Following a public consultation process, ASX Listing Rule 3.16.4 has been introduced from 1 May 2013 to specifically require listed entities to notify the ASX of the material terms or material variation of any employment, service or consultancy agreement made with the CEO or a director (or a related party of the CEO or a director), regardless of the impact of that information on the price or value of an entity’s securities.

 

Previously, information on CEO employment terms was technically only required to be given to the ASX under Listing Rule 3.1 if a reasonable person would expect it to have a material effect on the price or value of the entity’s securities. In many cases, it would not have such an effect.

 

As far back as May 2003, the ASX had suggested that a CEO’s remuneration ought to be disclosed to the market under Listing Rule 3.1. The existing notes to Listing Rule 3.1 also list in the examples of information that may need to be disclosed under that rule any agreement between the entity (or a related party or subsidiary) with a director (or a related party of a director).

 

The ASX view has been that most investors would expect the material terms of a CEO’s employment or service agreement to be disclosed to the market, and that most investors would expect the material terms of any employment, service or consultancy agreement a listed entity enters into with a director or related party of a director to be disclosed to the market.

 

Disclosure is not required of:

• periodic remuneration reviews in accordance with the terms of an employment, service or consultancy agreement;
• non-executive director fees paid out of an approved fee pool and the superannuation contributions in relation to such fees; or 
• an increase in director fees approved by security holders;

because the ASX does not consider these to be “material variations” for the purposes of this rule.

 

The ASX Listing Rules are available HERE.

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