Loopholes have been closed in proposed regulations cracking down on executive termination payouts released on Thursday by the Federal Government.
To prevent companies potentially subverting the laws, restraint of trade and voluntary payments which are part of an out-of-court settlement have been broadly defined as termination benefits, but statutory entitlements such as long-serve leave have been excluded.
A base salary has also been defined to include all pay, superannuation and shares that are not dependent on performance and is relevant to the proposal that shareholders can vote on golden handshakes that exceed more than one year's base salary.
Corporate Law Minister Chris Sherry said the Government had clarified regulation and made changes following public consultation and targeted consultations.
"These reforms will empower shareholders to reject excessive termination payments and promote responsible remuneration practices," he said.
"Importantly, the Government has provided clarity around the definition of 'termination benefit', specifically, to ensure statutory entitlements are not included as payments that require shareholder approval."
The Australian Institute of Company Directors told The Age that while it had no problem with the latest regulations, the government's legislation on golden handshake payouts should be limited to listed companies and a threshold of two years' total remuneration should be imposed.
A Senate inquiry is scheduled to deliver its findings into the Rudd Government's legislation on Monday.