Executive remuneration disclosure for Australian listed and disclosing entities
Executive remuneration disclosure in Australia is governed by the Corporations Act 2001 (Cth), the accounting standards, and ASX Listing Rules. This guide sets out 10 obligations — remuneration report content, KMP disclosure, the two-strikes rule, and equity-based pay approvals — that apply to listed and disclosing entities in each reporting cycle.
Coverage
All listed entities and disclosing entities under the Corporations Act. Registered schemes and other reporting entities have narrower obligations. Unlisted public companies must still comply with KMP disclosure where they are disclosing entities. Key management personnel are captured individually by the disclosure regime.
Legal basis
Corporations Act 2001 (Cth) ss 300A, 249L, and Part 2E (related party transactions). Australian Accounting Standard AASB 124 (Related Party Disclosures). ASX Listing Rules 3.16, 10.14, and 10.17. ASIC Regulatory Guides RG 76 and RG 228.
The obligations
Prepare a remuneration report in the directors' report
Listed companies must prepare a remuneration report as part of the annual directors' report, covering policy, link between performance and pay, elements of KMP remuneration, and service agreement terms.
Identify and disclose each KMP individually
Disclose the name of each key management personnel (directors and other persons with authority and responsibility for planning, directing, and controlling the activities of the entity) and the components of their remuneration.
Disclose short-term, post-employment, long-term, and share-based amounts
Remuneration must be split into short-term employee benefits, post-employment benefits, other long-term benefits, termination benefits, and share-based payments — with dollar amounts and values.
Explain the link between performance and pay
The remuneration report must explain the board's policy for determining remuneration, the relationship between the policy and the entity's performance, and the performance hurdles attached to variable pay.
Put the remuneration report to a non-binding vote
The remuneration report must be put to a non-binding shareholder vote at the AGM. The result is advisory but triggers the two-strikes rule if a 25% or greater vote is cast against the report.
Respond to the two-strikes rule
A first strike (25%+ no vote) triggers a spill proposal at the next AGM if a second strike occurs. Following a second strike and spill resolution, all directors (except the MD) must stand for re-election at a spill meeting.
Obtain shareholder approval for equity grants to directors
Issues of securities to directors under an employee incentive scheme generally require shareholder approval under ASX Listing Rule 10.14. Approvals must be obtained within 12 months of the grant.
Obtain shareholder approval for termination benefits above the threshold
Termination benefits above one year's base salary (or equivalent threshold) require shareholder approval. Benefits include cash, equity acceleration, and deemed benefits.
Apply clawback and malus provisions where triggered
Listed entities generally include clawback and malus provisions in incentive plans. The remuneration report should disclose when clawback has been triggered, considered, or waived.
Disclose related-party transactions involving KMP
Transactions between the entity and KMP (or their related parties) must be disclosed in financial statements under AASB 124 and may require shareholder approval under Chapter 2E.
What happens if you do not comply
Defective disclosure in the remuneration report can attract civil penalties, ASIC enforcement action, and shareholder class actions. Failure to obtain required approvals under ASX Listing Rules can result in securities being void or subject to escrow. Two consecutive strikes lead to a forced board spill.
Reporting requirements
Annual remuneration report as part of the directors' report. Continuous disclosure of material remuneration-related information (e.g. CEO termination, material change in incentive plans). Notice of meeting disclosures for equity grants and termination benefits.
What firms should do today
- Build a KMP register capturing appointments, resignations, and remuneration components in real time
- Map each performance hurdle to the disclosed link between performance and pay
- Run an annual two-strikes risk assessment on proxy voting intentions ahead of the AGM
- Align the incentive plan rules, clawback policy, and disclosure wording
- Obtain shareholder approval for equity grants within 12 months to preserve Listing Rule 10.14 exemption
- Verify related-party disclosures against AASB 124 and Chapter 2E requirements before lodgement
Compliance with Quillio
Quillio drafts remuneration reports, notice of meeting resolutions, clawback memos, and AASB 124 disclosure schedules aligned to current Corporations Act and Listing Rule requirements. Australian-hosted infrastructure keeps KMP information onshore. See /practice-areas/commercial-lawyers or start a free trial.
This guide is general information about executive remuneration disclosure — not legal or accounting advice. Disclosure content, Listing Rule approvals, and related-party analysis are fact-specific. Obtain specialist corporate and accounting advice before finalising the remuneration report.
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