No need to panic yet.  The government – with cross-party support – decided that giving priority to legislation relating to politicians’ remuneration was more important than giving those managing $1.5 trillion of the economy some certainty.

 

The two strikes and related executive remuneration legislation has been held up in the House of Representatives.

 

But make no mistake.  It is slated to be pushed through in the winter session of parliament.  The shadow assistant treasurer, Senator Mathias Cormann, has expressed confidence that a deal will be struck to avoid the laws being referred to a parliamentary committee, saying that:

 

 “We are supportive of the laws in principle, but are talking with the government on some of the finer points.”  

 

Just what may these finer points be?  On 24 March (before they adjourned the debate to rush through the politicians’ remuneration law), the opposition shadow treasurer, Joe Hockey foreshadowed an amendment to the laws in the lower house:

 

“The coalition will be moving an amendment in relation to the wording of the no vote.  The intention of the amendment is to improve the representation of total shareholder views, because as the legislation stands it is possible for a no vote to be triggered against a remuneration report by less than 25 per cent of all available votes that can be exercised. We consulted widely on this, and the view is that it was wiser to deal with the issue through an amendment to the proposal before the House now. Therefore, we are going to look to adjust the wording in this provision so that the vote required is 25 per cent of all available votes.”

 

After the disappointed responses to the government’s proposed legislation by both investors and boards, the Hockey amendments would be welcome.  In effect it would approximate the 50% “no” votes actually cast requirement advocated by virtually all stakeholders that sought a compromise with the government.  That is, about 55% of all shareholders exercise their votes on any resolution.  So requiring the two strikes to be triggered by “25 per cent of all available votes” is, in effect, almost 50% of votes cast.

 

The law is to be implemented from 1 July this year.  And the last sitting day for the Senate prior to this is 23 June.  This leaves the Governor-General 5 working days to sign the Bill into law.  Which leaves…golly…no days left for companies to comply.

 

Perhaps it is time for a bit of a panic now.  But see our panic avoidance checklist HERE

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