Hamish Fletcher: CEO pay rules don't go far enough

Investors have been in the dark for too long over what many chief executives of our listed companies are paid.

Unlike in Australia, these shareholders have been left to play guesswork about how much the person largely responsible for their investment is earning.

You might ask: what business is it of investors (and by extension the market and wider public) how much a CEO earns?

I can certainly sympathise why a chief executive (and anyone else) wouldn't want their remuneration shared publicly, particularly given the level of outrage that large pay packets can generate.

But, in my view, investors have the right to know the ways and means by which executives - particularly CEOs - are rewarded and what this reward amounts to.

They deserve to know, for example, whether or not an executive received a pay rise when a company's performance was lacklustre or over a period where their shares lost value.

More companies have been coming around to this idea and over the 11 years of the Herald's CEO pay survey disclosure has improved remarkably.

However, there are still a handful that are dragging their feet and disclosing the bare minimum required under the law.

That's why the stock exchange's corporate governance code - which was finalised today and comes into effect later this year - is huge step in the right direction.

The code recommends that companies reveal CEO remuneration in annual reports and means those who don't will have to justify that decision.

While that should provide clear direction for companies, the code stops short of compelling them to reveal CEO pay.

That was a missed opportunity and should be made a requirement if firms are still reluctant to reveal what bosses earn come October.