Dexus hit by second strike as investors rebel over CEO pay amid office slump

The landlord has copped a protest vote on the back of unhappiness about how it was planning to reward its new chief executive.

Dexus chief executive Ross Du Vernet with Waterfront Brisbane project director Matthew Beasley.

Office landlord and property funds company Dexus has been hit by a second strike over its pay practices on the back of concerns over a now dumped options scheme for its new chief executive Ross Du Vernet.

Investors have been active in this annual general meeting season with shareholders earlier this week hitting the ASX with a first strike over its executive pay on the back of dissatisfaction in the wake of damaging charges from the corporate regulator over a troubled technology project.

Dexus fell to a second strike after almost 26 per cent of proxies were lodged against its remuneration report, even as it defended its pay practices and a subsequent vote for a board spill was easily defeated.

Dexus chairman Warwick Negus called out a recommendation from one proxy adviser – understood to be influential international group ISS – as driving the strike and said the listed company had been able to convince investors it had met about the merits of its approach.

Mr Negus told the meeting that actual pay levels and awards were substantially lower than previous years, with pay at the lowest level in more than a decade.

He told the Sydney meeting that Dexus withdrew a planned resolution for the grant of long-term incentive options to the chief executive last week.

“Over the course of the meetings with proxy advisers and investors, it became clear that while many were supportive of an options-based LTI plan, there were concerns about aspects of the plan design. Given the concerns raised by investors, Dexus has decided to withdraw the resolution,” he said.

Mr Negus said the company would consider the feedback received and then determine the best approach for the years ahead. The board had already engaged extensively with key investors and proxy advisers to understand their concerns and undertaken benchmarking.

He defended pay awards made last year saying Dexus was operating against the backdrop of a continued challenging economic environment, with higher interest rates, softening office market valuations and a challenged deal market.

Dexus still sold off $4.6bn of assets across the platform, raised equity for a new fund, and integrated the local AMP Capital platform it purchased, he said.

The chairman also pointed to large-scale office projects that Dexus is undertaking, including the Waterfront Brisbane development, where the costs said had increased in 2023, as setting the pace for the sector.

Dexus had switched its proposed LTI plan to grant ‘market priced options’ instead of performance rights, subject to a total shareholder performance gateway. But Mr Negus said there were concerns about aspects of the plan’s design.

In a nod to the still tough environment, he said that in the years since the Covid pandemic the company had experienced growing inflation and interest rates. But he said the interest rate outlook today was more certain and direct investors were gaining greater confidence in deploying new capital.

Originally published as Dexus hit by second strike as investors rebel over CEO pay amid office slump