But Mr Gonski warned against any moves to go further and legislate pay. While he did not name countries where this has occurred, the European Union has introduced banker bonus caps that have been heavily resisted within the industry.
“What I would be really against is if it was legislated, and there are jurisdictions in the world in relation to banking, where they do legislate that it can’t be higher than a certain ratio,” Mr Gonski said at an Australian Institute of Company Directors (AICD) conference.
“I don’t believe we should do that. I believe people are entitled to have us accountable for remuneration, they are entitled to debate the remuneration, and shareholders are entitled to vote one way or the other. But it should be left to the companies.”
Ms Ridout, speaking on the same panel, signalled that a key concern for the fund, which voted against several banks’ executive pay packets last year, was a lack of transparency around how CEO pay decisions were reached.
“What investors like ours are looking for is very clear, transparent remuneration structures,” Ms Ridout said.
Mr Gonski made the comments in a wide-ranging discussion about issues facing boards following last year’s royal commission into misconduct in banking and financial services.
One issue raised during the inquiry was whether boards should have a formal duty to consider the interests of other “stakeholders” as well investors, but the AICD has indicated it does not support changing the laws along these lines. Mr Gonski indicated he was “very happy” to hear this.
“If we look to the long term, in the old laws, it allows you absolutely to focus on all the stakeholders, not just your shareholders,” he said.
With corporate boards facing hard questions about their ability to deal with community concerns after the royal commission, Mr Gonski said it was unacceptable for board members to be “arrogant or aloof”.
“Anybody who sits on a board who is arrogant or aloof is a fool,” Mr Gonski said.
Asked what “went wrong” in corporate boardrooms, Mr Gonski said the were three areas where the ANZ Bank board he chairs had determined it had fallen short: it focused too much on the short term; there had been too much complexity; and there had not been enough accountability.
“When something goes wrong, correctly, we see to fix it. And by the way we’ll continue to do that. But at times you have to find who’s accountable and act upon it. And if you look back I’m not sure we, and I don’t think we’re alone, did that superbly,” he said.
Clancy Yeates is a business reporter.