Australia: director and senior executive termination payments

A draft of the Corporations Amendment (Improving Accountability on Termination Payments) Bill 2009 has been published: see here. In the accompanying explanatory memorandum, the purpose of the Bill is set out as follows:

The current regulatory framework allows for termination benefits to reach up to seven times a director’s total annual remuneration package before shareholder approval is required. Additionally, only company directors’ termination benefits are subject to shareholder approval.

The Bill introduces a significantly lower threshold at which termination payments benefits must be approved by shareholders. Under the new arrangements, termination benefits for company directors and executives exceeding one year’s average base salary are subject to shareholder approval. In addition, the range of personnel whose termination benefits can be subject to shareholder approval is expanded from directors to also include senior executives and key management personnel. The Bill also clarifies the types of benefits that are subject to shareholder approval"