The Government has acted quickly on the issue of undirected proxies in the shareholder vote on remuneration with the passage of amending legislation by Parliament yesterday.
Last year, the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011 (the Act) was passed to strengthen Australia’s remuneration framework. One of the reforms under the Act addressed conflicts of interest by prohibiting key management personnel and their closely related parties from voting on remuneration matters.
An exception was provided to allow the chair of an annual general meeting to vote undirected proxies where the shareholder provides informed consent for the chair to exercise the proxy. The Government’s intention on this matter is clearly set out in the Act and its associated material, however there was some confusion as to whether this exception also applied to the non-binding vote on remuneration.
After listening to the concerns of stakeholders and working closely with them, the Parliamentary Secretary to the Treasurer, Bernie Ripoll, fast-tracked an amendment to clarify the matter in time for the upcoming AGM season.
Mr Ripoll said the amendment clarifies that the chair of an AGM will be able to exercise undirected proxies for the non-binding remuneration vote, where a shareholder provides their express authorisation to the chair in accordance with the requirements of the ASX Listing Rules for meetings.
“This amendment will provide greater certainty by removing any doubt or confusion in relation to shareholder voting on executive pay and will strengthen the Government’s remuneration reforms,” he said.
19 June 2012