AGL suffers first strike on executive pay

AGL shareholders have sounded a warning on executive remuneration, as AGM season kicks into gear.

AGL chairman Jerry Maycock defended its payment structure at today’s AGM.

AGL Energy has suffered the ignominy of a first strike on executive pay at its annual general meeting this afternoon, as more than 25 per cent of votes were cast against its latest remuneration report.

The action from shareholders will have executives on edge as AGM season kicks into gear.

Investors in the utility opted to exercise their right to pushback against a remuneration report that showed chief executive Andy Vesey’s take home pay had surged over 50 per cent from $4.4 million to an eye-watering $6.9m.

It came after AGL swung to a loss of $418m in fiscal 2016 as natural gas impairments of $795m weighed on the bottom-line.

Mr Vesey was able to enjoy a substantial rise in his wages, however, given the group’s underlying earnings rose 11 per cent and also due to the controversial use of non-financial targets to boost bonus payments.

The first strike on pay leaves the board vulnerable, with a second strike next year potentially leading to a spill.

The push back came on an otherwise positive day for AGL, with its shares shooting up 5 per cent as it announced plans for a higher dividend and share buyback as well as a steady earnings update.

AGL chairman Jerry Maycock defended a payment structure that saw Mr Vesey’s short-term incentives jump almost $1.2m to $1.7m last year, but said the response of investors would be taking into account next year.

“The board considers this to be a disappointing result,” he said.

“The board believes that, following a year when the total return to shareholders exceeded 22 per cent, and where stretch cost control and transformation targets were achieved by management, the remuneration outcomes were an appropriate reflection of management’s performance.

“Nevertheless it is clear there is a need and an opportunity to review the disclosure of our processes and outcomes in relation to both executive remuneration benchmarking and short-term incentive outcomes.”

The prospect of a board spill next year may not prove an issue for Mr Maycock as he today flagged his intention to step down at next year’s AGM.