Seven: The Corporations Act, Corporate Governance and Termination Payments to Senior Employees

Posted: 17 Aug 2007 Last revised: 24 Feb 2009

See all articles by Kym Sheehan

Kym Sheehan

The University of Sydney Law School

Colin Fenwick

University of Melbourne - Law School

Date Written: August 16, 2007

Abstract

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

Suggested Citation

Sheehan, Kym Maree and Fenwick, Colin, Seven: The Corporations Act, Corporate Governance and Termination Payments to Senior Employees (August 16, 2007). Melbourne University Law Review, Vol. 32, No. 1, 2008. Available at SSRN: https://ssrn.com/abstract=1007638

Kym Maree Sheehan (Contact Author)

The University of Sydney Law School ( email )

New Law Building, F10
The University of Sydney
Sydney, NSW 2006
Australia
61 2 8627 4660 (Phone)

Colin Fenwick

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia

Register to save articles to
your library

Register

Paper statistics

Abstract Views
706
PlumX Metrics