The Second Stability Act 2012 (2. Stabilitätsgesetz 2012; 2. StabG 2012) also amends the Austrian Stock Corporation Act (Aktiengesetz) and the Austrian Commercial Code (Unternehmensgesetzbuch). The changes will enter into force on 1 July 2012. The most important amendments are presented in the following summary.
Remuneration of managing directors
According to Art 78 para 1 of the Austrian Stock Corporation Act, the supervisory board shall ensure that the total benefits provided to the members of the management board are proportionate to the tasks of the individual management board member and the company's situation.
The new law introduces further criteria for the appropriateness of managing directors' remuneration: first, it states that the performance of the managing directors must also be taken into account. Second, the supervisory board has to look at the common practice in comparable companies, as well as the pay structure in the company itself. Finally, it is the supervisory board's duty to incentivize the managing directors to foster the long-term well-being of the firm.
The remuneration of each member of the management board, as well as the remuneration policy, shall be featured in the company's corporate governance report.
Cooling off-period
Further, the 2. StabG 2012 implements a cooling off-period for the management board members of listed companies. Former members of a listed company's management board must wait for two years after their departure from the management board before they can be elected as members of the company's supervisory board. However, this rule does not apply in the event that they are nominated by shareholders holding more than 25 % of the voting rights. The supervisory board may only have one member whose cooling off-period has not yet expired. In any case, the cooling off-period is mandatory for the supervisory board's chairperson.
Composition of the supervisory board
Ultimately, the amendments address the composition of the supervisory board. According to the new law, shareholders must pay attention to the professional and personal qualifications of the members of the supervisory board. The supervisory board should be well-balanced with regard to the professions of its members and diversified in terms of its members' gender and age. For listed companies, the internationality of the members of the supervisory board must also be taken into consideration. Finally, persons who have been convicted for criminal offenses that call in question their professional trustworthiness cannot be elected.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
