Treasury has released exposure draft regulations pursuant to the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011 for consultation.

The draft regulations deal with prohibited hedging of remuneration of key management personnel.

The draft proposes that two arrangements will not be permitted:
• A put option on incentive remuneration; and
• An income protection insurance contract in which the insurable risk event affects the financial value of remuneration or equity or an equity-related instrument for the key management personnel.

The following two arrangements will be permitted:
• An income protection insurance contract in which the insurable risk event is the death, incapacity or illness of any of the key management personnel; and
• A foreign currency risk arrangement.

Submissions are also being sought in respect of what will be defined as remuneration recommendations which will require disclosure in remuneration reports.