Australia to outlaw excessive 'golden handshakes' (2 Viewers)

[Nebuchanezzar]

graney, please provide enough examples for me to take your assertion seriously

 

[Luke!]

And alas, we see more government interference in markets. This is ridiculous.

Government interference;— the very thing that caused this economic recession!

 

[SnowFox]

And alas, we see more government interference in markets. This is ridiculous.

Government interference;— the very thing that caused this economic recession!

I thought it was banks being greedy.

 

[Graney]

I still can't get past the glaring question of why, executives that are confident in their abilities, would seek to place more importance on how heavy their parachute is if/when they jump from the building, rather than how much they are able to rake in through their term of contract.

When evaluating job opportunities, why wouldn't they weigh the expected termination package into their long-term investment? I see no reason it wouldn't be an expected major factor for influencing modern executives.

If you can work in a foreign nation and get a substantial renumeration package, but it's likely you won't get such a package working in Australia, the choice seems simple. Why work in Australia?

If their longterm package is equal however, if working in Australia could be made equally or more attractive in other ways, then there would be no problem.

 

[Graney]

Companies won't fail because the "leftover" executives won't be talented enough to work for "reasonable" amounts of money. Your opposition is based soley on an utterly absurd assumption.

The "leftover" executives will be less well educated and less experienced.

After serving a term in Australia and gaining the experience necessary to compete on a world stage, they will transfer to foreign nations where they can expect a better package.

 

[blue_chameleon]

And alas, we see more government interference in markets. This is ridiculous.

Government interference;— the very thing that caused this economic recession!

Here champ, have a lollypop!

I appreciate the article you posted in the other thread regarding government interference, but I fail to see the relevance of that article in regards to the issue discussed in this thread. Re-read the discussion rather than simply the thread title.

Further, I fail to see why this legislation would provide a fundamental disincentive to retain or recruit executives with high competencies and stable ethical standings, the precise qualities that we need in executive positions responsible for the strategic direction of a company, to make decisions that will assist in pulling us out of "this economic recession."

 

[blue_chameleon]

When evaluating job opportunities, why wouldn't they weigh the expected termination package into their long-term investment? I see no reason it wouldn't be an expected major factor for influencing modern executives.

That's all well and good that they evaluate the potential termination package, but i'd certainly be worried if it was more influential than the salary package for services performed under contract. Also, can you confirm that negotiations regarding termination packages are discussed at the same time as the actual contracted salary package negotiations? If they aren't revealed at the same time as the salary package, i'm not sure how executives would be able to properly evaluate their offer.

If you can work in a foreign nation and get a substantial renumeration package, but it's likely you won't get such a package working in Australia, the choice seems simple. Why work in Australia?

If their longterm package is equal however, if working in Australia could be made equally or more attractive in other ways, then there would be no problem.

Firstly, until there is adequate evidence to suggest otherwise, you're comments regarding the importance that executives place on termination packages are opinion not fact.

Secondly, I think you're take on this issue is far too simplistic in terms of what executives consider when they evaluate their options.

Perhaps more obvious though is that whilst the US, UK, Europe (to the best of my knowledge) have yet to put in place this type of legislation surrounding these massive 'golden handshakes', it doesn't mean they wont. We still have a fair way to go with regards to expecting poor results from companies and dare I say, I think having moved on this issue, other countries may soon follow.

 

[Luke!]

I actually did read the discussion. Graney already summarised it well enough;— a "ridiculous populist move".

 

[Graney]

It seems a truism to me that, if all other conditions of employment are to be roughly equal, but one country will pay substantial termination packages, and the other won't, the country paying more upon termination will attract more and better talent.

 

[blue_chameleon]

I actually did read the discussion. Graney already summarised it well enough;— a "ridiculous populist move".

Why not further explain the rationale for taking your position, like Graney?

That way we can get an insight into why.

 

[S.H.O.D.A.N.]

Ridiculous populist move. The only effect this will have is to continue to drive talented executives overseas.

You really have little justification for such a claim. This has absolutely nothing to do with their annual income.

 

[Graney]

You really have little justification for such a claim. This has absolutely nothing to do with their annual income.

Did you read the rest of the thread?

It seems a truism to me that, if all other conditions of employment are to be roughly equal, but one country will pay substantial termination packages, and the other won't, the country paying more upon termination will attract more and better talent.

What is wrong with this statement?

 

[blue_chameleon]

It seems a truism to me that, if all other conditions of employment are to be roughly equal, but one country will pay substantial termination packages, and the other won't, the country paying more upon termination will attract more and better talent.

Why though?

It doesn't seem that obvious to me.

In reality, all other conditions of employment are rarely, if ever, equal.

 

[Graney]

In reality, all other conditions of employment are rarely, if ever, equal.

Definetly, but with these legislative changes, Australian employers will have to offer other incentives to ensure they are still able to attract the same talent.

You will in all likelihood be getting a smaller payout on termination of employment if you choose to work in Australia, so the benefits paid during your term of employment here had better be more attractive.

I think it could possibly impact in a small way on Australia's reputation in the business community.

 

[Luke!]

Why not further explain the rationale for taking your position, like Graney?

That way we can get an insight into why.

Let's take Pacific Brands as an example. There is public outrage over it's former CEO receiving a multi-million dollar payout while many thousands of workers have simultaneously been laid-off. Likewise, its current CEO has also come under attack for her salary arrangements.

Their role as CEO of the company is not to protect employees' jobs, they are agents of the company's shareholders and their prime function should be to increase shareholder wealth.

If this means slashing jobs here and sending them overseas, so be it. And if that results in increased shareholder wealth, then that decision should be duly rewarded.

I support increased shareholder involvement with regards to executive salaries/payouts, but in keeping with my belief of minimalist government, I do not support any legislation specifically restricting executive payouts. I don't think it is the government's place to do that, such decisions should be left to the shareholders. It'll be interesting to see the fineprint of this legislation and exactly how restrictive it is.

Anyway, as Graney said, it's just a populist move.

 

[blue_chameleon]

Definetly, but with these legislative changes, Australian employers will have to offer other incentives to ensure they are still able to attract the same talent.

You will in all likelihood be getting a smaller payout on termination of employment if you choose to work in Australia, so the benefits paid during your term of employment here had better be more attractive.

I think it could possibly impact in a small way on Australia's reputation in the business community.

All of this is a dead argument though, executives can't confirm for themselves that there will be 'more attractive' opportunities abroad, directly related to size of termination packages, because they don't know if other countries will follow. Even if this issue was a major consideration for executives, we are far from being able to measure this.

As I said, I don't think you can really present this as a valid argument that this legislation will force executives to other countries, until we know the stance of the UK, US, Europe etc.

 

[Luke!]

All of this is a dead argument though, executives can't confirm for themselves that there will be 'more attractive' opportunities abroad, directly related to size of termination packages, because they don't know if other countries will follow. Even if this issue was a major consideration for executives, we are far from being able to measure this.

As I said, I don't think you can really present this as a valid argument that this legislation will force executives to other countries, until we know the stance of the UK, US, Europe etc.

Moreover, loopholes in the legislation will be found. As someone once said, where there is a will, there is a way.

 

[Graney]

All of this is a dead argument though, executives can't confirm for themselves that there will be 'more attractive' opportunities abroad, directly related to size of termination packages, because they don't know if other countries will follow.

I'm running on the assumption other Western nations won't follow. If there is global cooperation on this, there would be no problem. But I doubt it will happen universally, and there'll be a pressure on other nations not to regulate potential executive rewards, in order to keep staff.

Even if this issue was a major consideration for executives, we are far from being able to measure this.

It may not be a major consideration, but it could be enough to be a tipping point, the deciding factor.

As I said, I don't think you can really present this as a valid argument that this legislation will force executives to other countries, until we know the stance of the UK, US, Europe etc.

We shall see. I would be amazed if it was universally adopted.

 

[Graney]

Aside from moral outrage, what is the actual problem with paying executives large termination bonuses?

If it had a significant negative effect upon corporations, surely they just wouldn't do it?

 

[Luke!]

Graney, that is my train of thought exactly.

What is wrong with it?
Where is the justification in restricting it?