AUSTRALIE : Annual general meeting season 2018

The Australian Securities and Investments Commission has published an overview of the 2018 annual general meeting season for S&P/ASX 200 listed companies

Summary of key findings

Executive remuneration

Executive remuneration proved to be topical this AGM season, with the number of remuneration strikes increasing significantly compared to last year’s calmer season (12 compared to 5 in 2017). This trend was accompanied by an upsurge in the magnitude of ‘against’ votes on remuneration reports, with a number of record highs in 2018. Strikes appeared to be driven by a number of factors, including: › negative shareholder sentiment towards executive pay and accountability, arising from concerns highlighted by theRoyal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission) › remuneration amounts (including performance-based payments) and how the remuneration is structured (including ‘combined’ plan incentive structures) › company underperformance.

Shareholder engagement (including ESG issues)

The 2018 AGM season saw a strong display of shareholder engagement. Environmental, social and governance (ESG) issues continued to attract shareholder attention, with climate change risk and sustainability emerging as the most frequently raised ESG issue. ESG issues received a broader level of support from shareholders this season, suggesting such issues may continue to be raised in years to come. Director elections and re-elections persisted as an area where shareholders voiced discontent by ‘protest votes’, with some material ‘against’ votes coinciding with high ‘against’ votes on remuneration.

Royal Commission

The Royal Commission, including the interim report released on 28 September 2018, cast a long shadow over the 2018 AGM season. This was particularly so for companies and directors directly involved in the Royal Commission, but also more generally. It was an impetus for heightened shareholder focus on matters such as social licence to operate and community expectations.