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New laws on executive remuneration passed by Australian Parliament

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20 Jun 2011

The Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011 was passed by the Australian Senate on 20 June 2011, paving the way for new requirements to commence from 1 July 2011.

Some of the key reforms include giving shareholders more power to have a say over remuneration, improving the requirements for disclosure of remuneration consultants and prohibiting directors from hedging their remuneration or voting on the remuneration of key management personnel.

Under a new 'two-strikes' rule, if the company's remuneration report has received a 'no' vote of 25 per cent or more at two consecutive annual general meetings, shareholders will have the opportunity to vote on a motion to spill the board. Where a spill motion has been supported by a majority of shareholder votes, directors will face fresh elections at a subsequent spill meeting.

Click for Australian Government press release (link to Australian Treasury website).

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