ASIC Issues Guidance on Listed Company Executive Pay Decisions

Source: Regulation Asia Editors, Regulation Asia 2020-06-15

The high-level guidance set out specific factors boards and remuneration committees should consider when exercising discretion on executive variable pay in the current environment.

ASIC (Australian Securities and Investments Commission) has released high-level guidance to assist boards and remuneration committees of listed companies to navigate decisions on executive variable pay, in the context of Covid-19.

The recommendations are based on a targeted review of board oversight of variable remuneration schemes, covering 21 ASX listed companies worth a collective AUD 738 billion in market cap (as at 10 June 2020).

ASIC was preparing a detailed report on its findings when the Covid-19 pandemic required a recalibration of its priorities. The final report is now expected to be released later in 2020.

As such, ASIC has proceeded to directly provide the 21 listed entities covered in the review with its specific observations and findings, and has additionally released the new information sheet to assist the boards and remuneration committees of other listed companies.

The information sheet focuses on the importance of a robust remuneration governance framework, especially to ensure informed decision making; and specific factors to consider when exercising discretion on executive variable pay in the current environment.

“Discretion is likely to be a key focus for boards in their 2020 variable pay decisions” as the targets set in 2019 balanced scorecards may fail to address companies’ shifting priorities and the impacts Covid-19 has had on their operating and financial position, ASIC says.

The information sheet is available here.

ASIC Issues Guidance on Listed Company Executive Pay Decisions

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