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CEO pay, tax avoidance top ethical issues

Australians have a poor view of the ethical standards of large corporations and their top managements, particularly in the banking and finance sector, an annual survey by the Governance Institute of Australia has found.

Executive pay continues to be a top issue for most Australians, with respondents also flagging corruption, tax avoidance and misleading or deceptive advertising by companies as other major grouses.

More than three-quarters of respondents counted CEO pay of $3 million - about 50 times the average annual income in Australia - as unethical.

Even a $660,000 CEO pay packet was considered unethical by more than half the 1,000-plus survey participants.

Most thought $300,000 was acceptable.

Executive salaries and bonuses were considered the top issues of ethical importance for the banking & finance sector, rating even higher than topical matters such as the treatment of customers and insufficient regulation.

Governance Institute chief executive Steven Burrell said the federal government's May announcement that the regulator would be given power to oversee bank executives and their salaries had done little to arrest widespread community concern about the lack of ethics, transparency and accountability in the sector.

The survey found sectors such as healthcare, eduction and charities had the highest ethical scores.

On the other hand, large corporations, as well as the media, and banking and finance sectors had the lowest scores, indicating little trust and the perception of poor standards of behaviour.

There was a pattern to Australians' view of ethical behaviour, Mr Burrell said.

"They rank people they have the most personal contact with - GPs, pharmacists and the nearest local hospital - as the most ethical while those more distant are perceived as less ethical."

Survey respondents rated chief executives and directors as the most important 'gatekeepers' influencing ethics in organisations.

Board chairs and senior management were also seen as important drivers of ethical conduct, with these roles perceived to wield considerable influence over this aspect of corporate culture.

GOVERNANCE COUNCIL ETHICS INDEX SURVEY

* Most Ethical sectors - Health, Education, Charities.

* Least ethical sectors - Banking Finance & Insurance, large corporations, Media.

* Top Ethical Issues in Business - Corruption, tax avoidance, misleading advertising, executive pay, discrimination.

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