CAMAC on Disclosure

The Corporations and Market Advisory Committee (CAMAC) has provided a report on Australia’s director and executive remuneration disclosure requirements and included are a number of specific suggestions to improve company reporting on this issue.  This article outlines the latest from CAMAC.

Introduction

The Corporations and Market Advisory Committee (CAMAC) has provided a report on Australia’s director and executive remuneration disclosure requirements.

The report follows the Productivity Commission’s inquiry into the area late last year and sets out a number of recommendations that are intended to simplify remuneration reports and provide more relevant information to shareholders.

The good news is that CAMAC does not recommend major legislation changes to remuneration reporting at this time. Instead they recommend various specific amendments to s300A and the Regulation in the Corporations Act 2001 in response to particular concerns about the current remuneration reporting framework.

In releasing the report, the Convenor of CAMAC, Joanne Rees, said:

  • CAMAC sees remuneration reporting as a dynamic process, which needs to reflect evolving remuneration practices. Companies should be allowed to develop their response to this changing environment without simultaneously having to come to grips with wide‑ranging new reporting requirements. Evolving remuneration reporting practice, and ideas for simplification of remuneration reports, may provide the basis for a fresh non‑prescriptive legislative approach to remuneration reporting at some future time.

Egan Associates is pleased to see that CAMAC has recognised the need for companies to develop and adapt their own remuneration arrangements.  It is important that remuneration policy and practice is developed in such a tailored way so that the business strategy of the organisation can be reflected supported by remuneration plans.

CAMAC has made specific suggestions to improve executive remuneration reporting, including to:

  • require companies to give a general description of their remuneration governance framework
  • permit companies to withhold commercially sensitive information concerning a performance condition, provided that they disclose that fact and set out a general description of the omitted information
  • remove the requirement to use accounting standards methodology in remuneration reports
  • require the disclosure of all termination payments, identifying entitlement payments (amounts paid on termination that reflect statutory and other accumulated payments), severance payments (amounts paid specifically for termination, including gratuitous and discretionary payments) and post‑severance arrangements
  • require disclosure, for each executive, of crystallised past pay (remuneration granted at some previous time and paid in the current financial year), present pay (remuneration granted and paid in the current financial year) and future pay (remuneration that is deferred to some future period).

The government will now consider this report. Egan Associates will keep you posted of any developments.

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