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Say-on-Pay and Limits on Key Management Compensation Down Under

Similar to the Dodd-Frank Act in the United States, Australia recently adopted legislation applicable to listed companies that, among other reforms, provides for shareholder voting on executive compensation and prohibits compensation arrangements (?Ç£hedging arrangements?Ç¥) that limit the risk exposure for a member of key management for compensation that depends on the satisfaction of a performance condition. The new shareholder vote rules in Australia go further than the ?Ç£say-on-pay?Ç¥ rules in the U.S., by providing that if more than 25 percent of stockholders vote against a listed company?ÇÖs remuneration report in two consecutive years, stockholders can then require the company?ÇÖs board of directors to stand for reelection. Key management is excluded from voting on the remuneration reports. The new shareholder vote rule applies to remuneration report resolutions put to shareholders after July 1, 2011. The prohibition on hedging arrangements applies to agreements entered into on or after July 1, 2011.

The lawyers of our Employee Benefits and Executive Compensation Practice Group are readily able to assist companies on a nationwide basis with implementing sophisticated benefit plans and providing answers to their most challenging compensation issues. Additionally, our lawyers are well aware of the daily employee benefits challenges facing companies of all sizes and are capable of helping in-house lawyers and human resources personnel with the day-to-day advice and guidance necessary to properly administer employee benefits plans.

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August 2011