Australian Shareholders Association targets executive pay, taking aim at Tabcorp and Argo
The Australian Shareholders Association has declared it will vote against the remuneration reports of wagering giant Tabcorp and listed investment company Argo this week.
The Australian Shareholders Association has declared it will vote against the remuneration reports of wagering giant Tabcorp and listed investment company Argo this week, with executive pay so far dominating the annual meeting season.
Already, oil company Santos, ASX Ltd and vitamins maker Blackmores have received first strikes against their executive remuneration.
ASA chief executive Rachel Waterhouse said the association would attend more than 30 annual meetings this week, with Tabcorp and Argo in particular capturing its attention.
Ms Waterhouse said following the demerger of The Lottery Corporation, Tabcorp’s executive pay had not been “reduced to reflect the reduction in size and complexity of the company”.
“The Lottery Corporation has a market capitalisation of $9.1bn and Tabcorp’s is $2.2bn. The remuneration levels of the chief executive and board are too high,” Ms Waterhouse said.
“Further, the decisions on retention/notice payments and vesting of outstanding LTI (long-term incentive) awards were overly generous. For these reasons we will vote against the remuneration report and the grant of options to the chief executive.”
Tabcorp chief executive Adam Rytenskild receives a fixed salary of $1.5m, with the potential to lift his pay to $6.75m via short and long-term incentives under his “outperformance opportunity”.
“The total quantum of the CEO remuneration package is not reasonably within the Godfrey Group report benchmarks, not even allowing for the fact that the new CEO is a ‘rookie’,” the ASA says in its voting recommendations. “The target remuneration is only around 10 per cent lower than that of the previous longstanding CEO who ran a much bigger ($11.5bn pre-demerger) and more complex company.
“By any measure, the CEO remuneration is too high.”
Ms Waterhouse also took aim at the wagering company’s political donations, which jumped more than 16 per cent to $216,000 last financial year.
“ASA is not in favour of companies making political donations, but at least Tabcorp now disclose the quantum of donations in the annual report,” she said. “These are typically balanced between the parties. When discussed with Tabcorp previously, they believe that involvement in political party forums is important in protecting shareholder interests.”
Tabcorp will hold its annual meeting at the Westin Brisbane on Wednesday.
Ms Waterhouse said Argo, which will hold its meeting in Adelaide on Monday, was paying its executives more for “lesser performance”. “Argo’s remuneration arrangements are unchanged from June 30 2020, when Argo significantly lowered hurdles for performance-based long-term incentive remuneration. ASA did not support this change,” she said.
“Argo’s most recent one-year NTA performance against the S&P/ASX 200 Accumulation Index benchmark is positive, but long-term (five, 10, 15, 20 years) performance against the S&P/ASX 200 Accumulation Index benchmark continues to be negative. With increased remuneration for lesser performance continuing, ASA will vote against the remuneration report, as we did in 2020 and 2021.
“Argo advises changes to the remuneration policy for FY23, including introducing an additional 10-year performance condition and remuneration tranche. We are hopeful this long-term performance hurdle will increase alignment between Argo and ASA member long-term interests. ASA will assess these changes when details are made.”
Other companies set to hold annual meetings this week include JB Hi-Fi, Super Retail, Carsales.com, Dexus and Corporate Travel Management.
At Santos, which held its annual meeting in May, 25.32 per cent of shareholders voted against its remuneration report, with the company blaming a negative report from proxy Adviser Institutional Shareholder Services.
At Blackmores, which held its annual meeting last week, 43.35 per cent of shareholders voted against its remuneration report.
“Major shareholder, Marcus Blackmore, spoke out against the company’s share price performance and we assume voted his 23 per cent shareholding against these resolutions,” Ms Waterhouse said.
In October last year, Mr Blackmore vowed he “won’t give up” in his efforts to secure George Tambassis, former president of the powerful Pharmacy Guild, onto the board of the vitamins giant his father founded and says his relationship with chairman Anne Templeman-Jones is now “poisonous”.
In the lead up to last year’s annual meeting, Ms Templeman-Jones and Mr Blackmore feuded over Mr Blackmore’s support for Mr Tambassis, who self-nominated himself for election as a director after failing to win the endorsement of Ms Templeman-Jones and the rest of the board.
Ms Templeman-Jones was elected to the company’s board with the support of 58 per cent of the shareholders and declared she will continue in the role. The vote of 38.75 per cent against her re-election, included the votes of Mr Blackmore who controls 23 per cent of the company’s shares.
And the vote against the remuneration report at this year’s annual meeting shows the relationship between the vitamins company and its biggest and namesake shareholder remains frosty.
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