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Australian shareholders rebel over pay

The first big week of Australian proxy season has seen a number of revolts on executive pay, with one ASX 100 company losing the remuneration report vote and two others seeing very significant dissent.

At Downer Edi, the remuneration report was defeated, with investors reacting to reduced performance hurdles for the long-term incentive plan and large payments under the annual bonus. In particular 50% of awards under the share option plan may now vest for TSR performance below the median against the ASX 100. Only 40.62% of shareholders voted in favour, with 58.64% against. The remaining shareholder abstained.

Manifest had flagged up a number of concerns at United Group, including the payment of bonuses despite EBIT performance targets not being met, share awards being made not subject to performance, retesting of performance conditions, and allowing 50% of the awards under the performance share plan to vest for standstill (median performance). For votes just scraped over 50%, with 48.6% voting against and almost 1% submitting abstentions.

At Qantas, Manifest highlighted large payments to two departing executives on termination of their employment and who also benefited from accelerated vesting of share awards under the Performance Share Plan and the Retention Plan. Like at United Group, the long-term incentive plan allows 50% vesting for median performance. Dixon, the former CEO, also received over $3m as compensation for tax changes in relation to his pension as a result of changes made in 2006. Over 40% of shareholders voted against, with more than 2% submitting abstentions.

Full details of the voting at these meetings are available on Manifest VoteWatch.

Further Reading

Sydney Morning Herald: Downer shareholders reject exec pay report

What do you think?