Second Stability Act 2012 Improves Corporate Governance

The Second Stability Act 2012 (2. Stabilitätsgesetz 2012; 2. StabG 2012) also amends the Austrian Stock Corporation Act (Aktiengesetz) and the Austrian Commercial Code (Unternehmensgesetzbuch). The changes will enter into force on 1 July 2012. The most important amendments are presented in the following summary.

Remuneration of managing directors 

According to Art 78 para 1 of the Austrian Stock Corporation Act, the supervisory board shall ensure that the total benefits provided to the members of the management board are proportionate to the tasks of the individual management board member and the company's situation.

The new law introduces further criteria for the appropriateness of managing directors' remuneration: first, it states that the performance of the managing directors must also be taken into account. Second, the supervisory board has to look at the common practice in comparable companies, as well as the pay structure in the company itself. Finally, it