Corporations Legislation Amendment (Remuneration and Other Measures) Bill 2012 has been released for comment. The legislation aims to ‘continue improvements to the disclosure of executive remuneration and further clarify the test for payment of dividends’.
The Parliamentary Secretary to the Treasurer, Bernie Ripoll, released for consultation exposure draft legislation and explanatory material.
Background
In 2010, the government introduced measures to give shareholders more power over the pay of company directors and executives. These reforms have proven to be very effective in strengthening the accountability and transparency of Australia’s executive remuneration framework.
‘This legislation will further strengthen Australia’s remuneration disclosures while also reducing the regulatory burden on companies,’ said Ripoll.
‘This next tranche of reforms was first announced by my predecessor, David Bradbury, on 21 February 2012. It has been developed after extensive consultation on a proposal for “claw-back” and will implement several recommendations made by the Corporations and Markets Advisory Committee.’
‘This reform builds on the additional powers we have provided to shareholders to have a say over the level and composition of executive pay.’
In addition, this legislation clarifies the operation of the dividends test under the
Corporations Act in response to feedback on the discussion paper
Proposed Amendments to the Corporations Act. In particular, the government has sought to address stakeholder concerns by incorporating a solvency-based dividends test.
‘Concerns about executive pay have prompted action in other jurisdictions recently, such as the United Kingdom, where the Government recently announced comprehensive reforms to their remuneration framework,’ said Ripoll.
‘I am looking forward to meeting with my UK ministerial counterparts to discuss their executive pay reforms when I lead an Australian parliamentary delegation to London next week.’
The government encourages comment and feedback on the exposure draft legislation as part of the consultation process and invites interested stakeholders to provide their input.