Senator COONAN (Minister for Revenue and Assistant Treasurer) (5:34 PM) —I would like to very briefly respond to Senator Murray's comments. His amendment (3) is a proposal that shareholder approval be mandated for all remuneration and retirement packages for directors, whether executive or non-executive. The government's position on this is that the bill does not seek to shift accountability for determining executive remuneration to shareholders, even in relation to executive directors. It is appropriate, in the government's view, that the responsibility and accountability through the non-binding shareholder vote remains with the board.

As I said in respect of some earlier amendments—the ones we have just dealt with—the bill does not intend to blur the line of responsibility for shareholders to determine directors' remuneration and for directors to determine executives' remuneration. Requiring shareholders to directly approve payments to executives would detract from the accountability of directors for such payments. The Corporations Act provides that directors are to be paid remuneration as determined by the company at a general meeting. However, this is a replaceable rule that in practice is almost universally overridden by a provision in the company's constitution.

As everyone knows, the listing rules of the ASX require shareholder approval of any increase in the total pool of directors' fees payable to all directors. This does not apply to the salary of an executive director. The government consider, then, that there are already mechanisms available which require shareholder approval of increases in non-executive directors' remuneration. Again, the non-binding shareholder vote in directors' and senior executives' remuneration is, in the government's view, a powerful tool to hold directors to account and should be at least given a chance to operate in practice before much more restrictive amendments are considered. A related issue that we have just dealt with is the opposition's proposal—which has now been passed—to amend the act to require shareholder approval for termination payments to executives that exceed the value of a year's remuneration. Given the way in which Senator Murray has cast this matter, I have at least placed on record the government's view that we will not be supporting it.