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The Federal Government has today released legislation aimed at curtailing excessive golden handshakes to senior executives.
The legislation, the Corporations Amendment (Improving Accountability on Termination Payments) Bill 2009, has been released by the Minister for Superannuation and Corporate Law, Senator Nick Sherry, who said the legislation had been drafted to address significant and ongoing community concerns about excessive pay, especially golden handshakes, at a time when many Australian families were being hit by the global recession.
The core elements of the bill were outlined by the Government in March, including significantly lowering the threshold at which shareholder approval is required for a termination payment from seven times an annual remuneration package to one times an average annual base pay.
However, Sherry today announced that the legislation would additionally impose significantly higher penalties, with potential fines for individuals now set at $19,800 and at $99,000 for corporations.
The minister said the legislation would also contain a mechanism for shareholders to assess golden handshakes in the context of the recipient’s actual performance by requiring shareholder votes on termination benefits to take place at a future annual general meeting following an executive’s departure.
He said the legislation also entailed a ban on the calling of extraordinary general meetings that were only intended to approve such benefits.
The legislative draft released by the minister will be available for public consultation until June 2.
