New ASX listing rules impacting executive pay matters

The ASX revised ASX Listing Rules and updated Guidance Notes, including several that impact executive remuneration. The majority of the changes came into effect on 1 December 2019.

We have highlighted some of the key changes below.

Director long term incentives and other equity grants – more detail required

Entities that seek approval under Listing Rule 10.14 for equity awards to the CEO/Managing Director or other directors under an employee incentive scheme will need to include more detail in their notices of meeting. In particular, the Listing Rules will require disclosure of a “summary of the material terms of the scheme” and details about the director’s current total remuneration package.

Remuneration report voting

Updated Listing Rule 3.13.2 requires more standardised information to be provided when the AGM voting results are announced on ASX. This includes the percentage of votes cast (in addition to the number), confirmation if the company receives a ‘strike’, and, if a resolution that was included in the notice of meeting is not put to the meeting, an explanation of why.

Issuing securities from options and rights exercises

There will be different notice requirements for the issue and quotation of “equity securities” under an employee incentive scheme, or as a consequence of the conversion of any convertible securities (e.g. options or performance rights). The definition of “equity securities” has been revised and potentially signals a change in ASX’s expectations about the notifications required in relation to new issues of options and rights under employee incentive plans.

A good summary of outcomes from the ASX consultation process resulting in the new rules can be found HERE .

© Guerdon Associates 2024
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