Philip Lowe's new job: rewriting the rules for how ASX companies are run

Philip Lowe left the Reserve Bank in September 2023 after a bruising final year in office. Eighteen months later, the ASX gave him a different kind of institution to reform. In January, the exchange appointed him chair of the Advisory Group on Corporate Governance, an eight-person panel that will rewrite the rules governing how Australia's 2,200 listed companies report to shareholders.

The group replaces the ASX Corporate Governance Council, a 30-member body that had been in place since 2002. An independent review panel concluded in October 2025 that the council had become unwieldy. Too many members. Too many recommendations. Too much compliance for small companies that could not afford governance teams.

The panel

Lowe's seven fellow members are Pru Bennett, a board governance adviser; Dominique d'Avrincourt, head of equities at TelstraSuper; Mark Delaney, the outgoing chief investment officer at AustralianSuper; Tim Paine, company secretary at Rio Tinto; Helen Rowell, former deputy chair of APRA; Peter Torre, a Perth-based company secretary; and Nicola Wakefield Evans, a company director.

The mix is deliberate. Two company secretaries who write governance reports. Two superannuation executives who read them. A regulator. A board adviser. A company director.

"I wanted people who actually live with these rules every day," Dr Lowe told the Australian Institute of Company Directors in February. "Not people who write policy papers about them."

"The current principles are 35 recommendations across eight themes," Dr Lowe told the Australian Financial Review. "Some of those are essential. Some of them are box-ticking. We want to know the difference."

What needs fixing

The existing ASX Corporate Governance Principles and Recommendations run to 44 pages. Every listed company must either comply with all 35 recommendations or explain in its annual report why it has not. For ASX 200 companies with in-house legal teams, the burden is manageable. For the 1,500-odd companies with market capitalisations below $200 million, it is not.

The review panel's October 2025 report found that smaller companies were spending between $50,000 and $150,000 a year on governance reporting alone. Some were copying disclosure templates from larger competitors without adapting them. Others were producing boilerplate statements that satisfied the letter of the rules but told investors nothing useful.

"You can't have the same governance framework for BHP and a $30 million lithium explorer," Helen Rowell said at an AICD event in March. "The principles need to scale."

The two-strikes effect

The panel's work arrives at an inflection point for executive pay governance. The two-strikes rule, introduced in 2011, triggers a board spill if more than 25 per cent of shareholders vote against a company's remuneration report in two consecutive years. Since 2011, ASX 100 CEO fixed pay has declined by more than 20 per cent in real terms, according to the Australian Council of Superannuation Investors.

In 2024, there were 40 remuneration report strikes across the ASX 300. That was the second-highest total since the rule took effect. Shareholders are voting against pay reports more frequently, not less.

Russell Reynolds Associates found in its 2026 global governance survey that Australian boards are now among the most constrained in the world on executive compensation. The average ASX 100 CEO earns roughly $5.2 million in total remuneration, compared with $15.5 million for the average S&P 500 CEO.

"The two-strikes rule worked," said ACSI chief executive Louise Davidson. "Fixed pay came down. Variable pay is more tightly linked to performance. The question now is whether it's pushing talent offshore."

Guerdon Associates managing director Michael Robinson said Australian boards were caught between two pressures. Shareholders want lower pay. Companies want to attract executives who could earn three times more in New York.

"The two-strikes rule did what it was supposed to do," Mr Robinson said. "It gave shareholders a weapon. The question is whether it's now a weapon that's hurting the companies the shareholders own."

Timeline

The panel met for the first time in February and agreed to pursue a simplification of the principles by end of 2026. A consultation draft is expected in the third quarter.

ASX Group executive James Posnett said the exchange had received 87 submissions during the 2025 review.

"Most called for fewer, clearer recommendations," Mr Posnett said. "The super funds wanted stronger climate disclosure. The miners pushed back. The small caps just wanted fewer pages to fill in."

AustralianSuper's Mark Delaney, another panel member, said the fund had seen too many annual reports where governance disclosure was cut and pasted from a template.

"We manage $340 billion," Mr Delaney said. "We read every governance statement from every company we hold. Half of them tell us nothing. That's the problem we're trying to fix."

Tim Paine, Rio Tinto's company secretary and one of the panel members, said the current principles assumed every listed company had a governance team.

"A $30 million explorer with three employees doesn't have a company secretary," Mr Paine said. "They've got a founder who's also the CEO, CFO and the person who empties the bins. The principles need to recognise that."

The consultation draft will be published on the ASX website. Companies, investors and industry bodies will have 90 days to respond. Lowe's panel will consider submissions before publishing a final version, likely in early 2027.