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Some not-so-super reform suggestions

Corporate and M&A
Jonathan Wenig action
In an opinion article published in the business pages of today’s Australian newspaper, partner Jonathan Wenig explains why changes to corporate law suggested by the Australian Council of Superannuation Investors could do more harm than good.

In its recent Towards Better Corporate Accountability report, ACSI called for the annual election of directors of listed companies and a binding vote on remuneration.

But while Jonathan agrees that the report’s “diagnosis of a serious trust deficit in corporate Australia is undeniable”, he argues that “the treatment plan would achieve precisely the opposite outcome by incentivising directors to pursue short-term interests at the expense of long-term sustainable shareholder value.”

Where Australian corporate law is currently structured around a system of director-centric governance, Jonathan writes that ACSI’s view that the system would be improved if it were more shareholder-centric “fails to reckon with the importance of alignment”.

“ACSI’s report is part of a debate we need to have about addressing Australia’s corporate governance concerns.

“But we have to be careful to assess each well-meant proposition in the context of Australia’s relatively robust corporate governance system, and not rush to make changes that could undermine it.”

To read Jonathan’s full article, which was prepared with assistance from lawyer Anna Sandiford, click here.

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