Three leading super funds have supported calls for the industry to disclose executive pay the same way listed companies do, following the release of the Cooper report that asked whether super funds should adopt the same corporate governance rules as listed companies.

This week the Panel behind the Cooper Review noted that it favours the proposal that the governance of all APRA-regulated super funds should be equivalent to the standard that applies to listed companies.

One such governance rule that has attracted much public debate centres on executive pay disclosure. In September this year, super fund GESB had withdrawn a planned $100,000 pay rise for its chief executive Michele Dolin after public uproar, given the performance of super funds after the GFC.

Ironically, GESB is one of the minority of super funds that disclose remuneration. It is not compulsory for super funds to disclose pay and, in many cases, they would only disclose the remuneration bands of the board. Super funds are not obliged to disclose the pay of all trustee directors and senior executives, like many listed companies are.

But following the preliminary report from the Cooper Review this week, super funds including legalsuper, Asset Super and Media Super have all said they are willing to fully disclose executive remuneration, if this becomes the law.

Legalsuper chief Andrew Proebstl said that last year, the fund disclosed the remuneration bands of the board and trustee directors but that they are looking to disclose the pay of their senior management from next year.

Similarly, Media Super chair Gerard Noonan, who is also the chair of the policy committee of industry body AIST, and Asset Super chief executive John Paul support more transparency around pay.

"Yes, super funds absolutely should. And not just remuneration bands or the disclosure of the board, it should also apply to trustee directors as well," said Noonan.

Terry McGuirk, managing director of McGuirk Management Consultants, which has been a long-time provider of research on executive pay of super funds, said that disclosure is long overdue. However, he said that the public needs to know that there's a difference between the trustee model and the corporate model.

For a start, the corporate governance of trustees is already more onerous so it is highly unlikely that remuneration would be excessive, the way it is in the listed companies world. In addition, unlike listed companies, it is only in recent years that many super funds started paying all of its trustees. For example, many industry funds have trustee directors who received no pay up until four years ago.

According to McGuirk's 2009 research surveying around 100 super funds, a super fund chief executive gets paid around $600,000 while the equivalent chief executive in a listed company would be paid a multiple of that.

The salary of a super fund chief executive rose 9 per cent, on average, in the last five years - equivalent to a 5 per cent increase year-on-year if you factor inflation.

This averages are a mild comparison to the dizzying heights that executive pay and bonuses that listed companies and fund managers reached over the same period.

But McGuirk said there should be a mechanism in place, like an independent committee or an APRA ruling, that will allow super funds to properly remunerate their trustees without fear of an unfair public backlash overwriting any pay model put in place.

"There's very few people out there who really have a skill on what is a fair level of remuneration in the super sector. For example, a half a million dollar salary from a super fund will seem like an enormous sum of money to someone who's on average wage - that's the downside of disclosure. However, it is still the person's right as a member to know what's going on in their fund [including remuneration]," said McGuirk.

Trustee skills under the microscope

But the Cooper Review didn't go as far as supporting the idea of Annual General Meetings (AGM) or that super funds should require trustees to have certain academic qualifications or additional skills outside what's already required by the SIS Act.

Liz Westover, head of superannuation at the Institute of Chartered Accountants, said the Institute is disappointed with this outcome as they have long lobbied for super funds to hire talent outside representative boards.

"We have always advocated strong levels of disclosure so we liked what the Cooper Review presented on the corporate alignment issue. But we're a bit disappointed that they're not advocating AGM-type reporting. We also think equal representation of boards is largely irrelevant these days when you can get strong sets of skills and knowledge [outside the industry]," she said.

Similarly, Noonan also expressed dismay that the Review didn't back the proposal that trustees should take on a mandatory 30-hour training each year to ensure trustee skills and knowledge keep up with their evolving duties.

On the plus side, Cooper's preliminary report may have rejected AGM-style reporting, as the ICAA advocated, but Noonan and Proebstl both said their funds are looking into running AGMs for fund members except they will be done online, not in person.

The Review will submit its final report to the government in June next year, giving the industry at least until then to weigh in on the debate regarding the pros and cons of the preliminary recommendations on super fund governance published this week.