Australian companies facing investor anger over executive pay at near record levels, says study
SYDNEY, Feb 7 (Reuters) - The number of Australian companies facing investor opposition over remuneration plans held near record levels for a second straight year in 2024, according to a study by shareholder advisor Georgeson.
The study, shared first with Reuters, underscores not only frustration with high executive pay at a time when the cost of living has risen but also anger over corporate scandals.
Forty of Australia's 300 biggest companies had more than a quarter of investors vote against their remuneration scheme at their annual general meeting last year.
That was just under record 41 a year earlier which was double the amount in 2022, the study showed. The vote became mandatory in Australia in 2011.
Under Australia's unusual "two strikes" rule, companies must put a remuneration report to a shareholder vote annually, and a "no" vote above 25% is a strike. That has no immediate legally binding effect but a "no" vote two years in a row lets shareholders hold another vote on whether to remove a company's entire board.
Last year, the number of companies that experienced a shareholder vote against executive pay for a second year running jumped to 12 from two in 2023. However, none of the follow-up votes on whether to sack the board were successful.
Even among companies where the remuneration vote carried, the average size of winning votes has declined in the past five years, the report said.
"When you've got a kind of economic situation where there's cost of living pressure, higher interest rates and so forth, the optics of very high executive pay are going to be more in the spotlight," Paul Murphy, Georgeson's head of ESG for Asia Pacific, said in an interview.
The vote has become an all-encompassing platform to express sentiment towards a company, he added.
"When the company's been under the spotlight because it's having sort of customer service issues or having some sort of conduct scandal, then what you tend to get is a very high protest."
Companies hit with shareholder strikes over remuneration in the past two years include airline Qantas (QAN.AX), opens new tab which was grappling with a deluge of negative headlines about industrial relations, flight cancellations and the conduct of its former CEO.
Iron ore miner Fortecue (FMG.AX), opens new tab also received a strike. The country's biggest office landlord Dexus (DXS.AX), opens new tab received a second strike in 2024 but survived the so-called "board spill" motion.
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