Melbourne Law School - Theses
Permanent URI for this collection
Search Results
1 - 2 of 2
-
ItemRegulation of executive remuneration: an empirical study of the first three years of a 'disclosure and voting' regime in Australia and the UK( 2010)Legislation by the UK government in 2002 and the Australian government in 2004 sought to improve board accountability for executive remuneration practices in listed companies. The thesis examines whether the remuneration report plus an advisory vote were effective in achieving this and other government policy aims (such as reducing excessive remuneration and aligning pay with performance). The thesis focuses upon the initial three years of this regime in the UK (2003-2005) and Australia (2005/06-2007/08). Part I of the thesis reviews three theories of motivation from the human resource management literature, together with two derivatives of agency theory (optimal contract and the managerial power thesis) to justify executive remuneration practices and the need for it to be regulated. Drawing upon the concept of ‘regulatory space’ and Julia Black's writings on rule dimension and regulatory conversation, the thesis presents a conceptual model of the regulatory framework for executive remuneration: the regulated remuneration cycle consisting of four activities (remuneration practice, disclosure, engagement and voting). Close analysis of the rule types, regulators and regulatees within this regulated remuneration cycle demonstrates that most of the rules found in the cycle take the form of statements of best practice, or other kinds of ‘soft law’, rather than legislation. Thus enforcement of good remuneration practices does not rely upon legal sanctions. The enforcement pyramid for remuneration practice confirms that most of the enforcement strategies for remuneration practice belong to shareholders. However, the regulated remuneration cycle exposes the three roles that shareholders play within this regulatory space: a rule-maker for executive remuneration practice, an active engager of remuneration committees and a routine voter on remuneration-related resolutions. Part II presents qualitative and quantitative empirical evidence of the operation of the remuneration report and advisory vote in both jurisdictions. It analyses remuneration reports and voting results for a sample of companies from the FTSE 100 and the S&P/ASX 200 for the first three years. It supplements this publicly available information with interview evidence from remuneration committees and their consultants, institutional investors and institutional representative organisations. By analysing the rules for each of the four activities in light of the evidence of how they work in practice, it demonstrates the challenges facing remuneration committees and institutional investors in working within the regulated remuneration cycle. Using the advisory vote as a proxy for shareholder outrage, it demonstrates the effect that the vote had on remuneration practice over the first three years of its operation was not identical in the UK and Australia. Part III concludes the thesis by presenting six findings on the operation of the regulatory initiatives of the remuneration report and advisory vote. These reforms were only partially successful in improving board accountability and unsuccessful in reducing excessive remuneration over the first three years of its operation. The implications of these findings for the regulatory reforms enacted in response to the global financial crisis are noted.
-
ItemReform to the law of corporate groups to protect employees( 2002)The rise of asset-stripping behaviour and other forms of corporate opportunism have presented a challenge to regulators around the world, and the response has been varied and creative. A recent phenomenon in Australia has been the manipulation by employers of corporate law structures to avoid obligations to employees on insolvency of the employer. The regulation of corporate groups was examined in the light of the industrial dispute and ensuing litigation that surrounded the waterfront dispute of 1998 between Patrick Stevedores and the Maritime Union of Australia and which ended in the redundancy of more than half of the company's 1,427 employees. The Patrick Stevedores group of companies undertook a corporate restructure towards the end of 1997. This resulted in different companies within the corporate group conducting the stevedoring business, holding assets and employing and supplying labour. The dismissal of the entire workforce occurred when the employer companies entered voluntary administration and led to Australian courts examining for the first time an organisational restructure that allegedly was designed to avoid fulfilling obligations to employees when one or more companies within a group of companies became insolvent. The complex strategy involved in the restructuring of the Patrick Stevedores group of companies revealed fundamental problems in the law of corporate groups. The present work critically discussed legal controls on directors and corporations and the capacity under the Corporations Act 2001 (Cth) for a company to structure or restructure its operations so as to avoid meeting obligations to employees on insolvency. In particular, the discussion involved a review of the obligations of directors and corporations, including related companies, under these circumstances. To this end, the application of the separate entity principle in the Salomon v Salomon case to corporate groups was reviewed. An in-depth analysis was then undertaken of the litigation surrounding the waterfront dispute, and other Australian cases that have involved the attempted use of the separate entity principle as a device to allow a company to avoid obligations that would otherwise be legally binding. The conclusions drawn from analyses of the various examinations of cases and of the consequential legislative reforms enacted and proposed and the results of survey questionnaire information provided by members of the Insolvency Practitioners Association of Australia lead to suggestions for reform to the law of corporate groups to protect employees. It is suggested that modifications to the law as it applies to directors, liquidators, administrators, creditors, shareholders and employees are required to prevent similar corporate conduct to that undertaken by the Patrick Stevedores group of companies. An amendment to the Corporations Act 2001 (Cth) to allow employees to seek contribution orders against a related company in respect of entitlements owed by an insolvent company is proposed. The discussion contained herein is based on the law as at 9 November 2002.