Seven: The Corporations Act, Corporate Governance and Termination Payments to Senior Employees
Posted: 17 Aug 2007 Last revised: 24 Feb 2009
Date Written: August 16, 2007
This paper presents an empirical study of the regulation of termination payments under Part 2D.2 of the Corporations Act 2001 (Cth) and the ASX Listing Rule 10.19, as well as limits endorsed in the ACSI Corporate Governance guidelines. Based on the termination payments contemplated by the executive service contracts of a sample of ASX 50 managing directors, the empirical results demonstrate firstly, that few termination payments would ever trigger the Part 2D.2 or ASX LR threshold due to the sheer magnitude of both the Part 2D.2 and ASX thresholds. Secondly, the analysis highlights problems with classifying share-based remuneration payments into either of the current sections 200F and 200G. Finally, the prevalence of contractual or share plan terms which permit share-based payments to be made without reference to the underlying performance conditions is also noted.
Keywords: termination payments, CEO pay, CLERP 9, corporate governance, ASX Listing Rules, shareholder voting, share based remuneration, executive compensation
JEL Classification: G34, G38, K22, M51, M52, J33, J41
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