Golden Handshake Draft Bill Open For Comment
Posted by Dave Bath on 2009-05-06
Golden handshakes, especially for executives involved in disastrous outcomes, are on the nose, and a draft bill to address some of the problems is open for comment at the Treasury website.
While the unofficial title is the "Golden Handshake Reform Bill" (the media announcement at alp.org.au has that title, officially it is the Corporations Amendment (Improving Accountability on Termination Payments) Bill 2009.)
As I see it, huge golden handshakes for disastrous executives are often huge golden showers on the public. If there was a decent correlation between severance entitlements to lowly employees and those to executives, then it wouldn’t be so bad (especially if set at the maximum for a by-the-hour employee who has worked for the company the same length of time as the executive).
The inquiry is only departmental, it’s yet to be polished and sent to parliament – so your Senate Inquiry announcement feed won’t have it.
Inquiry details over the fold…
- Ministerial press release (2009-05-05) about the departmental inquiry.
- Main inquiry page at Treasury
- Closing date for submissions: 2009-06-02
- Address for submissions:
- Exposure Draft of Bill as PDF (why no html – they give Microsoft formats?!?)
- Explanatory Memorandum (well, if it is 4 times the size of the bill, then perhaps memoranda would be better, although I expect many pollies would say memorandums)
- Associated regulations
From the blurb, it’s pretty much motherhood stuff, with shareholders getting a little more information and control. However, the big companies have institutional investors, often loaded with superannuation funds, so why can’t the government set some hard rules that will satisfy the general public for how such superannuation-fueled institutional investors should vote on golden handshake and remuneration matters?
I expect most of the submissions will come from high-powered executives or their executive unions, and will simply be either:
- Can we have this watered down?
- Love it – because I’ve got other loopholes ready to exploit!
- Other Treasury Consultations, including Creeping Acquisitions – the way forward, with submissions on the discussion paper to
email@example.com 2009-06-12. (Perhaps this is really about acquisitions by creeps.)
- There is a suprising (because it isn’t necessarily self-serving) suggestion to the recently-closed Short Selling inquiry in a submission from the Securities and Derivatives Industry Association, about what should happen with dodgy short-sell deals, and perhaps something analogous could be done with golden handshakes:
Whilst a short position cannot by definition be the subject of forfeiture, as the stock has been sold, Parliament could consider forfeiture of profits of a short selling transaction, compulsory close-out of the position, or some such remedy that could be applied within the jurisdiction. There may be scope for international regulatory cooperation to be invoked in the investor’s place of domicile via international memoranda of understanding between regulators.
International memoranda on reclaiming golden handshakes from companies with decreased market capital during the working period of an executives would certainly make the likes of Telstra Sol and his Amigos worried!