AMP Capital’s annual Corporate Governance Report found investors attach importance to environmental, social and governance (ESG) performance – with issues including remuneration and diversity topping their list.
The report found that chief executives of S&P/ASX200 companies were paid an average of $3.8 million in 2014. The second highest paid executive received an average of $1.6 million, with other key executives receiving $1.4 million.
AMP Capital corporate governance manager Karin Halliday said: “CEOs deserve to be paid a premium for running a listed company in Australia as every facet of their role is crucial to investors.”
However, Ms Halliday said executive pay must remain “reasonable and aligned with shareholder interests”.
“We… encourage boards to be transparent about the factors they consider when setting pay so shareholders can assess it appropriately,” Ms Halliday said.
The report noted that gender diversity on ASX-listed company boards has improved, “although more needs to be done”.
In 2010, 60 per cent of companies AMP Capital held had no female directors; by 2015, this number had fallen to 21 per cent.
“In addition to demonstrated links between performance and the number of women on a board, we have found that when companies have more women directors, they present fewer characteristics of poor governance,” said Ms Halliday.
The report urged companies to address their unconscious bias by “casting the net more widely” when making appointments.
AMP Capital also called for further focus to be placed on pay parity and the opportunities available for women to gain executive experience.
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