2016 AGM Season Survey Results

Articles Written by John Keeves (Partner), Karina Marcar (Partner)

At the conclusion of the 2016 AGM season, we conducted our annual survey of remuneration report voting for S&P/ASX 1001 entities.

First strikes were at an unprecedented level for S&P/ASX 100 remuneration reports – 7 strikes, compared to 4 in 2015.

There were seven ‘first strikes’ on remuneration reports in 2016, compared to four in the previous year. First strike recipients were AGL Energy Limited, Boral Limited, carsales.com Limited, Commonwealth Bank of Australia, CSL Limited, Goodman Group and Woodside Petroleum Limited. In particular:

  • Commonwealth Bank of Australia withdrew a proposed resolution to approve CEO incentive awards which included a 25% non-financial performance hurdle for People and Community, despite lodged proxies suggesting that the resolution would pass2; and
  • carsales.com Limited suffered a near miss in 2015 with a no vote of 24.8%, then proceeded to a first strike in 2016 with a no vote of 54.79%.

For the fifth year in a row, no S&P/ASX 100 companies on a first strike received a second strike.

In response to first strikes in 2015, measures taken by entities included:

  • incentives not being payable in circumstances where non-financial hurdles are achieved but financial measures have not been met;
  • introducing a financial hurdle of return on capital employed (to replace peer total shareholder returns);
  • deferral of part of short term incentives into restricted equity; and
  • freezing the remuneration of non-executive directors.

Over 20 companies in the S&P/ASX 100 sought and obtained approval to increase their non-executive director fee pools. This included first strike recipients AGL, Boral and CSL. Query whether these entities will utilise these approvals in the new financial year, or freeze non-executive director remuneration other than for new board members.

These results are discussed further below.

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 another meeting (the spill meeting) be held within 90 days, at which the company’s directors will be subject to re-election.

First strikes

Table 1 details the 7 first strikes in the S&P/ASX 100 in the 2016 AGM season, together with the percentage of votes cast against the remuneration report and the voter turnout percentage in each case.


Table 1: S&P/ASX 100 – entities receiving First Strikes in 2016


No vote percentage

Voter turnout percentage

AGL Energy Ltd



Boral Limited



carsales.com Ltd



Commonwealth Bank of Australia






Goodman Group



Woodside Petroleum Ltd
















In undertaking our survey, we observed that:

  • Commonwealth Bank did not have a substantial ‘no vote’ on its remuneration report in 2015 (unlike Westpac and ANZ), yet became the first of the big four banks to suffer a first strike. As a result of shareholder concerns around its group leadership reward program, it withdrew from the 2016 AGM a proposed resolution to approve CEO incentive awards which included a 25% performance hurdle for People and Community.  The People and Community hurdle was based on overall progress in diversity and inclusion, sustainability and culture.  Commonwealth Bank stated in a media release that proxies lodged indicated that the CEO incentive resolution would have passed.
  • carsales.com Limited had a near miss in 2015 and a first strike in 2016.  Its 2016 annual report states that, as a result of shareholder feedback, a remuneration review undertaken by consultants and the view of the board, carsales.com intends to implement changes to the long term incentive plan from 2017.  In its 2016 AGM, it received a first strike but resolutions were carried which approved the grant of incentives to the managing director, including long term incentives which added relative total shareholder return as a performance measure.
  • Spark Infrastructure Trust is not obliged at law to vote on its remuneration report, but does so as a result of its governance deed.  Having had a near miss in 2015, it proceeded to have the equivalent of a ‘first strike’ in 2016. It is not included in the seven first strikes listed above.
  • 3 companies in the S&P/ASX 100 reported a near miss of more than 20% of members voting against the remuneration report (the same number as in 2015). These were South32 Limited, Tabcorp Holdings Limited and Tatts Group Limited.  James Hardie Industries plc experienced the equivalent of a near miss, but is not subject to the Corporations Act.
  • All 2016 First Strike recipients conducted the vote on the remuneration report by poll.
  • In 2016, 4 companies voted on the remuneration report by a show of hands, compared to 6 in 2015 and 16 in 2014.  However, it is unlikely that any of those 4 entities would have had first strikes or near misses on a poll, based on proxy votes lodged.
  • Over 20 companies in the S&P/ASX 100 sought and obtained approval to increase their non-executive director fee pools.  This included first strike recipients AGL (97.07% in favour), Boral (98.91% in favour) and CSL (66.18% in favour).

Second strikes

None of the entities in the S&P/ASX 100 that received a first strike in 2015 (of which there were four – see Table 2 below) received a second strike in 2016. 


Table 2: ASX S&P/ASX 100 - 2016 results for entities which received First Strikes in 2014


2015 no vote percentage

2016 no vote percentage




Ansell Ltd



AusNet Services

41.24% (for previous stapled group)

9.9% (for new company, post-restructure

Downer EDI Ltd












Each of these entities conducted their 2016 AGM voting on the remuneration report by poll.

In response to the first strikes received in 2015:

  • ALS Limited changed performance measures for both short term and long term incentives. It introduced a new financial performance hurdle for its short term incentives, to prevent short term incentive payments being achieved from non-financial key performance indicators when divisional financial performance hurdles were not met. It revised its long term incentive performance hurdles, to include a return on capital employed measure (replacing the industry peer Total Shareholder Returns measure).  It continued its freeze on the level of directors’ fees (last revised in the 2012 financial year).
  • Ansell Limited engaged with stakeholders, re-designed the remuneration report for clearer communication and approved remuneration changes for the 2017 financial year. It also cancelled the 2014 long term incentive plan so there were no financial year 2016 LTI awards. The 2017 remuneration changes include part deferral into restricted shares of cash short term incentives (up to 50% of the overall short term incentive opportunity). Long term incentives will no longer have a cash element but will be wholly in the form of performance share rights. Two additional financial performance measures were applied for long term incentives (group return on capital employed and long term growth in revenue). Relative total shareholder returns was removed as an LTI measure, on the basis that an appropriate comparator group could not be identified. 
  • AusNet Services Ltd is the successor of the stapled AusNet group, as a result of a restructure completed in 2015. The stapled group received a first strike in 2015 at the AGM for AusNet Services Ltd (i.e. despite the restructure scheme having been completed at that time). Therefore, technically, AusNet Services Ltd had not received a first strike in 2015, but it did fail to pass a resolution at its 2015 AGM to increase the non-executive director fee pool. The FY16 remuneration for key management personnel of AusNet Services Ltd exceeded FY15 remuneration; AusNet says this was largely due to improved economic performance. The company took remuneration advice outlining overall market conditions and pay practices among a selected peer comparator group; the 2016 report says that this advice was taken into account by the board in determining FY16 and FY17 remuneration outcomes. 
  • In its 2016 remuneration report, Downer EDI Limited sets out feedback received from some shareholders on its 2015 remuneration report and, for the most part, argues against changes in response to the feedback, other than a limited increase in disclosure. This includes feedback on a lack of disclosure of short term incentive measures for individual KMP and specific financial targets (Downer EDI notes that each are commercially sensitive and that they will not be disclosed), the breadth of the total shareholder return comparator group for long term incentives, the level of the managing director remuneration and retention arrangements for their CEO Mining.


Until the 2016 AGM season, we had seen relatively stable levels of first strikes on S&P/ASX 100 remuneration report votes. 

The 2015 season saw an increase in near misses and high protest votes for bank remuneration reports, but that did not prepare us for the unprecedented seven first strikes for S&P/ASX 100 entities in the 2016 AGM season.

Entities cannot be complacent in structuring their remuneration arrangements, with incentive structures being the subject of particular scrutiny.

1Based on searches of Thomson Reuters’ Connect 4 subscription service.
2Commonwealth Bank of Australia media release “Commonwealth Bank withdraws Resolution 4 from 2016 Notice of Annual General Meeting”, 9 November 2016.

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