of Super Investors (ACSI) conference in Melbourne recently.
Stapledon, who unveiled research on corporate governance commissioned by ACSI at the conference, noted that of the five most recent corporate failures in Australia, four out of five collapsed due, in part, to bad corporate governance practices.
He said several Australian companies were practising poor corporate governance by not reflecting a link between the CEO’s pay and the company’s performance or by having insufficient numbers of independent non-executive directors on their boards or by spending far more on non-audit fees than audit fees.
Stapledon’s research showed that the top auditing firms earned significantly more from non-audit ($250,234,760) than audit ($115,726,931) fees.
He added that a small but disconcerting number of Australian companies (nine to 10 per cent of the top 80 examined) don’t disclose the share option packages of their directors or the shares exercised.
When looking at CEO pay for performance (against market capitalisation), he said the trend seemed to be that the larger the company, the bigger the pay packet. This meant the CEO is incentivised to grow the company through mergers and acquisitions, rather than company performance.
“Although corporate governance may not be the sole cause of a company’s collapse, if good corporate governance policies and practices are in place, it may prevent a collapse,” he concluded.
Recommended for you
The latest superannuation performance test results have shown improvements, but four in 10 trustee-directed products continue to exhibit “significant investment underperformance”, warns APRA.
The corporate regulator has launched civil proceedings against Equity Trustees over its inclusion of the Shield Master Fund on super platforms it hosted, but other trustees could also be in the firing line.
The shadow minister for financial services says reworking the superannuation performance test to allow investment in house and clean energy risks turning super into a ‘slush fund’ for government.
Australia’s superannuation sector has expanded strongly over the June quarter, with assets, contributions, and benefit payments all recording notable increases.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
74.26 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
72.60 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
44.46 3 y p.a(%)
4
Pengana High Conviction Equities B
39.12 3 y p.a(%)
5
Pengana High Conviction Equities A
39.05 3 y p.a(%)
