Listed companies are set to be hit with even more stringent rules on executive remuneration disclosure, if a new set of guidelines proposed by the federal government is passed.
The government has said the changes are improvements to the current regime, and the bill tabled in parliament introduces new powers to shareholders under a ‘two strike-rule’ – yet business leaders have said it’s akin to a Trojan horse insofar as its being done with commercial interests at heart, not shareholder democracy.
According to draft legislation released on Friday, the changes would constitute improvements to the disclosure of executive remuneration by improving flexibility on the payment of dividends. “This legislation will further strengthen Australia's remuneration disclosures while also reducing the regulatory burden on companies,” Parliamentary Secretary to the Treasurer Bernie Ripoll said. “This reform builds on the additional powers we have provided to shareholders to have a say over the level and composition of executive pay.”
According to Ripoll, the legislation will also increase the disclosure of termination payments or “golden handshakes” and unnecessary disclosure requirements will be removed to simplify remuneration reports, while clearer categorisation of pay will be introduced to better enable shareholders to understand the company's remuneration arrangements.
Yet a partner at KPMG's executive remuneration team told The Australian that a better outcome would have been achieved if the rules had been re-written rather than adding to the existing regime. “I don't think this makes it simpler or more transparent,” Ben Travers said. “There is a three-month consultation period, so hopefully we can improve transparency but also make it simpler.”
Submissions on the new bill will be taken until March 15, 2013.