Senator MURRAY (5:30 PM) —I move Democrat amendment (3) on sheet 4214 revised:

(a) an absolute majority of shareholders of the company may vote that approval of the remuneration of executive directors is not necessary; and

(b) where a vote of the kind mentioned in paragraph (a) is taken, a board remuneration policy must be approved by the AGM.

This amendment requires me to re-express the view I just put, which is that I rather like binding votes. This amendment specifically requires the remuneration of directors to be determined by a binding vote. We heard throughout the committee's hearings—and Senator Conroy was present at some of those—this constant obfuscation, this constant mixing of the mud. The myth is put out that directors are responsible to shareholders and it is quite right that shareholders should determine directors' remuneration, but when you talk about the management they say, `No, that is for the board to determine.' Then you say, `But most of the people who create immense angst amongst shareholders are actually both management and directors.'

The fact is that you have to decide. Either directors are going to have their remuneration determined by shareholders or they are not. I think the principle is exactly right: the shareholders determine the board, and determine everything to do with that board, and the board run the company and determine everything else. If that principle is right—and I have spelt it out in much more detail in my minority report—then whether you are an executive director or a non-executive director the vote should be binding. That is the end of it as far as I am concerned. If an executive director does not want to be in that situation then let them get off the board and be an executive, and when the board needs to talk to them they can come along and front up to the board. We should remember that one in five directors is an executive and that most other directors are former executives themselves. I do not know the numbers, but I suspect that the vast majority of so-called non-executive directors used to be executives, so they have that culture and mentality.

This is a very simple proposition: it says that if there is a shareholder vote it binds the directors of the company. I have given an out. I continually argue on company law that it is the shareholders who make the decisions about these things. If an absolute majority of the shareholders of the company—not just those who are in the pocket of the chair so that he can fiddle the proxies as he sees fit, as under the present system—vote that approval of the remuneration of executive directors by those shareholders is not necessary, that is fine by me. They are entitled to do that. Where a vote of the kind mentioned in paragraph (a) is taken, a board remuneration policy must be approved by the AGM with respect to those executive directors. That is a very reasonable proposition. The binding vote continues a well-understood and widely accepted view that the shareholders are entitled to bind the directors of a company with respect to these matters.