Today we publish our response to the government’s Green Paper on Corporate Governance.
“The government’s green paper on corporate governance lacks ambition,”
according to Joe Zammit-Lucia, author of the Radix response.
“Corporate governance is not simply a matter of equity, it is about the structure and function of our whole economy. The government’s review is an opportunity to live up to the Prime Minister’s promise to create an economy that works for everyone, not just the privileged few. Unfortunately, the green paper does not live up to that ambition.”
The Radix paper provides a comprehensive set of suggestions as to how corporate governance can be improved. They include, among others:
- revising company law to give more weight to stakeholders other than investors
- creating a professional standards body to oversee governance
- discouraging performance-related pay based on stock price performance
- banning or limiting large scale stock repurchase programs
- requiring annual Integrated Reporting for companies that employ more than 500 people
- including governance standards as a component of any eventual public interest test for foreign takeovers
The paper also warns against actions that are no more than tokenism and that will have unintended consequences – such as the publication of pay ratios and the placing of worker representatives on company boards.