The Bill was introduced into Parliament on 23 February 2011. 

 

Its provisions include:

·          the opportunity for shareholders to vote on whether the board should be spilled if the remuneration report receives “no” votes of 25% or more at 2 successive AGMs (“2 strikes”);

·          strict rules for the engagement and disclosure of remuneration consultants by ASX companies;

·          prohibitions on key management personnel (KMP) and their closely related parties hedging KMP incentive remuneration (such as shares and options);

·          a requirement that shareholder approval be obtained for board “no vacancy” declarations;

·          prohibitions on KMP and their closely related parties voting (or voting undirected proxies) on the remuneration report and any 2-strikes board spill motion;

·          measures designed to prevent proxy holders from “cherry picking” the proxies they exercise; and

·          limiting remuneration disclosures in the remuneration report to KMP.

 

We outlined the contents of this bill HERE

 

The Bill passed the House of Representatives on 12 May 2011. Various members of the Federal Opposition gave speeches that were generally supportive of the Bill.  We had hopes that the government would accept an Opposition amendment to require the threshold for the 2-strikes rule to be changed from 25% of the votes cast to 25% of the votes available to be cast, but the amendment was defeated.  We summarised the Opposition’s suggestions HERE

 

Nowithstanding that the Coalition has indicated that it will not oppose the Bill, the government strategy to get the Bill through the Senate is to rely on the support of the Greens, who say they want to cap executive pay.  Apparently reliance on a party described by one prominent and well-regarded former government Minister (Lindsay Tanner) as “whacky” is no deterrent.

 

Acknowledging the very short period that will be available between the enactment and commencement of the Bill, the lower house amended the commencement date from 1 July 2011 to 1 August 2011 for:

·          the prohibitions on KMP and their closely related parties voting (or voting undirected proxies) on remuneration matters and any board spill motion; and

·          the measures designed to prohibit “cherry picking” of proxy votes. 

 

These amendments would permit companies holding AGMs in July 2011 to finalise their notice of meeting materials during May and June without reference to the reforms being made by the Bill, which are still before Parliament.

 

The remaining reforms are still intended to commence on 1 July 2011, which means companies will not have a lot of time to prepare, as indicated in our newsletter last month. 

 

The Bill will be introduced in the Senate on or after 14 June 2011, when that House commences its winter sittings.

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