Governance news bites
A collection of governance-related news snapshots you might have missed in the past two weeks.
Governance is often in the headlines, and the last few weeks have been no exception. Recent news related to governance includes:
Turning down a Crown company director fee increase?
TVNZ’s board has temporarily turned down a 41% fee increase proposed by the Government, considering it inappropriate during a period of strategic changes that include significant job cuts. Chair Alastair Carruthers explained that retaining the current fee structure aligns with the broadcaster’s ongoing organisational adjustments. Minister for State-Owned Enterprises Paul Goldsmith acknowledged the timing challenge, as the increase is set to take effect from January 2025, but noted that competitive remuneration is crucial for Crown boards to attract high-calibre talent. Kirsten Patterson, chief executive of the Institute of Directors, supported the need for fair director fees, highlighting the unique responsibilities and risks of board roles, while also understanding the TVNZ board’s decision, which reflects sensitivity to current financial pressures within the broadcaster.
Profits over ethics in the land of Oz
A recent Financial Times article highlighted continuing corporate scandals in Australia. Distrust in corporate Australia is escalating, with 66% of Australians expressing doubt about companies’ motives, according to a Roy Morgan survey. Major scandals, such as data breaches and questionable practices at companies such as Qantas, Optus and Rio Tinto, have led Australians to see CEOs and directors as increasingly focused on profits over ethics. A special webinar with Roy Morgan CEO Michele Levine highlighted that Australians now primarily blame top executives for these issues, with 79% pointing to CEOs and managing directors and 65% to company directors as responsible for corporate scandals. This rising distrust reflects the impact of perceived greed and insensitivity to societal values, raising a critical need for governance improvements across corporate boards.
New insights for boards setting executive remuneration
A recent study by researchers at the University of Hong Kong suggests that executive compensation tied to environmental and social (ES) targets can effectively drive improvements if structured carefully. The study found that when specific, measurable targets, such as emissions reductions, are explicitly linked to executive pay, companies report stronger environmental performance. However, for less easily quantifiable goals such as community engagement, implicit, more flexible compensation structures prove to be more effective. This research highlights the importance of tailoring ES pay schemes to match the precision of the target, as misaligned incentives may undermine intended improvements in corporate sustainability.