The Australian Securities and Investments Commission (ASIC) has called on companies to improve the disclosure of their remuneration arrangements for their directors and executives.

 

The call comes after the commission conducted a review of 50 remuneration reports from 300 of the country’s largest publically listed companies for the year ended June 2011.

 

‘It is important for the integrity of the market and investor confidence that there is a high level of compliance with the executive remuneration laws,’ ASIC Deputy Chairman Belinda Gibson said.

‘This year’s review showed that companies could still improve their disclosure in order to provide shareholders with a better understanding of why directors have adopted the remuneration arrangements they have.

‘Directors must provide sufficient detail on the remuneration arrangements to enable shareholders to assess the appropriateness of them in the company’s circumstances.’

 

ASIC also surveyed how listed companies have managed the new voting exclusions that prohibit key management personnel (KMP) and their closely related parties voting on the resolution to adopt the remuneration report. ASIC examined procedures adopted by 12 ASX300 companies that held their annual general meeting between 21 October 2011 and 23 November 2011.

Procedures used by some companies that others could adopt to provide the Chair of the meeting with greater confidence that only those votes that are permitted under the law have been counted, include:

  • requesting the KMP to advise their closely related parties of the voting prohibitions
  • providing members of the KMP with a pro forma letter with instructions for nominee companies or trusts on not voting their shares
  • seeking assurances from KMP that they will not cast votes, and
  • confirming that the share registry service provider, if used, has excluded the relevant votes.


On 10 November 2011 Chartered Secretaries Australia (CSA) issued guidelines to assist companies to manage voting exclusions on remuneration-related resolutions.

‘ASIC encourages directors and those supporting directors to read the CSA guidelines and put in place procedures that demonstrate to shareholders that votes at meetings are properly conducted,’ Ms Gibson said.