Despite ASIC calls for better disclosure of executive pay, the situation remains unchanged from the corporate watchdog’s previous survey.
ASIC has called on companies to improve the disclosure of their remuneration arrangements for directors and executives.
ASIC deputy chair Belinda Gibson said the market and investor confidence needed “a high level of compliance with the executive remuneration laws”.
“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.”
She added that directors must provide sufficient detail on the remuneration arrangements to enable shareholders to assess the “appropriateness of them in the company’s circumstances”.
This year’s review of 50 remuneration reports was drawn from 300 of Australia’s biggest companies to the year ended 30 June 2011, and the previous review surveyed 60 remuneration reports.
At the same time, ASIC surveyed listed companies’ strategies for managing voting exclusions that prohibit key management personnel (KMP) and their closely related parties voting on the resolution to adopt the remuneration report.
The study examined 12 ASX300 companies that held their annual general meeting between 21 October and 23 November 2011.
ASIC found some companies had introduced procedures which gave the AGM’s chair more confidence that only legal votes were counted.
The regulator commended these practices which included asking KMP to advise closely related parties of the voting prohibitions; providing KMP with a pro forma letter containing instructions for nominee companies or trusts on not voting; seeking assurances from KMP that they would not vote, and; confirming the share registry service provider, if used, had excluded the relevant votes.
The Chartered Secretaries Australia (CSA) issued guidelines on 10 November last year to help companies 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,” Gibson said.
