New Zealand's listed companies are going to come under pressure to say exactly how much their bosses are earning.
The New Zealand Stock Exchange have released their new governance code today and it will come into force from October 1.
It's the first substantial overhaul of governance rules since 2003 and includes eight principals that are meant to protect the interests of and build long-term value for shareholders, NZX said in a statement.
It recommends companies disclose pay arrangements for their chief executive in their annual report.
NZ Herald Business Editor Hamish Fletcher said if companies don't follow the principals they will be under pressure to explain why.
"I'm struggling to think of what a company could come up with as to why they don't want to let investors, their staff, everyone in the market know what their chief executive is being paid."
Hamish Fletcher believes the system has been a mess for some time.
Listed companies are also being required to report on their sustainability performance, including environmental and social matters and health and safety risks. These are often cited by ethical investors as giving indicators on long-term value creation.
The move has been welcomed by the Sustainable Business Council CEO Abbie Reynolds, who said this type of reporting has multiple benefits including more transparency for investors.
"Climate change is a part of sustainability amongst other things so investors are looking for more information which helps them understand what risks there might be in a business that they're thinking about investing in."
The new code has been in the works for more than a year, with two papers attracting more than 80 submissions over that period.
The Financial Markets Authority has also kept tabs on the NZX code, which it will have to ratify as the market regulator, and said it lined up with the principles of its own governance guidelines. The FMA said it will review its handbook to make sure everything is consistent.
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