The Australian government should not introduce new laws on executive pay levels or disclosure, and should think about scrapping some of the complex regulations that exist already, according to a report from its legal advisor.

The Corporations and Markets Advisory Committee (CMAC), which advises the federal government on company law, proposed new guidance that would make it easier for shareholders to understand how much pay executives were actually taking home. But it warned against major legislative changes to remuneration reporting requirements.

The government asked the committee to review the issue in 2010 after a report on executive pay levels from the Productivity Commission, which advises on policy, highlighted excessive pay levels, compliant boards and soft targets for incentive pay, which it said was a practice imported from the US.

The committee said companies should be allowed to decide how much to pay their staff, but made some suggestions for better disclosure of executive remuneration.

It said companies should explain their governance processes around remuneration, disclose termination payments – including gratuitous payments, and reveal how much executives have actually been paid in the year, with details of any payment deferred to future years.

But it said companies should be allowed to keep secret any commercially sensitive pay information, as long as they reveal that they have done so.

Joanne Rees, head of the committee, said if remuneration reporting improved and became more simple, that “may provide the basis for a fresh non‑prescriptive legislative approach to remuneration reporting at some future time.”