Remuneration Resolutions at Listed Company AGMs
The Australian Securities and Investments Commission (ASIC) has released an information sheet on remuneration report resolutions.
Under amendments to the Corporations Act (Act) introduced by the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011 there is some uncertainty about the circumstances in which a shareholder of a listed company can appoint a chairperson who is a member of the company’s key management personnel, which includes a director, to vote as their proxy. Section 250R(4) of the Act only allows the chairperson to vote on remuneration report resolutions on a proxy which is a directed proxy. The Government has clearly indicated that it intends to amend the legislation to allow chairpersons to vote under its proxies but it is not anticipated that any such amendment will be legislated prior to the 2011 annual general meetings for companies with a balance date of 30 June 2011.
Shareholders often appoint the chairperson of the AGM as their proxy to vote on their behalf. The chairperson may be directed how to vote on a resolution by ticking a box next to the resolution on the proxy appointment form (a directed proxy) or the shareholder may not specify the way the chairperson must vote (an undirected proxy).
Until the legislation is amended, ASIC has suggested that the following options are available to listed companies:
• making no change to the company’s usual proxy form and ensuring that the chairperson will not vote any undirected proxies on the remuneration report resolution;
• amending the company’s proxy form so that there are more directed proxies which can be counted on the vote on the remuneration report such as a specific notation that unless the chairperson is directed how to vote on such resolution it will not be counted;
• suggesting shareholders consider nominating a proxy other than a member of the company’s key management personnel for the purpose of voting on the remuneration resolution; and
• applying to ASIC for relief in relation to that resolution.
The information sheet sets out the information which must be provided to ASIC in order to obtain relief and draws attention to the fact that ASIC cannot make a class order in relation to the relief but that each application for relief will be considered individually.
Until the law is changed, shareholders of listed companies who wish to give proxies to a member of the company’s key management personnel (including to directors) should ensure that they give a directed proxy for the remuneration resolution so that their votes will be counted.
Joe Polkinghorne
Special Counsel
T: +61 2 9390 8335
E: joe.polkinghorne@holmanwebb.com.au