Navigating Australia’s remuneration disclosure rules in 2025

Disclosure of director and senior executive remuneration is not new to corporate Australia, particularly for listed companies.  However, 2025 will be a watershed year in which a number of new remuneration disclosure obligations will commence or be enhanced, including under:

• APRA’s prudential standard CPS 511 Remuneration (CPS 511); and
• the Workplace Gender Equality Act 2012 (Cth) (Gender Equality Act).

This article explores the overlapping and onerous requirements of the new remuneration disclosure obligations, and our thoughts on what companies should do to best prepare for the new disclosure obligations.

From 1 January 2025, Boards will need to be mindful of the following remuneration disclosure obligations:

• Continuing - for listed companies, remuneration disclosure under s.300A of the Corporations Act 2001 (Cth);
• New - for APRA regulated entities, remuneration disclosure under CPS 511; and
• New and enhanced - for most Australian employers, remuneration disclosure and targets disclosure under the Gender Equality Act.

Each disclosure regime has a different emphasis and requires slightly different disclosure.

The overlapping regimes will create practical issues for companies, including in respect of the timing of disclosure and the onerous nature of gathering the information required by each regime.

Existing remuneration disclosure obligations

Substantive remuneration disclosure obligations of directors and senior executives have applied for some time now for listed companies.  With the passage of the Corporate Law Economic Reform Program (Audit Reform & Corporate Disclosure) Act 2004, ASIC noted: the purpose of listed company remuneration disclosure was “to allow shareholders to compare directors’ and executive officers’ remuneration with the reported performance of the company and economic entities”.  In general, listed companies are required to disclose details of:

• the Board’s policy for the remuneration of key management personnel, including a discussion about the relationship between pay and performance;
• the company’s variable remuneration design, including why specific performance conditions and their assessment have been chosen;
• prescribed and detailed quantitative remuneration details for each key management personnel’s fixed and variable remuneration, including the value of options granted, exercised, and lapsed during the financial year; and
• specific employment conditions, including the length of the employment contract and termination provisions.

Listed companies remuneration disclosure under the Corporations Act is heavily weighted towards quantitative remuneration information for a narrow cohort of executives (the ‘key management personnel’).  Corporations Act disclosure is limited in respect of explaining remuneration governance matters like risk and conduct outcomes in the consideration of variable remuneration outcomes, including the application of malus and clawback in relation to adverse risk and conduct events.

Remuneration disclosure through annual reports creates a ‘dialogue’ between the Board and shareholders that reaches its zenith during the non-binding vote on companies’ remuneration reports at their AGMs.  The number of strikes against remuneration reports in 2024 was slightly above average[1], the profile of strikes against remuneration reports (e.g. Perpetual’s 88% vote against the remuneration report) was high, as is institutional proxy advisers’ analysis of executive remuneration.  Additionally, the intensity of media scrutiny of strikes against remuneration reports continues to be significant.

In 2023, the Corporations Act’s remuneration disclosure regime was expanded to include a requirement that registrable superannuation entities (i.e. superannuation funds) report the remuneration of their key management personnel.  While superannuation entities previously had remuneration disclosure obligations under the Superannuation Industry (Supervision) Act 1993 (Cth), the Corporations Act’s remuneration disclosure regime requires quantitative disclosure of a similar kind to those for listed companies.

Remuneration disclosure in 2025

In addition to the Corporations Act’s disclosure regime, CPS 511 and the Gender Equality Act will create new disclosure obligations for companies to navigate in 2025.

These developments are covered in more detail in the following articles: Show me the money! Remuneration disclosure under CPS 511 - KWM,  Workplace gender equality legislative changes - KWM, and Moving towards gender equality: Bill to introduce reporting requirements - KWM). 

ASX Corporate Governance Principles 5^th edition

Reforms to remuneration disclosure have also been proposed as part of the ASX Corporate Governance Principles (5^th ed).  Specifically, Recommendation 8.3 would require companies to disclose (on a de-identified basis) the use of malus and clawback of senior executives remuneration outcomes.  Disclosures would include:

1. Identifying the types of matters which trigger the use of malus or clawback provisions;
2. The number of current and previous senior executives impacted by malus or clawback provisions; and
3. The value of remuneration downwardly adjusted, on an aggregated basis or expressed as a percentage.

By its nature, this information is highly sensitive.  When identifying the types of matters triggering downward adjustment, companies will need to think carefully about how they disclose decisions about remuneration downward adjustment in relation to matters that may be subject to external scrutiny by the media, regulatory authorities, parliaments, and in the course of judicial proceedings.

What should companies think about now?

The clear policy objective of remuneration disclosure through CPS 511 and the Gender Equality Act is to allow the public (read: the media) to assess and compare remuneration outcomes across industries to drive improvements in risk management through remuneration (CPS 511), and gender equality (Gender Equality Act).  In response companies and boards should consider now:

1. Remuneration governance – Does your organisation have appropriate remuneration governance systems and processes in place to meet the compliance burden of CPS 511 and the Gender Equality Act? For example:
   1. If a remuneration gender pay gap exists in your workplace, are you able to explain: where the gap is (e.g. primarily in the senior leadership quartile, or in specific parts of the business), and the systems your organisation utilised to monitor and address the remuneration gender pay gap?
   2. Is variable remuneration designed in a manner that is consistent with CPS 511?
   3. Has your organisation designated the correct specified role person?
   4. Are you able to stand behind remuneration governance decision making, like the vesting of variable remuneration in circumstances where financial and non-financial outcomes have been poor, or where there has been demonstrable and public non-financial risk failure in the prior 12 months?
   5. Do you track where remuneration consequences have been applied for sexual harassment or other conduct matters?
   6. Where variable remuneration has been downwardly adjusted (through the application of malus and clawback tools), are you able to publicly explain why and what your organisation has done to remedy the underlying root causes of the event justifying downward adjustment?
2. Public response to remuneration information – Organisations should expect and be prepared to respond to media, public, and governmental enquiries concerning their disclosed remuneration information. Organisations should expect to see:
   1. Benchmarking and comparison of remuneration outcomes between entities, particularly by making comparisons between remuneration outcomes and financial and non-financial performance, and remuneration gender pay gap statistics;
   2. The correlation of remuneration decisions (e.g. downward adjustment decision) with significant public adverse risk events in the prior 12 months; and
   3. In response to sexual harassment and other Respect@Work issues, the drawing of correlations to gender pay statistics – particularly for upper quartile senior managers; and
   4. Adverse commentary on remuneration outcome decisions which may be perceived as inadequate – but without the critical (and often highly-confidential) information that informed Board decision-making.
3. Remuneration information gathering systems – Like the quantitative remuneration disclosure obligations in the Corporations Act, CPS 511 and the Gender Equality Act require a significant amount of personalised remuneration information to be gathered, aggregated, and reported. CPS 511 and the Gender Equality Act remuneration disclosure obligations are detailed and onerous for organisations to satisfy and work should commence now to ensure they are able to meet the disclosure deadlines in both regimes.  Listed companies, banks and superannuation entities will have experience with public report of remuneration information.  However, unlisted insurers and foreign headquartered entities will need to ensure that they meet the enhanced disclosure requirements of CPS 511.

Simplifying remuneration disclosure?

The remuneration disclosure obligations outlined above are onerous and will be time consuming for more companies to satisfy.  However, there is a sliver of regulatory relief for APRA regulated banks.  APRA has indicated that it will repeal the Basel 3 remuneration disclosure obligations in APS 330, which broadly overlap (but are not the same as) the CPS 511 remuneration disclosure obligations.  What this means is that for APRA regulated banks, if their financial year finishes on or after 31 December 2024 they will report under the CPS 511 remuneration disclosure regime rather than the APS 330 regime.

What’s coming next for remuneration disclosure?

We understand that APRA is continuing to develop the reporting tools and template spreadsheets to collect remuneration information required for disclosure under CPS 511, and that it will provide industry with at least a 12-month implementation window.  It is not yet known how APRA will utilise the information reported to it, and whether it will adopt the approach of WGEA in developing tools for the public to compare remuneration outcomes for APRA regulated entities.

Additionally, in addition to the Reform Bill which requires employers with greater than 500 employees to set and report their progress against gender equality targets, further reforms to the Gender Equality Act may be on the horizon.  The WGEA has made no secret that its wish list for legislative reform includes:

• collection of information about employees who identify as non-binary, and other diversity information; and
• requiring organisations to disclose the extent to which they utilise confidentiality obligations (colloquially, ‘NDAs’) and further information about the prevalence of sexual harassment and steps taken to address it in accordance with the positive duty in the Sex Discrimination Act 1984 (Cth).