A global investment manager with about $1.2 trillion in assets under management believes Australia lags behind other developed countries in market disclosure of executive remuneration.
AXA Investment Managers' (AXA IM) 2017/18 responsible investment and stewardship report shows remuneration accounted for 68% of its votes against management in Australia, outstripping the Eurozone, Asia Pacific and North America.
Global attention has moved away from solely focusing on aligning executive rewards with share price performance to aligning executive pay with the general workforce and social expectations, AXA IM said.
However, AXA IM global head of responsible investment Matt Christensen said executive remuneration reforms - such as requirements in the UK to publish gender pay gaps and the US' Dodd-Frank requirements to disclose the median pay of chief executive officers - had yet to reveal long-term shifts in the way boards and companies thought about executive pay and rewards.
Christensen said the firm supported executive remuneration reforms.
"AXA IM is always supportive of reforms that require improved and increased disclosure in markets, allowing shareholders further clarity and better oversight of the companies in which they invest," he said.
Christensen added the Royal Commission had helped highlight executive remuneration as an issue in Australia, but said its opaqueness made it difficult for shareholders to "visualise a clear line of sight between executive reward and company performance."
AXA head of Australia and New Zealand Craig Hurt added investors needed help from professional managers in avoiding inadvertently rewarding this lack of transparency.
"Australian investors are increasingly sensitive to corporate behaviour when thinking about where to invest their retirement savings," Hurt said.
"It is difficult for individuals to identify discrepancies in things such as executive remuneration and disclosure."
Referring to the recent $700m civil settlement between CBA and AUSTRAC over the bank's contravention of anti-money laundering and counter terrorism laws, Christensen said executive pay was becoming difficult for companies to justify to shareholders, especially when mismanagement occurred.