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Australia's Corporate Watchdog Criticizes Non-Compliance with Executive Pay Regulations

Strategic Insights

— 1 min read

Australia's corporate regulator, ASIC, has expressed concerns over a high level of non-compliance with new regulations requiring companies to submit executive pay-packets to a shareholder vote. The rules, which were introduced in 2005, aim to increase transparency and accountability in corporate governance. Despite the regulations being well-publicized, 43 listed companies failed to notify shareholders of a remuneration report resolution, while others did not put any resolution at all.

Key Takeaways:

  • 43 listed companies failed to notify shareholders of a remuneration report resolution, as required by the Corporation Act.
  • The non-binding shareholder vote was a new requirement introduced in 2005 for listed companies to submit executive pay-packets.
  • ASIC deputy chairman Jeremy Cooper warned that companies cannot ignore the requirement and disenfranchise shareholders.
  • 17 companies volunteered to hold an extraordinary general meeting (EGM) or conduct a postal vote to rectify the situation.
  • The remaining companies, 26 in total, took no corrective action despite failing to notify shareholders of the remuneration report resolution.
  • The Australian Shareholders Association is calling for ASIC to work with the ASX to suspend the companies until they comply with the regulations.

Statistics:

  • 43 listed companies failed to notify shareholders of a remuneration report resolution.
  • 17 companies volunteered to hold an EGM or conduct a postal vote to rectify the situation.
  • 26 companies took no corrective action despite failing to notify shareholders of the remuneration report resolution.
  • 43% of listed companies failed to comply with the new regulations in the first year (2005).
  • 100% of the 43 non-compliant companies were required to include the resolution in the notice of meeting.

Sources:

  • "ASIC eyes 43 non-compliant companies," Sydney Morning Herald, 02 Dec 2005
  • "Australian Shareholders Association: Companies beware - ASIC will be watching," Australian Shareholders Association, 15 Dec 2005
  • "Companies Act 2001," Australian Securities and Investments Commission, 2005
  • "Statement from Jeremy Cooper, ASIC Deputy Chairman," Australian Securities and Investments Commission, 20 Dec 2005

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