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 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.
The Banking Royal Commission’s Interim Report provided us with insights into two very different outcomes resulting from the activities of several financial services organisations.
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?”
Our review of Non-Executive Directors’ (NED) remuneration covering the ASX 300 and the NZX 50 through to the end of the 2017 calendar year reveals generally modest fee increases.
Our last research report dealing with the cost of governance was published in July 2014. Recent discussions arising from our advisory work and highlighted in Board responses from comments made by institutional investors and their advisers and issues recently arising in the Royal Commission into the financial services sector, have made several supplementary issues front and centre.
Egan Associates has received many and varied requests from clients to advise on governance.
Having reviewed the statement prepared by the ASX 200 Boards in relation to Director capability, incorporating skills and experience, we have noted indicatively two approaches.
With comments from proxy advisers, major institutional investors and shareholder activists questioning Directors’ (particularly Chairmen’s) capacity, to serve on more than three or four Boards for which they will often receive more than $1 million in annual fees, the community should not be aggrieved with the level of reward paid to our Prime Minister, our Premiers or our Ministers.