Australia 2015 Proxy Season Preview


  • Macroeconomic factors indicate a weakening economy. FY15 corporate performance confirmed weakening corporate earnings. The resources sector has seen substantial impairment charges.
  • While some companies have suffered as a result of commodity price declines, others have seen a reversal of fortunes, and so have executives who have derived disproportionate incentives.
  • At the board level, there has been demonstrable moves to improve diversity, including gender and skills. However, some companies are not reacting.
  • Overboarding remains a concern as some directors are increasing their commitments to large listed company boards.
  • FY15 has seen significant change at the executive level with approximately 20 percent of CEOs of S&P ASX200 companies leaving their roles. The challenging business and economic environment and substantial pay packages already received acts as a disincentive for some CEOs to stay on.
  • Some founders of smaller companies are questioning board performance.
  • FY15 has seen increased votes against the remuneration resolution, which is a trend expected to continue this AGM season. Issues relevant to investors include excessive remuneration and misaligned incentive payments following financial underperformance or earnings losses, and excessive reward for non-financial targets.
  • Whilst boards suggest that CEOs do not value LTI plans, the excessive award of performance share rights has, in a number of examples, resulted in substantially higher realised remuneration compared with reported remuneration.
  • Whilst remuneration statistics for non-executive directors are correlated with market capitalisation, there is no correlation between CEO remuneration and size of the company.

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