Proxy firm takes aim at Perpetual over executive payments and ‘governance risks’
Influential proxy group Ownership Matters says shareholders reject Perpetual’s remuneration report.
Influential proxy group Ownership Matters says shareholders should reject Perpetual’s remuneration report and has outlined a list of governance risks at the ASX-listed investment house.
In a note to investors, Ownership Matters said Perpetual voters should vote down the remuneration report, the proxy group’s second such warning in two years.
Ownership Matters said significant payments to outgoing chief executive Rob Adams were a key issue in the report, as they did “not appear to reflect PPT’s performance and the shareholder experience”.
Guaranteed incentive payments to the key executives at Perpetual, alongside low minimum shareholdings by directors, are also highlighted as key issues.
Ownership Matters said the cash bonuses, totalling $3.1m across five executives, along with redundancy and gardening leave payments for Mr Adams, were problematic.
The report also takes issue with Perpetual’s governance, taking aim at the leadership of the investment house following a proposal to hive off much of its wealth management and corporate trust businesses in a $2.18bn deal with KKR.
The deal comes as Perpetual struggles with a growing debt load after its acquisition of rival Pendal, and heavy writedowns among its struggling US funds managers.
Perpetual booked a $206.1m underlying profit after tax, but this was slashed to a $472.2m loss on the back of writedowns.
“This result continues a trend at PPT in which statutory and underlying measures of profitability have diverged materially over the past several years,” Ownership Matters said.
The proxy group also said Perpetual faced a “high” board risk from its board, after the acquisition of Pendal ended up in the NSW Supreme Court.
Ownership Matters said the departure of Mr Adams, Perpetual’s chair and two directors upon the closure of the KKR deal was a risk to investors.
The proxy group backed Perpetual’s push to reappoint Mona Kanaan and Philip Wagstaff to the Perpetual board, as well as the election of Paul Ruiz to fill a vacant seat.
This comes after rival proxy group Institutional Shareholder Services took aim at Ms Kanaan and Mr Ruiz but backed Mr Wagstaff.
However, Perpetual said Ms Kanaan’s limited shareholding in the firm could be a factor “in deciding how to vote”.
Ownership Matters also refused to back a push by outside candidate Rodney Forrest for a board seat.
Mr Forrest has opposed the KKR deal, which will also see Perpetual shed its brand name, saying it showed the need for “fresh ideas and input”.
Ownership Matters said while Perpetual had shown “recent disappointing … performance” the company was now “undergoing management change and board renewal”.
“Given the significant change already set to occur at board level and significant asset management experience among continuing directors, it is not thought that the mix of skills among PPT directors would be demonstrably improved by Forrest’s appointment such that the unusual step of supporting a non-board endorsed candidate is warranted,” Ownership Matters said.
Shares in Perpetual are down 4.37 per cent over the past 12 months, having collapsed 46.5 per cent over five years.
However, shares in Perpetual closed up 1.41 per cent on Thursday, lifting 27c to $19.47.
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