2013 AGM Season Survey Results

Articles Written by Karina Marcar (Partner), Alice Hudson


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.

  • results of voting on remuneration reports for the ASX 100;
  • special business considered at AGMs of the ASX 100; and
  • other notable trends or developments.

Voting on remuneration reports

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:

  • Three companies in the ASX 100 received a first strike, compared with four companies in the 2012 season.
  • The 2013 AGM season is the second AGM season where entities could potentially receive a second strike in relation to their remuneration reports. For the second year in a row, no ASX 100 companies on a first strike received a second strike.
  • All but one second strike occurred outside the ASX 300 and, of those entities with second strikes, only 2 entities had resolutions carried to hold the subsequent spill meetings. Only one entity had a director not re-elected at its subsequent meeting.2

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.

Special business items in 2013

We also surveyed the ASX 100 in relation to items of special business considered at their AGMs. Key findings include:

  • The most common item of special business (62 entities) involved approval of grants to executive directors under incentive schemes. In at least 11 of these cases details in the notice of meeting suggested or stated that approval was not technically required for the purposes of the ASX Listing Rules. Under ASX Listing Rule 10.14, a grant of incentive awards to directors or their associates that will be satisfied by transferring shares acquired on-market to the relevant employee (as opposed to the company issuing new shares to the employee) does not require shareholder approval. However, the majority of the entities concerned indicated that approval was nonetheless sought in the interests of what the company considered to be good governance.  Interestingly, some entities also stated that cash payments could be made in the absence of shareholder approval, subject to satisfaction of performance hurdles.
  • 15 entities sought approval of termination benefits for management for the purposes of the Corporations Act. Only two of these entities sought approval in circumstances where a retirement date had been determined. Three of the entities sought blanket approval or renewal of previous blanket approvals for unnamed executives (one approval extending to benefits outside incentive plans).
  • 14 companies sought increases in their non-executive director fee pool, with the highest percentage increase being 100% (Aurora Oil & Gas Limited, which had the smallest of the original fee pools), followed by 30.8% (Flight Centre Limited). The lowest percentage increases were 10% each (QANTAS and Ramsay Health Care Ltd). The average percentage increase was approximately 27% (or approximately 21% if Aurora Oil & Gas Limited is excluded). All increases were approved by shareholders.
  • Of the 20 entities which sought to replace or update their constitutions:
    • 11 entities sought to reinstate the proportional takeover provisions for a further three years (by way of special resolution), which gives shareholders the power to approve proportional takeover bids.
    • 8 entities were managed investment schemes or stapled entities. Types of amendments included amendments to facilitate capital reallocations within stapled entities or to reflect a new ASIC class order regarding pricing of units.
    • Three companies were required to address matters at their AGM put forward by individuals or special interest groups. This compared to three companies in 2012 and six companies in 2011. The 2013 proposals were for board appointments, put forward by two (unrelated) individuals and not endorsed by the respective boards4; none of the resolutions were carried.

Other observations

  • 13 entities in the ASX 100 permitted companies to cast direct votes as an alternative to appointing a proxy or attending the AGM in person. A further two entities inserted direct voting provisions in their constitutions. 11 companies in the ASX 50 permitted shareholders to direct vote in 2012.
  • 70 entities in the ASX 100 voted exclusively by poll. 35 entities in the ASX 50 did so in 2012. This indicates the broad acceptance of this approach in order to bring proxy votes to account that would otherwise not be reflected on a show of hands.

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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