Government Effort to Clarify Shareholder Voting on Executive Remuneration
The Government notes the concerns raised by Chartered Secretaries Australia (CSA) regarding undirected proxy votes cast by the chair on executive remuneration resolutions. The Government has acted promptly to address these concerns by introducing an amendment into Parliament last year through the Consumer Credit and Corporations Legislation Amendment (Enhancement) Bill 2011.
The Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011 was passed and addresses the conflicts of interest in the remuneration setting process. This Act prohibits key management personnel from voting on remuneration matters. However, an exception was provided where shareholders give an undirected proxy to the chair of an annual general meeting (AGM), and the shareholder provides their informed consent for the chair to exercise the proxy. Concerns were raised as to whether this exception applies to the non‑binding vote required under section 250R of the Corporations Act 2001 (the Act).
While the Government’s intention is clearly set out in the Act and its associated extrinsic material, for the avoidance of any doubt, we have sought to clarify this issue. The Government recognises the urgency of this matter, which is why we have progressed a legislative amendment as part of the existing Consumer Credit Bill, which has been granted the highest priority that can be afforded to a Bill. This signals the Government’s strong commitment to address this issue as a priority.
The Government understands CSA’s concerns about the progress of the Bill. We have worked constructively with the CSA on this matter and will continue to do so.The Government has acted urgently to make these changes and it is now up to the Opposition to act responsibly on this matter and pass the Bill.
2 April 2012