Speaking at a lunch in Sydney, Mr Byres noted that APRA’s proposals had caused “a fair amount of angst”.
“Many large investors and proxy advisers, in particular, have been uncomfortable with what we have proposed largely, I suspect, because they have been very influential in designing current practices to suit their particular interests,” Mr Byres said.
Mr Byres also took a swipe at groups threatening to obstruct compliance.
“At least some boards have apparently been told that if they change their arrangements to comply with APRA’s requirements, they will be met with protest votes at AGMs,” Mr Byres said.
“That is a strange and disappointing response to a board that would be seeking to comply with the law, but is illustrative of the passion that this topic has aroused.”
APRA’s proposed changes would see a cap of 50 per cent placed on the use of financial metrics in structuring remuneration in an effort to emphasise the management of non-financial risk.
However, Mr Byers noted the need to provide balance, saying that APRA was not “locked in” to the 50 per cent cap and that there were trade-offs involved.
“These could include, for example, a higher limit, a narrower definition of ‘financial metrics’, or an alternative way to use non-financial metrics,” Mr Byres said.
“Whatever we do, however, the challenge is to find an alternative that gives sufficient comfort that a ‘profit alone’ approach will not re-emerge in another guise.”
Mr Byers has not been shy about addressing complaints against APRA’s proposed overhauls in the past.
“Unsurprisingly, our proposals have not been warmly welcomed,” Mr Byres said in an address to the Australian Banking Association National Economic Series in October.
“Various stakeholders – managers, directors, investors, shareholders – have each found something to seriously dislike.
“My challenge to those engaging in the debate is to provide us with an alternative to our proposals that isn’t just the status quo, because outcomes from the status quo have been found unacceptable.”
