Shareholders down under are about to get a little more power. The Australian government has introduced new legislation that would give shareholders what it calls ‘unprecedented power’ over executive pay.
According to Responsible Investor, the bill was ‘warmly welcomed by investor groups,’ although the Australian Institute of Company Directors called it a ‘heavy-handed black letter law approach’ that would produce unnecessary red tape.
The bill would strengthen the non-binding vote on remuneration by giving shareholders the opportunity to remove directors if the company’s remuneration report has received a ‘no’ vote of 25 per cent or more at two consecutive annual meetings.
The bill also prohibits directors, executives and their ‘closely related parties’ from voting on executive pay and requires shareholder agreement for declarations of ‘no vacancy’ at AGMs.
The Australian Shareholders Association says the proposed bill ‘should lead to improved transparency and accountability in executive remuneration matters, and we hope subsequent improvements in the alignment of remuneration and performance.’