On 18 June 2012, Parliament passed the Corporations Amendment (Proxy Voting) Bill 2012 (The 2012 Bill) which clarifies the proxy voting rules in relation to resolutions to adopt a company's remuneration report.
The 2012 Bill addresses an inconsistency in the Corporations Amendments (Improving Accountability on Director and Executive Remuneration) Bill 2011 which introduced the 2 strikes rules in relation to director remuneration. (Please see our article, 'Crackdown on Director and Executive Remuneration', from before the changes came into force).
The inconsistency prevented the Chair from voting undirected proxy votes on the advisory resolution on the remuneration report. TressCox advised a number of our clients on amendments to their standard proxy forms to allow shareholders to be deemed to have directed their votes. However, general statistics for listed companies show that, last year, a large proportion of proxy votes on the remuneration report had to be disregarded because shareholders did not direct their votes.
The 2012 Bill clarifies that the Chair may exercise the proxy if the Chair is appointed as a proxy and:
- the vote is directed, or
- the vote is not directed and the appointment of proxy expressly authorises the Chair to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of key management personnel.
What does this mean for my upcoming AGM?
While the amendment has clarified that the Chair may vote as proxy in relation to the advisory resolution on the remuneration report, the change is likely to mean that you will need to review your proxy form to either:
- allow the Chair to vote as proxy in relation to the remuneration report, or
- to make the proxy form easier for shareholders to understand and fill out correctly and to minimise the incidence of proxy votes which must be disregarded.
As some companies may be facing a potential second strike at this years' AGM, it will be important that the proxy forms are prepared correctly to avoid an unnecessary second strike and the need to hold a spill meeting resolution and the possibility of a meeting to spill the Board.
If you have any queries regarding these recent amendments, please do not hesitate to contact us.
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