On 14 December 2012, the Hon Bernie Ripoll MP, Parliamentary Secretary to the Treasurer, released an Exposure Draft of legislation to continue reform of the disclosure of executive remuneration. The proposals in the Exposure Draft will have implications for boards and executives who will be keenly interested to understand their potential impact.
KPMG has prepared an Executive Remuneration briefing in response to the Exposure Draft which outlines the key points.
The key reforms in the Exposure Draft are:
- An 'if-not why-not' requirement on the clawback of paid remuneration based on financial statements that are found to contain a material misstatement or omission.
- Listed disclosing companies will be required to disclose past pay, present pay and future pay of Key Management Personnel.
- Additional disclosure of termination payments and post-termination consultancy agreements.
- A requirement that the annual report include a description of the remuneration governance framework.
- A proposal that companies only need to disclose the number of options forfeited and the year of grant, in lieu of the current requirement to disclose the value of forfeited options.
KPMG recommends directors engage with the government throughout the consultation period to ensure the final legislation works to assist shareholders in understanding remuneration.