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Wednesday, 4 December 2002
Page: 7144

Senator CONROY (2:11 PM) —My question is to Senator Coonan, the Minister for Revenue and Assistant Treasurer. Does the minister believe it is ethical that executives who receive options and shares as part of an incentive scheme are able to use derivatives to lock in the value of those schemes—so-called protection deals—when shareholders are subject to both upward and downward movements in share prices? Does the minister agree that this entirely negates the claimed benefit of executive share and option schemes, which is to align the interests of management and shareholders? Why has the minister taken no action to prohibit the use of these protection deals? Why is the minister protecting the interests of the top end of town?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —In answer to Senator Conroy's question, ASIC, of course, is taking action. I understand that it has been announced that this issue has been referred to the Australian Stock Exchange for referral to the Corporate Governance Council for consideration. When these deliberations have run their course I will be in a position to announce the government's position.

Senator CONROY —Mr President, I ask a supplementary question. Can the minister confirm that these protection deals are also a device to avoid disclosure to shareholders? Why wasn't this addressed in the government's CLERP 9 paper on corporate governance? Isn't this just another case of this government letting greedy executives distort and disguise their remuneration packages at the expense of ordinary Australians?

Senator COONAN (Minister for Revenue and Assistant Treasurer) —I thank Senator Conroy for the supplementary question. I have already said that the matter is being addressed by ASIC, having referred the matter to the Australian Stock Exchange which is referring it to the Corporate Governance Council. That is an entirely appropriate process by which to consider this specific matter.