Table Of Articles
|Executive Pay Cuts |
|Newspaper |Date |Article Number |
|The Age |23 July 2009 |A1 |
|The Age |10 August 2009 |A2 |
|The Australian Financial Review |26 August 2009 |A3 |
|The Age |26 August 2009 ...view middle of the document...
Employee Relations (ER) concerns the direct relationship between the employer and the employees whereas Industrial Relations (IR) ‘consist of the whole gamut of relationships between employees and employers which are managed by the means of conflict and cooperation.’ (www.industrialrelations.naukrihub.com 2007, para 1)
There are three main actors in the IR system: Employee, Employer and the Government. In the tug-of-war between employers and employees the government plays the all important role of influencing and regulating industrial relations through laws, rules, agreements etc. (www.industrialrelations.naukrihub.com 2007)
‘A sound industrial relations system is one in which relationships between management and employees (and their representatives) on the one hand, and between them and the State on the other, are more harmonious and cooperative than conflictual and creates an environment conducive to economic efficiency and the motivation, productivity and development of the employee and generates employee loyalty and mutual trust’ (www.industrialrelations.naukrihub.com 2007, para 2).
This portfolio would be discussing the interrelation between ER and IR and role of Government. Issue No. 1 is the new regulations on the Executive Pay Cuts imposed by the government currently awaiting the reviews of Productivity Commission which was the forefront of media focus recently.
The new legislation proposes to subject the Company CEOs termination packages to be limited to one year' base pay and be subject to the vote of the shareholders if the amount is any higher. (A12, A13, A7) The bill was introduced in June to amend the Corporations Act (A14) accommodating the above. This move has raised much debate among the businesses, economists, public, Directors and CEOs, average employees, investor community and specific Government Regulatory Bodies bringing about opposing viewpoints and varied perspectives.
The overall objectives of the legislation are to hold the companies accountable to the shareholders, make directors accountable for the decisions made plus block huge remuneration packages being handed to undeserving CEOs. It would help prevent the companies suffer losses and even the threat of bankruptcy (A1) i.e. Verticon Group paying its CEO a cash bonus which approximates to half the value of the company’s share market value while the company $17.5 million loss for the year This regulation intervenes the companies’ employee relations and HRM policies in order to stop adverse effects that may arise for the greater good of the companies’ as well as the employees.
Merhebi et al (2006, p. 481) ‘document CEO pay–performance association as positive and statistically significant’. However Merhebi et al further state that Australian observations differ the world trends except the study of Matolcsy. ‘Studies examining the CEO pay–performance relationship for Australian firms report findings...