Termination Payments For Directors And Executives: Into The Unknown

The proposed restrictions on termination payments for directors and executives loom as a major headache for many companies, their shareholders, their directors and their senior executives.

However, it is hoped that the draft released by Treasury is more of a work in progress than a near-final product. It is clear that the draft amendments need a lot more work. Clayton Utz has made a submission to Treasury, drawing attention to drafting and policy issues contained in the amendments. If you would like a copy of the submission, please contact one of the Clayton Utz partners listed below.

Among the issues we have identified are the following.

More Pain, Little Gain?

In broad terms, the Corporations Act currently requires shareholder approval for termination payments to directors and some senior executives if those payments are greater than seven times the director's or executive's final annual remuneration.