Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Hansard source

I have a couple of points on this amendment from the Liberal-National Party. On the issues of the threshold of 25 per cent, the Productivity Commission did consult widely. It is obviously a matter of considerable interest, and indeed contention, for many.

While the first two strikes occur where a company's remuneration report receives a no vote of 25 per cent or more, there are still several protective measures in place to ensure that there is not a destabilising effect on company operations and that minority shareholders cannot abuse the process to inappropriately undermine company stab­ility. Following the second strike, share­holders will vote to determine whether the directors will need to stand for re-election. The spill resolution can only pass with 50 per cent or more of eligible votes cast. If it passes then the spill meeting, which must be held within 90 days, also requires over 50 per cent of votes to pass. The two-strikes process allows shareholders to express their concern with the remuneration report and compels a company to outline their response to these concerns.

As the PC concluded, a threshold of 25 per cent would better align with levels commonly accepted as demonstrating serious shareholder concern about remuneration, particularly in light of current voting patterns. Clearly it provides a greater level of accountability than a threshold of 50 per cent. In short, the two-strikes test empowers share­holders to take action against unres­ponsive boards while avoiding any destab­ilising effect on companies.

The senator asked a question about the minimum. The minimum is not a legislative minimum; it is the minimum established in the company's constitution, so that is the relevant figure. We believe it is appropriate, we do not believe it is set too low and we oppose the opposition's amendment.