At the conclusion of the 2013 AGM season, we conducted a survey of the business of AGMs of ASX listed entities in 2013. Our survey has been conducted on a similar basis to our surveys of the AGM seasons in 2010, 2011 and 20121, with the exception that we have expanded our focus in this survey to the ASX 100.
Under the 'two strikes' rule, if a listed company receives a 'no vote' against its remuneration report of at least 25% at two consecutive AGMs, the company must, at the second of those AGMs, put to the vote another resolution that a further meeting (the spill meeting) be held within 90 days at which the company's directors will be subject to re-election.
Key findings for remuneration report voting in the 2013 AGM season include:
Table 1 details the three first strikes in the ASX 100 in the 2013 AGM season, together with the percentage of votes cast against the remuneration report and the voter turnout percentage in each case. In the case of Alumina Limited, this meant that the resolution to adopt the remuneration report was not carried as an ordinary resolution, as well as a first strike being recorded.
None of the entities in the ASX 100 that received a first strike in 2012 (of which there were three - Cochlear Limited, Fairfax Media Limited and Lend Lease) received a second strike in 2013.
Both Lend Lease and Cochlear engaged with stakeholders and obtained input from remuneration advisers in responding to their 2012 first strike. However, only Cochlear received remuneration recommendations for 2013 in relation to its key management personnel. Cochlear also consulted with institutional proxy adviser firms for specific feedback.
Cochlear stated that it had introduced a number of changes, including reformatting and improving disclosure in its remuneration report, the replacement of performance shares with performance rights as long-term incentives, amendments to long-term incentive eligibility criteria such that it would result in fewer executive participants and the reweighting of the performance based elements of remuneration for the CEO/President and other key management personnel.
Lend Lease stated that it did not make significant changes in 2013 because 2013 remuneration packages had been agreed before the 2012 AGM. However, Lend Lease did implement mandatory securityholding levels for the CEO and senior executives in 2013 and advised it would implement enhancements in 2014 such as reducing the total target remuneration package of the CEO (with no change to fixed remuneration), changing the remuneration mix to place greater emphasis on long-term incentives and deferring a greater proportion of 'above target' short-term incentive awards for the CEO and senior executives.
For Fairfax Media3, 2013 remuneration included a freezing of the majority of senior executive salaries, the freezing of fees paid to non-executive directors and a reduction of fees paid to the Chairman. The Fairfax 2014 remuneration strategy includes a stop on increases in fixed remuneration for the majority of senior executives, reducing base non-executive director fees and replacing current incentive schemes in order to better reflect the transformation strategy of the company.
We also surveyed the ASX 100 in relation to items of special business considered at their AGMs. Key findings include:
1 The only Planet Platinum director subject to re-election under the spill provisions was not re-elected. We note as a general matter that, unlike remuneration report resolutions and resolutions to hold spill meetings, there are no voting exclusions applicable to spill meetings themselves, so that key management personnel and their closely related parties remain entitled to vote.
2 The only Planet Platinum director subject to re-election under the spill provisions was not re-elected. We note as a general matter that, unlike remuneration report resolutions and resolutions to hold spill meetings, there are no voting exclusions applicable to spill meetings themselves, so that key management personnel and their closely related parties remain entitled to vote.
3 Fairfax Limited was not in the ASX 100 as at 30 June 2013.
4 David Barrow, who had brought proceedings against several financial services entities in relation to exception fees, sought appointment to three boards, being ANZ, National Australia Bank and Westpac. The resolution in respect of the ANZ board was not put to the meeting.
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