Over the many decades of his distinguished public career, Canberra Raiders chairman Dr Allan Hawke AC FAICDLife has been outspoken on a number of issues. These include the lack of women in the public service and on boards, the need for people-focused leadership, the lack of consequences from the financial services royal commission and how greed on CEO pay is out of step with what is seen as fair by society
Growing community anger over inflated CEO and executive remuneration in Australia should not be ignored by directors, as investors may act to remove board members who fail to recognise this contentious issue, warned Canberra Raiders chairman Dr Allan Hawke at the AICDâs annual dinner for ACT members in March.
âRemuneration packages for CEOs and top line executives in Australia are out of kilter with community expectations,â he said. âIf you look at Europe, their people get paid far less than ours do in Australia. I think this needs to be reigned in.â
Boards in particular appear to be missing this point in social governance and if they donât address the issue, it is likely to play out at annual general meetings for businesses this year and next, when powerful shareholders may punish companies and directors who are granting excessive remuneration packages, he said in his frank address.
âI think we may see big institutional investors take a more active interest in both director appointments and their removal and also in remuneration packages and how they are envisioned for the future.â
In a speech titled âGreed Rulesâ, Dr Hawke outlined many instances of the culture of greed being displayed by Australian businesses. One area was JobKeeper. While the government committed $93 billion to the JobKeeper package, relatively few companies had repaid what they were granted for this COVID-19 subsidy when their business did better than expected.
âAbout 15 ASX 300 companies have so far decided in the spirit of good corporate citizenship to repay about $100 million in JobKeeper net of tax,â Hawke said. (According to a later estimate, 33 public companies have pledged to pay back $160 million, $60 million of which has already been repaid according to ATO data delivered to Senate Estimates.)
âWe shouldnât be altogether surprised that some companies have gamed the system, pocketing the proceeds with increased executive pay, bonuses and the like,â said Hawke. Even calls by Business Council of Australia (BCA) CEO Jennifer Westacott for executives not to be paid bonuses where companies are receiving JobKeeper, have been largely ignored.
More accountability needed
The 2011 two strikes legislation represented a good start, but it has not yet addressed total remuneration excesses or brought boards and CEOs to book, Hawke added. âAdoption of the UK rules requiring annual elections for all directors could be next if the current glimmer of redress is not realised.â
Some boards will give lip service to whatâs required and community expectations but will continue to sit on their hands until they risk real accountability, he warns. âIt seems to me that we may be on the verge of just such a new era where superannuation funds, the Future Fund and other institutional investors will increasingly act in their shareholdersâ interests.â
He points to Rio as an example of inflated CEO pay. Jean-Sebastian Jacques, who joined Rio in 2011 and became CEO in July 2016, was the fifth-highest paid CEO in Australia in calendar year 2019, receiving $10.3 million, a 27 per cent increase over 2018. His package for 2020 was $16.9 million. When Jacques left Rio over the Juukan Gorge incident, the board awarded him about $56 million.
By contrast, Hawkes said the total remuneration package for the top 300 ASX CEOs was up one per cent in 2018-19 and down 2.29 per cent in 2019-20.
Much is said about the accountability of chairs, boards, CEOs and executives, but Hawke feels that little accountability is actually meted out. For example, the financial services royal commission made 76 recommendations in February 2019, but government legislation to ease responsible lending laws was withdrawn from the Senate on 17 March 2021. Similarly, a recommendation by Commissioner Kenneth Hayne AC to banish trailing lines of commission by mortgage brokers from 2020 was accepted until lobby groups changed the governmentâs mind. Other key reforms are under review and â44 seem to be in limboâ.
It is âamazingâ that so few of the charlatans exposed have been brought to account by regulators, said Hawke. âRecent legislation requiring directors to obtain a Director Identification Number should help here.â
Since the Hayne Royal Commission, Australia has also witnessed the Crown casino imbroglio, AMPâs transgressions, ASICâs pursuit of CBA and NAB, Westpacâs AUSTRAC fines, criticism over the Sydney Airport boardâs move to change the CEOâs remuneration package, the Boral and Challenger CEO payouts, Telstraâs $50 million fine for âunconscionableâ sales, the Australia Post CEOâs demise over $20,000 spent on Cartier watches as executive bonuses while no action was forthcoming when NBN paid $78 million in bonuses in 2019-20 at the height of the pandemic, almost double the $43 million paid in 2018-19, he points out.
âYou could be forgiven for wondering whether the banks and similar institutions have learnt much at all from Hayne.â
Rio Tinto and Crown will probably become case studies in governance and culture and serve as a salutary example to others, says Hawke. Other issues that should be explored include how many boards a director should sit on, the duration of term limits and whether the Code of Conduct should be revised.
Reflections on a long career
Hawke was made a Life Fellow of the AICD in 2021 after a decades-long career spent predominantly in the federal public service and on numerous boards. He served as Chief of Staff to Prime Minister Paul Keating, Secretary of the Department of Veteransâ Affairs (1994â1996), Secretary of the Department of Transport and Regional Services (1996â1999), Secretary of the Department of Defence (1999â 2002), High Commissioner to New Zealand (2003â 2005), and Chancellor of the Australian National University (2006â2008).
Currently he serves as chairman of the Canberra Raiders board, chair of the Southern NSW Local Health District Board, and a member of the Committee for Economic Development Australia (CEDA) board.
Queanbeyan-born Hawke has a long family history with the Canberra Raiders, having grown up across the street from the McIntyre family who were active at the highest levels. John McIntyre, former chairman and CEO, spent 32 years at the helm before handing over to Hawke. âI also played for the Queanbeyan Blues when I was much younger, so Iâve had lifelong association with rugby league,â said Hawke.
When he started at the Raiders, Hawke changed the way things were done. He raised eyebrows, for example, when he chaired a subcommittee set up to select a new coach â the group eventually choosing Ricky Stuart. The Sydney rugby league media labelled the subcommittee process a Canberra invention, but âI think almost every club does it that way nowâ.
Down through the decades, Hawke has witnessed significant changes in the Australian workforce, and has played an active role in opposing performance management and pay, and promoting organisational renewal, culture and diversity.
Reflecting on the many roles he has held, Hawke, who has also battled cancer since early 2019, says that all public servants should consider active staffer roles in politics to really understand how government works.
âI learned more about how government really works from the inside in the six months I was with Keating than I had previously learned from 1974 to 1993,â he said.
âI often explain to people that their experience and career will benefit if they get an opportunity to spend time in a ministerial office and learn about the issues. I was in the Keating office during a period when amazing things were achieved for Australia including the Mabo legislation.â
Increasing female numbers in the workforce
When he began as chair of the Canberra Raiders board 10 years ago, there was only one woman on the board of seven directors â now there are three. âI think we now have a very good diverse board to oversee what happens at the Raiders,â he said. âIf you look at their qualifications and contributions you can readily see that this is not tokenism.â
Hawke is also overseeing a lift in the number of women on the Southern NSW Local Health District Board. âBy July this year, I expect half of our board will be women.â
Likewise, in his departmental roles he has always promoted the employment of women. As early as 1994, during his first secretary appointment at the Department of Veterans Affairs, one of the things he initially noticed was that âthe place was full of men wearing cardigansâ. When he suggested setting targets for women âthe bloody place erupted, not only within the department but across the public serviceâ.
His belief that having targets is not incompatible with the merit principle is one he still holds today. âIt was a question of going out of your way to find qualified women and then, later on, people of talented diversity to add to your organisation or board. Wherever I have been I have done that.â
Leadership needs to change in Australia
Hawke believes that leadership in Australia has changed in a negative way and that this needs to be addressed.
The leadership style that he sees in the ascendancy is âthe taskmasterâ who is quite autocratic, often thinks in terms of crises, focuses purely on results and âbasically ignores the people side of the businessâ, says Hawke.
But what Australians prefer is âa captain/coach personâ who cares about, responds to and nurtures their people.
"We need to move away from leadership that focuses on pure financial measures towards culture and people measures to achieve and sustain high performing organisations. Thatâs one of the big issues that I think confronts the private and public sectors."
Image by Graham Jepson
Latest news
Already a member?
Login to view this content