The passing of a Corporations Amendment Bill through the Senate will empower shareholders to reject excessive termination payments and prevent irresponsible remuneration practices.
The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen, welcomed the passage of the Corporations Amendment (Improving Accountability on Termination Payments) Bill 2009 through the Senate.
“These reforms will empower shareholders to reject excessive termination payments and promote responsible remuneration practices,” he said, adding that the change in the law will prevent termination payments reaching up to seven times a director’s total annual remuneration package.
Key features of the reform will mean that shareholder approval must be sought before termination benefits for company directors and executives can exceed one year’s average base salary, a broadening of the definition of what constitutes a ‘benefit’, a specifying of what type of payments are or are not termination benefits, the defining of ‘base salary’, and the immediate repayment of unauthorised termination payments with increased penalties.
The scope of the requirements relating to termination benefits has also been expanded to include senior executives or key management personnel.
