Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Hansard source

I thank Senator Bob Brown for circulating his reasons. I will be very brief in reading mine. I am sorry; I am not as well prepared as you are, Senator Brown. We have debated this before. I note that the proposal put forward by the Greens is similar to a proposal recently identified by RiskMetrics, an advisory firm. Under this proposal, the Corporations Act would be amended to require that termination payments be capped at $1 million before shareholder approval is required.

I note that commentators have criticised this proposal, as setting a specific dollar threshold may sanction or even encourage termination payments that fall just below this level. They have also noted that a cap of $1 million would indicate that parliament considers this amount to be reasonable, as payments up to this amount would not require a company to seek shareholder approval. In cases of poor performance, however, I doubt that shareholders would consider payment of up to $1 million as justified. Finally, I note that the introduction of a $1 million threshold is arbitrary and does not take into consideration a director’s years of service or annual remuneration.

The government will undertake a review of the regulatory framework relating to director and executive remuneration, including strengthening the current requirements dealing with termination payments. For those reasons, we cannot support the amendment.