Annual General Meetings - Corporate Australia's itch

Under the Australian Corporations Act, public companies are required to have Annual General Meetings annually and no later than 5 months after the end of the financial year. It's not surprising that in October 2016, the Australian Institute of Company Directors [AICD] issued a checklist of possible questions which might arise from the floor of Annual General Meetings of Australian companies.  A raft of negative media stories about the franchising sector, (many of which are part of publicly listed companies) Board and executive remuneration and increasing class action litigations have left many companies working overtime to deflect public criticism.

So what did the AICD recommend as a question checklist ?

Of the 21 major questions suggested, 15 were on Chief Executive remuneration, 3 on Board remuneration and 3 on Board diversity. It's plain to see where the main focus of attention was directed. Questions included  were: Why is the CEO's remuneration so high when the company's performance over the last 3 years has not shown any significant improvement ? What has the CEO done to deserve the "bonus" you have paid him or her ? Why is the new CEO paid more than the previous CEO ?

The AICD also pays considerable attention to question involving the proportion of Short Term Incentives (STI) and Long Term Incentives (LTI) included in CEO contracts. Quite often a higher proportion of bonus payments have been placed in the STI category not the LTI one. In contrast, the Australian Shareholders Association continues to argue that greater incentives, such as share options should be placed in the long term incentive category to prevent CEOs making short term focused decisions (such as asset sales) giving the impression that a company is doing well when in fact, its normal operating results are poor. Perhaps the AICD would be better placed to ask companies to do some self examination to determine why these type of questions are necessary in the first place.