1. What rules actually apply?

For Australian companies listed on ASX, KMP remuneration disclosure mainly comes from four places:

1. Corporations Act 2001 s 300A – requires a separate, clearly identified Remuneration Report in the directors’ report for listed companies, setting out policy and detailed KMP remuneration info.
2. Corporations Regulations 2001 reg 2M.3.03 – sets out the “prescribed details” that must be disclosed for each KMP (the detailed table items).
3. AASB 124 Related Party Disclosures – requires disclosure in the financial statements of aggregate KMP compensation across specific categories.
4. ASX Listing Rules & ASX Corporate Governance Principles and Recommendations (4th ed.) – influence how you structure your remuneration governance, committee and disclosures (on an “if not, why not” basis).

In practice, you’ll be preparing two key sets of disclosures:

• The Remuneration Report (Corporations Act + Corporations Regulations, audited)
• The KMP compensation note in the financial statements (AASB 124)

2. Step 1 - Lock down who your KMP are

Everything hinges on correctly identifying key management personnel.

AASB 124 defines KMP as people with authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly – including any director (executive or otherwise).

Practical actions:

1. Agree a KMP list early (e.g. at year-end planning), typically including:
   • All directors
   • CEO/MD
   • CFO and other C-suite / key business unit heads with real decision-making authority
2. Document the rationale for each inclusion/exclusion (useful for auditors and regulators).
3. Share the agreed list with:
   • Finance/reporting
   • HR/remuneration team
   • Company secretary
   • External auditors

3. Step 2 – Map out your remuneration structure and story

Section 300A requires a discussion of the board’s policy for determining KMP remuneration and how it relates to company performance.

Before drafting, answer these questions internally:

• What are we trying to achieve with remuneration? (attraction/retention, performance, culture, risk alignment)
• What’s the mix for executives (fixed vs STI vs LTI vs other)?
• How does each component link to strategy and performance (financial and non-financial)?
• What’s different this year? (new metrics, structure changes, sign-on/retention awards, wind-backs, clawbacks etc.)

Deliverable: a 1–2 page internal “rem story” note that everyone (Rem Committee, CEO, CFO, CoSec, auditors) agrees on. This becomes the backbone of your Remuneration Report narrative.

4. Step 3 – Build the KMP remuneration tables (Reg 2M.3.03)

Regulation 2M.3.03 contains a detailed table of “prescribed details” that must be disclosed for each KMP – essentially the big remuneration table(s) in the Remuneration Report.

Practical approach:

1. Start from a checklist/template
   • Many firms publish checklists summarising each prescribed item (e.g. Grant Thornton’s disclosure checklist).
2. Build a spreadsheet that, for each KMP, tracks:
   • Fixed remuneration (salary/fees, super, benefits)
   • Short-term incentives (STI) – cash and non-cash
   • Long-term incentives (LTI) – deferred cash, performance rights, options, performance shares
   • Other long-term benefits
   • Termination benefits
   • Total
3. Include columns for:
   • Performance-related vs non-performance-related amounts (a Corporations Act requirement).
   • Any comparative period information required under the Regulations.
4. Tie this spreadsheet:
   • Back to payroll/HR systems and equity registers
   • Forward into the Remuneration Report tables and AASB 124 note

Tip: Lock down a “master KMP remuneration file” for the year so everyone is working off the same numbers.

5. Step 4 – Document performance conditions (STI and LTI)

Where any element of KMP remuneration is conditional on performance, s 300A requires a detailed explanation of:

• What the performance condition is
• Why it was chosen
• How it is measured and assessed
• Any external benchmarks or peer groups used

Practical steps:

1. For each STI and LTI plan, create a one-page “metrics sheet” listing:
   • Metrics (e.g. EPS growth, relative TSR, ROIC, safety, customer metrics, ESG measures)
   • Weightings
   • Threshold/target/maximum levels
   • Measurement period
   • What data source is used (e.g. audited results, external benchmarks)
2. After year end, document:
   • Actual outcomes vs targets
   • Any board discretion (upwards or downwards) and why
   • Any malus / clawback decisions, if applicable
3. Use plain English in the Remuneration Report to explain this, rather than just pasting plan rules.

6. Step 5 – Explain equity that is not performance-based

If any part of a KMP’s remuneration is in the form of securities that are not subject to a performance condition (e.g. sign-on shares, service-only rights), the Remuneration Report must explain why they are not performance-based.

Practical tips:

• Keep such awards rare and well-justified (e.g. buy-out of forgone entitlements, retention in a critical turnaround).
• Document and disclose the board’s reasoning, including:
  • Why the award was necessary
  • How the size was determined
  • Any holding locks / minimum shareholding requirements that support alignment

7. Step 6 – Capture employment contract and termination terms

For each KMP employed under a contract, the Remuneration Report needs to outline the key terms, including contract duration, notice periods and termination payments.

Practical steps:

1. Maintain a central KMP contracts summary (one row per KMP):
   • Contract type (open-ended/fixed term)
   • Notice periods (company and executive)
   • Termination benefits (statutory vs additional; caps vs s 200B requirements)
   • Treatment of STI and LTI on good/bad leavers
2. Have HR/Legal confirm annually that there have been no changes or, if there have, document them clearly.
3. Use this summary as the basis for the contract disclosures in the Remuneration Report.

8. Step 7 – Remuneration consultant disclosures

If a remuneration consultant has provided a “remuneration recommendation” relating to KMP, s 300A requires you to disclose:

• The consultant’s name
• A statement that they made a remuneration recommendation
• Any other services provided
• Separate fees for the recommendation and other services
• How you ensured the recommendation was free from undue influence
• Whether the board is satisfied about that, and why

Practical checklist for each consultant:

• Engagement letter: make sure it states the consultant is engaged by the board or Rem Committee, not management.
• Keep a short governance note:
  • Who they reported to
  • Who they interacted with (e.g. interviews with KMP are ok; sign-off must be to the board/committee)
  • How conflicts were managed
• Obtain a year-end confirmation from the consultant that they understand and complied with the independence framework.

9. Step 8 – Prepare for the two-strikes regime

If at your most recent AGM:

• At least 25% of votes cast were against adoption of the Remuneration Report; and
• Comments were made on that Remuneration Report,

then the next year’s Remuneration Report must explain the board’s response (or why no action is proposed).

Practical actions:

1. After the AGM, produce a short “Remuneration Feedback & Actions” paper:
   • Key issues raised by investors, proxy advisers and the meeting
   • What the board has changed (structure, metrics, quantum, disclosure)
   • What was considered but not changed, and why
2. Use that paper as the basis for the “Response to last year’s vote” section in your Remuneration Report.
3. If you are at risk of a second strike, ensure:
   • Clear communication in the Remuneration Report and investor engagement program
   • The board understands the potential for a spill resolution and has a plan.

10. Step 9 – AASB 124 KMP compensation in the financial statements

Separate from the Remuneration Report, AASB 124 requires disclosure in the financial statements of aggregate KMP compensation, usually split into:

• Short-term employee benefits
• Post-employment benefits
• Other long-term benefits
• Termination benefits
• Share-based payment

Practical tips:

• Use the same KMP list and remuneration data as for the Remuneration Report.
• Build a reconciliation from the individual KMP tables in the Remuneration Report to the aggregated AASB 124 note.
• Involve auditors early to agree on classification (e.g. what counts as short-term vs other long-term).

11. Step 10 – Governance and ASX expectations

While the Corporations Act sets minimum disclosures, the ASX governance framework shapes stakeholder expectations:

• The ASX Corporate Governance Principles and Recommendations (4th ed.) encourage listed entities to have a remuneration committee and disclose its role, composition and policies, including for KMP.
• Draft materials for a possible 5th edition and recent debate (including proposed mandatory clawback provisions) highlight growing expectations around:
  • Aligning executive remuneration with long-term value and risk
  • Having clear clawback/malus provisions
  • Stronger transparency around non-financial metrics and ESG

Although the governance architecture is evolving, investors and proxy advisers already look for:

• A robust remuneration governance framework
• Evidence that the board uses discretion to temper windfalls or penalise poor outcomes
• Clear, non-boilerplate explanations in the Remuneration Report

12. A simple “year-end workplan” for KMP remuneration disclosure

Here’s a practical sequence you can adopt inside your company:

1. August–September (or early in the reporting cycle)
   • Confirm KMP list
   • Update/remind Rem Committee of remuneration framework and any changes
   • Map which data will feed which disclosure (Rem Report vs AASB 124 note)
2. Pre-year end
   • Prepare draft metrics sheets for STI/LTI
   • Confirm tracking of performance against targets
   • Identify any unusual arrangements (sign-on, retention, one-off awards)
3. Post-year end
   • Finalise remuneration data spreadsheet for all KMP
   • Document performance outcomes, board discretion and any clawbacks
   • Draft Remuneration Report narrative and tables
   • Prepare AASB 124 KMP compensation note and reconcile to Rem Report
4. Pre-sign-off
   • Run through a Reg 2M.3.03 / s 300A checklist (internal or external)
   • Confirm remuneration consultant disclosures (if relevant)
   • Draft “response to last year’s vote” section (if strike or close call)
   • Cross-check consistency with:
     • Directors’ report
     • Financial statements
     • Corporate governance statement
     • Investor presentations
5. Post-AGM
   • Record investor and proxy adviser feedback
   • Update your remuneration governance calendar for the next year.

13. Final thoughts

For ASX-listed companies, KMP remuneration disclosure is no longer a technical annex – it is a core governance and investor relations document. A practical, well-planned approach will help you:

• Meet your legal obligations
• Avoid last-minute disclosure issues with auditors and regulators
• Improve investor understanding and reduce the risk of a remuneration “strike”

Important: This is general information only, based on Australian requirements as at November 2025. Always check the current Corporations Act, Corporations Regulations, accounting standards, ASX materials and get professional advice for your company’s circumstances.