Steve Fielding (Victoria, Family First Party) Share this | Hansard source

Family First supports the Financial System Legislation Amendment (Financial Claims Scheme and Other Measures) Bill 2008, the Financial Claims Scheme (ADIs) Levy Bill 2008 and the Financial Claims Scheme (General Insurers) Levy Bill 2008 that guarantee bank deposits and insurance coverage for ordinary Australians. These are important measures to give the Australian public confidence in the banking and insurance industries in these difficult financial times. Family First is concerned that there is no time to properly scrutinise these bills but, given the urgency of the issue, Family First is to make a special exception to the expectation that such important bills should go to a Senate committee before being considered.

Family First is disappointed that these bills do not address the important issue of executive salaries. In the United States, for example, the rescue package passed by the congress included restrictions on executive salaries. I understand there is some difference between this package and the US but it is important that we should also be including restrictions on executive salaries. Executive salaries need to be competitive but they also need to be reasonable. This is an opportunity for the government to tell fat cat executives with outrageous salary packages that it is time to get off the gravy train, that the train will terminate here and to mind the gap.

At a bare minimum, we should be looking at the salaries of chief executives and considering things like ensuring bonus payments cannot exceed the company profit result for the year. If profits are up by one per cent bonus payments should not exceed that one per cent. Also salary packages should not exceed the company’s capital increase for the year. So, if the capital increase was one per cent for the year, bonus payments should not be above that one per cent. In addition, early termination payments must not exceed company profit results for the year or should not exceed the capital increase for the year. These are termination payments when a company has failed and when it is quite clearly trying to get rid of an executive. Another measure when corporations fail is that maybe we should be thinking about whether bonus payments in excess of, say, five per cent of the base salary for the preceding two years are repaid. A lot of times, when a company fails, it knows two years beforehand.

Executive salary packages for CEOs should be transparent and be reported in a standard way on company websites with changes updated within seven days. They should not just be reported at the end of the year and buried in some sort of report but be reported within seven days of the change. Also, looking at CEOs, they should not have stock option plans unless the employees receive a share of the firm’s profit as well. Family First will be pursuing and pressuring the government to stop extravagant executive salaries. Fat cats, you are on notice—the gravy train has stopped.