Most Significant Votes (w/e 3rd November 2023)

Paul Lee

Head of Stewardship & Sustainable Investment Strategy
(Friday, Nov, 03, 2023)
|   5 mins

Once again, Most Significant Votes is covering the Southern Hemisphere voting season, and the handful of Northern Hemisphere votes that also occur this time of year. Paul Lee, Redington’s Head of Stewardship & Sustainable Investment Strategy, highlights the key AGM decisions that matter to asset owners and on which they might wish to hold their fund managers accountable.

Quiet no longer. The Australian voting season slunk into action last month, but perhaps only really got going in its usual boisterous way with the AGM of Whitehaven Coal (26th October). As one of the few remaining specialist miners of the fossil fuel outside of emerging markets, and one of the only to be bolstering its assets by buying mines from those seeking an exit, it’s not surprising that Whitehaven has become a focal point for activism, and there was a great deal of campaigning noise both outside and within the AGM. A shareholder resolution sponsored by campaigner Market Forces called on the company to report on how its capex was in line with the targets of the Paris Agreement; while this wasn’t formally put to the meeting because the resolution enabling it to have effect didn’t pass, it was nonetheless disclosed that 18% of shareholders had supported it. Still more brutal was the voting on remuneration: the annual report on pay was opposed by 42% of shareholders, and 40% opposed an annual award being made to the CEO. This for many reflected concerns about incentives for growth whether or not that strategy takes appropriate account of future risks. The scale of the vote against the remuneration report represents a ‘strike’, meaning if the 25% threshold is exceeded next year shareholders will have the opportunity to vote on replacing the whole board (known as a ‘board spill’ resolution). Some may favour that: there was a 27% vote against the reappointment of non-executive director Raymond Zage. There may have been a number of reasons underlying this (and general discontent will have played a part – it’s notable that two other NEDs also faced votes against over 10%) but the facts that he has been a director of Whitehaven for over 10 years and that he is busy, being both the CEO of an investment vehicle and non-executive four times over will have been among the drivers.

Still more remarkable, and noisy, were the events at airline Qantas (AGM 3rd November). This was a rowdy meeting, with the chair asking at one point for the microphone of one irate shareholder questioner to be turned off – sparking multiple cries of ‘shame’ from other investors. The ire was reflected in the vote on pay, which saw an extraordinary 83% vote against (easily enough to amount to a ‘first strike’). A proposed incentive award to new CEO Vanessa Hudson fared rather better but still faced 24% opposition. Investors simply felt pay levels were unwarranted in the face of two scandals in the year: the outsourcing of ground handling jobs which was challenged in the courts and found to be illegal; and sales of tickets on flights that had already been cancelled. Inevitably these missteps have been accompanied by a stark share price fall, but many of the shareholders at the AGM were also reflecting their frustrations as customers of the airline. Their fury was also reflected in votes on the board, with advertising expert and media personality Todd Sampson facing a 34% vote against – though this may have been seen as a positive as some commentators had expected his re-election to be rejected. By comparison, the 7% vote against the reappointment of audit committee chair Belinda Hutchinson was mild.

Also facing a ‘first strike’ vote on its remuneration report was retailer Woolworths (AGM 26th October). Over 30% of shareholders declined to back the pay resolution. This was perhaps because they found the generosity and increases in pay distasteful in the light of ongoing investigations into two workforce fatalities at the firm over the year.

Other Australian companies also faced rebellions on pay, though on a smaller scale. Super Retail Group (AGM 25th October) witnessed an 18% vote against the remuneration report. Some investors were clearly concerned about one-off awards made to fill a perceived ‘gap’ in executive incentives brought about by the retailer having accelerated some awards in light of the COVID-19 pandemic. Plumbing supplier Reece Group (AGM 26th October) faced a protest of 20% against its remuneration report, apparently because of sizeable uplifts to the remuneration available to the CEO. Supermarket Coles (AGM 3rd November) witnessed a 15% vote against its remuneration report, a 14% vote against long-term pay awards to its new CEO and 11% opposition to short-term incentives for her. Similarly, Bendigo & Adelaide Bank (AGM 24th October) saw 7% of shareholders oppose its remuneration report. This is apparently in concerns over a 30% increase in the CEO’s base salary, which though it is in part-recompense for the removal of a former fixed annual deferred share award, drives upwards all her other compensation, as this is calculated as a multiple of salary.

One Australian retailer for which the vote against its remuneration report wasn’t its most high profile vote was Carsales (AGM 27th October). While it still faced a 16% rebellion on that resolution, more notable was the vote on the re-election of chair Patrick O’Sullivan [note: not our Redington colleague of the same name!]. O’Sullivan has been on the board for 16 years and though there has been some refreshment of the board overall, shareholders clearly feel it is time for him to move on: 27% declined to support his reappointment.

South Africa’s main voting season has also started. Miner Impala Platinum (AGM 30th October) – more usually known as Implats – had faced a recommended vote against from proxy adviser ISS on its resolution allowing the company to provide financial assistance to associated organisations. Typically, such resolutions are narrowly written (usually including only subsidiaries) so that shareholders can be confident that their interests will be protected, but Implats had written its authority broadly. In an extra shareholder circular, Implats explained that this more widely drafted authority was intended to enable it to support parties to a forthcoming economic empowerment transaction connected to its recent acquisition of Royal Bafokeng Platinum (empowerment transactions are deals which seek to share ownership of businesses with historically disadvantaged South Africans – a partial redressing of past wrongs that most international investors recognise as a necessity). This seems to have changed the minds of some shareholders, but the circular came out less than a fortnight before the meeting so may have been too late for some as 10% still opposed the resolution. However, this opposition was lower than the unusual 19% vote against the authority to buy back shares – a resolution that appears to have been in much more standard language.

In the Northern Hemisphere, US workforce apparel and outsourcing firm Cintas (AGM 24th October) faced two shareholder resolutions. One, seeking additional disclosure on the company’s diversity, equity and inclusion efforts, won backing from 28% of shareholders. The second, calling on the company to set climate transition targets that are in line with the goals of the Paris Agreement, was supported by 26% of investors. US healthcare technology firm Medtronic (AGM 19th October) has been audited by PricewaterhouseCoopers for fully 60 years. Clearly, at least a portion of shareholders see this extended period as a challenge to the audit firm’s independence: 9% opposed PwC’s proposed reappointment.

Meanwhile, UK music investment fund Hipgnosis Songs (AGM & EGM 26th October) – a firm that pioneered music rights as an investment – has hit a decidedly bum note with investors. This followed underperformance, a marked widening of the discount between the valuation of its assets and the trading value of its shares and the abrupt cancellation of a dividend earlier in October. The scale of the investor backlash was remarkable: 84% voted down a proposed sale of some music assets to a related party (apparently believing the price was too low), and 83% declined to support the continuation of the fund – meaning that the board must come back within six months with proposals for its reconstruction, reorganisation or winding up. What’s more, that will be a very different board: the chair, Andrew Sutch, failed to win re-election, with 72% of shareholders voting against; further, two directors resigned the day before the AGM, suggesting that they may also not have won investor support. A fourth director, Simon Holden, was re-elected but faced 39% opposition. He is one of only three directors left on the board, who say they are now expediting the appointment of a chair to lead the review process. In comparison, the 17% vote against directors’ remuneration seems small. The fact that the company uses the symbol of an elephant flat on its back now looks sadly prescient.

We’ll return with Most Significant Votes in a fortnight, on 17th November.


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