Questioning by Counsel at the Hayne Royal Commission of Board Chairmen, CEOs and accountable executives has revealed the market’s expectation of the level of stewardship and scrutiny which shareholders and customers in particular might anticipate rests with the Board or the CEO in communicating strategy, financial results and breaches of company policy.
There has been a significant increase in the number of ASX 300 companies receiving a strike against their remuneration report in the 2018 AGM season, with fifteen companies overall receiving strikes compared with six in 2017.
The decade since the Global Financial Crisis can be regarded as one of considerable change in relation to incumbency and reward.
The 2017 and 2018 reporting periods have seen increased shareholder activism, changes in emphasis and priorities expressed by institutional investors and proxy advisors, and a sense of urgency in addressing issues arising from the Hayne Royal Commission which are clearly observed as extending beyond the Financial Services Sector.
Companies need to identify ways to make annual general meetings (AGMs) transparent, ethical, and effective.
One of the questions raised by Rowena Orr, QC in the Banking Royal Commission’s session which took place on 27th April 2018 was “How can companies incentivise good quality advice where the best advice is to do nothing?”
What role should incentives play in rewarding senior management?
Boards, shareholders and proxy advisers are increasingly engaged in oversighting any company activity which fails to account for its exposure to risk, including short term incentive plans.
Egan Associates have been guiding privately owned and listed public companies with their incentive plan design and review for over 30 years. In this article, we summarise some of the questions that we get asked on a regular basis in relation to long term incentive design.
Among the top 300 listed companies by market capitalisation*, there were six companies that experienced a significant shareholder vote against their Remuneration Report during the final quarter of the 2017 Annual General Meeting season.