The Australian Government has announced reforms aimed at ‘curbing excessive golden handshakes’ (or termination payments) paid to company executives. The government proposes to amend the Corporations Act 2001 to lower the threshold at which termination payments must be approved by shareholders from the current seven year’s average base salary down to one year. The Treasurer noted, however, that the changes cannot be made retrospectively and that the announcement ‘will not prevent existing contracts on termination payments from proceeding’.
The government has also announced that the Productivity Commission will examine the regulation of director and executive remuneration. The Treasurer said the review is a broad-ranging examination that will consider the existing regulatory arrangements that apply to director and executive remuneration for companies that are disclosing entities under the Corporations Act. The review will also consider the role of equity-based payments and incentive schemes, and the role played by the tax treatment of equity-based remuneration.