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Legislative solution to executive remuneration rejected by Chartered Secretaries Association

by Hilary Kincaid 17. August 2010 11:38

In a submission to the Corporations and Markets Advisory Committee (CAMAC), the Chartered Secretaries Association has argued that it is neither feasible nor practical for legislation to determine one of the thorniest elements of executive remuneration— incentive components.

"A centralised, regulated approach for setting remuneration will deprive companies of the ability to respond most effectively to the needs of the day, and almost certainly will drive inefficiencies and unwanted outcomes", said Peter Turnbull, President of the Association.

The CSA believes that directors should ultimately retain responsibility for these key decisions, balanced by accountability and transparent and clear disclosure. The recommendations include:

  • removing the requirement that directors report to shareholders on remuneration using defined terms from the accounting standards;
  • mandating that reporting include actual pay received during the year, including base salary and both short and long-term incentives;
  • mandating separate reporting of deferred payments relating to those incentives by stating the maximum number of securities (rather than their value) that may be received, and anticipating the number of securities that will be received based on current performance; and
  • mandating a two-tier approach to reporting perfomance against short-term incentive targets, which would require (a) disclosure of the general nature of the targets' components, and (to the extent not prejudicial to the company) (b) the specific targets relating to those incentive targets.  

Submissions on CAMAC's executive remuneration information paper closed on Friday 13 August.

   

Tags:

Law reform

Comments

26/08/2010 4:53:01 AM #

I in fact came across this on Google, and I am actually happy I did. I will definately be returning here a lot more often. Wish I could add to the post and bring a bit a lot more to the table, but am just absorbing as much info as I can at the moment.

SSI United States |

26/08/2010 9:16:47 AM #

I'm delighted that you find it useful! Please feel free to comment - there's a lot of focus here at the moment on whether we can gain something from US insolvency law and its distinct culture of recovery (ours tends to lean more towards the dissolution of a company).

hilary.kincaid Australia |



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