Glass Lewis backs campaign to oust Woodside director on climate concerns, recommends against pay report
Proxy adviser CGI Glass Lewis recommends Woodside shareholders kick former resources minister Ian Macfarlane off the board and vote against the company’s pay report.
Influential proxy adviser CGI Glass Lewis has dealt Woodside Energy a blow ahead of its annual meeting, recommending shareholders vote against the company’s pay report and backing a climate activist campaign targeting former federal resources minister Ian Macfarlane.
In its report Glass Lewis, a key adviser to institutional investors, questioned the pay rise handed to chief executive Meg O’Neill in the wake of Woodside’s acquisition of BHP’s oil and gas assets, saying Woodside had failed to justify the generous bump.
The Woodside board reviewed Ms O’Neill’s salary package in mid-2022, after the close of blockbuster merger, bumping her fixed pay package up $200,000 a year to $2.4m, and boosting her total possible incentive rewards to 420 per cent of Ms O’Neill’s fixed pay packet – from 300 per cent when she was appointed to the company’s top job in 2021.
Woodside’s annual report shows the CEO was also given a $400,000 “ad hoc” cash bonus for completing the BHP deal.
Glass Lewis noted Ms O’Neill could now earn a total of $12.48m in fixed and discretionary payments – below the $18.68m possible for BHP boss Mike Henry and the $18.26m for Rio boss Jakob Stausholm, but 40 per cent above those at Fortescue Metals, which has a similar market cap.
“We have some concerns about the revised quantum of Ms O’Neill’s total remuneration as her package has increased by 53 per cent. Woodside has provided very limited disclosure of the benchmarking process associated with this substantial increase,” he Glass Lewis report says.
“We recognise that the company’s post-merger size justifies a certain adjustment to fixed remuneration, which could be considered reasonable on its own. However, we are not convinced that the additional increase in the executive incentive scheme opportunity is appropriate, especially considering the short-term focus of the performance measurement under this plan.”
The proxy adviser did recommend shareholders vote in favour of a separate motion to grant Ms O’Neill 111,747 Woodside shares and 64,013 performance rights flowing from its incentive scheme.
A spokesperson for Woodside said the company had conducted external benchmarking after its BHP acquisition, and the change in Ms O’Neill’s package reflected the new scale of its business.
“The CEO’s fixed remuneration increased by about 9 per cent in recognition of the increased accountabilities of the CEO position upon merger completion. The increase to variable remuneration brings the CEO total remuneration to a competitive position with previously identified peer groups.”
Glass Lewis also handed its support to the campaign run by the Australasian Centre for Corporate Responsibility (ACCR) – along with institutional investors Vision Super and Betashares – to send a warning to the Woodside board over its climate strategy, recommending shareholders vote against the re-election of Mr Macfarlane.
ACCR, Vision Super and Betashares have been seeking shareholder support to unseat Woodside independent directors including Mr Macfarlane, Larry Archibald and former Shell Singapore chair Goh Swee Chen ahead of the annual meeting on April 28, arguing Woodside directors should be held to account for the board’s “repeated failure” to present a credible strategy to address climate change concerns.
All three are members of the Woodside board’s sustainability committee.
At last year’s Woodside meeting an advisory vote on the company’s 2021 climate report only narrowly squeaked over the line, after being backed by 51 per cent of shareholders.
Woodside is not giving shareholders a vote on its 2022 climate report, and Glass Lewis criticised the company for giving only limited information on what had changed since almost half of the shares voted at its last meeting went against the last iteration.
“When companies receive strong investor opposition to ballot items, we believe that they should both engage extensively with investors on these matters and provide shareholders with detailed disclosure concerning their engagement efforts, discussions with investors, and the changes made or not made as a result,” Glass Lewis said.
Glass Lewis noted Woodside’s latest climate report did not have a summary of changes since the one that came perilously close to being rejected a year ago, forcing shareholders to closely read both reports to identify any changes and improvements.
“The company’s engagement with shareholders after the 2022 Say on Climate vote has not resulted in any significant underlying changes to its climate plan. Absent such changes, we would expect the company to provide a comprehensive and thorough response to the concerns raised, or otherwise draw out the changes made between the 2021 and 2022 versions of the climate change report, which it has failed to do,” Glass Lewis said. “With that view, we believe that the board should be held accountable for the continued lack of appropriate response to clear shareholder opposition to their management of climate-related issue.”
Glass Lewis stopped short of backing the ACCR campaign for the removal of all three directors, recommending protest votes be limited to only Mr Macfarlane as the longest serving director.
A Woodside spokesperson said its board “finds Mr Macfarlane’s contributions to be extremely valuable, based on his extensive experience in government and the resources sector”.
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