Each AGM season, there are always a handful of ASX companies that endure a remuneration report strike. All companies have to hold votes on their remuneration reports and while this is usually a formality, it is not always.
If there is a no vote of over 25%, the company receives a ‘first strike’. If the same thing happens a year later, there must then be a vote to decide whether or not company directors must stand for re-election. And if this ‘spill vote’ passes (over 50% of eligible votes), a meeting must be held within 90 days with the directors standing for re-election.
A first strike is a notice to the company’s management that they are ‘on notice’ and better things are expected of them if they are to avoid a worse fate in 12 months time. In this article, we recap 6 companies that were officially put on notice by their shareholders this AGM season.
6 companies that suffered a remuneration report strike this AGM season
Over 52% of Fortescue’s shareholders delivered a strike. Imagine how much worse it’d be if Twiggy Forrest didn’t have a stake of over a third in the company. There were some good things to come out of the AGM, such as the unveiling of final investment decisions on multiple green projects. However, investors did not agree with the decision to reward retiring executives with millions of dollars in bonuses.
Qantas suffered an 83% no-vote to its remuneration report. If you don’t know the problems the Red Roo has had and will face, you’ve probably been on Planet Mars. A big capex bill to replace an ageing fleet, legal cases from the ACCC and former baggage handlers, significant competition (at least internationally) and its reputation having copped a hiding. Hard to justify giving over $14.4m in bonuses to former CEO Alan Joyce in our book and the books of 83% of its shareholders. This was the biggest strike since the 88% no vote that NAB suffered in 2019, which was its first AGM since it was taken to the cleaners at the Royal Commission into Financial Services.
This one might surprise some investors that haven’t been paying attention, because this company has barely cracked headlines (at least for bad reasons). Nonetheless, it is not every AGM that has a former boss come back to haunt the company, as Roger Corbett did to critique Woolworths’ position on Endeavour and a proposed board spill. Woolworths investors voted against the remuneration report strike, seemingly because of the death of two staff members in 12 months and a subsequent unwillingness to give a pat on the back for that.
Tabcorp had not recorded a strike since 2018 but got a 34% protest vote at its own AGM. The company is in a highly competitive market and has shrunk since it spun off The Lottery Corporation (which narrowly avoided a strike of its own with a 23% no vote to its own remuneration report). Chairman Bruce Akhurst argued the plan was about motivating and rewarding management, but it seems enough shareholders listened to the proxy firms that recommended a no vote.
It is a few weeks ago now, but Whitehaven saw a 40% no vote to its remuneration report. The efforts were led by one activist investor, Bell Rock Capital Management, which argued the structure would encourage the company to deploy capex. Instead, it wanted Whitehaven to buy two BHP coking coal mines and return $2.5bn cash to shareholders. Whitehaven efforts to stop Bell Rock from voting itself ultimately came to nothing. Proxy firms were split on this one.
Treasury Wine Estates (ASX:TWE)
The owner of Penfolds, among other luxury wine brands, copped a 46% no vote. Proxy advisory firms recommended retail investors vote with their feet after $2.26m in shares were vested relating to the period when demand from China bottomed out due to wine tariffs imposed by Beijing. No one is saying the tariffs are TWE’s fault, although whether or not they should get millions of dollars in shares just the same as if demand were are pre-COVID levels was a question 46% of shareholders were unwilling to affirm.
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