Corporate conduct in Australia and first strike votes

The corporate reporting season and Annual General Meetings of ASX listed companies in Australia runs until November each year but usually extends up until the Christmas eve period followed swiftly by half yearly results in February. Late 2016 saw a raft of companies falling foul of their shareholders and experiencing first strike votes. This particularly affected what are known as the remuneration reports which provide information about how much Board directors and chief executive officers are paid.

Under the Corporations Act, if 25 per cent of the votes cast at two consecutive annual general meetings oppose the remuneration report, then at the second meeting the company must give shareholders the option to require the entire board to stand for re-election. What the table below (provided by the Australian Shareholders Association) shows is the disconnect between Boards and executives with their shareholders.

  

Commonwealth Bank	First strike. Ian Narev, CEO of CommBank saw his LTI grant withdrawn and 50.91% of voted stock opposed the remuneration report.
CSL	First strike. 26% voted against the remuneration report, 27.25% against the CEO’s  Long Term Incentive grant and 33.82% against the proposed rise in the fee cap for directors from $3M to $4M.
Cabcharge	46% voted against the re-election of Donald McMichael after the Board reversed his promised retirement and failed to source new directors.
LendLease	Withdrew proposed new constitution after investor rejection of proposals.
Carsales.com	First strike. 54.8% voted against the remuneration report.
Goodman Group	First strike. 39.94 voted against the remuneration report as the pay for the CEO with $18m incentive was considered too high.
Sims Group	First strike. 31.7% voted against the remuneration report and proposed constitutional changes.
News Ltd/ 21st Century Fox	First strike. 31.1% voted against the remuneration report or 63.7% if the Board directors votes are excluded.