Westpac Banking Corp director Craig Dunn and Australia and New Zealand Banking Group director Paula Dwyer are set to bear the brunt of a backlash against bank executive pay at their upcoming shareholder meetings.
Westpac and National Australia Bank face a major protest vote over bank bonuses while ANZ is likely to follow the Commonwealth Bank and avoid a strike after major proxy firms sided with the bank, despite a revolt led by industry super funds.
The bank AGMs will round out a fiery AGM where 13 top companies including Telstra, AMP, Tabcorp and Myer have received a ‘strike’ or protest vote of 25 per cent or more, up on last year where just 11 top 300 companies received a strike.
The investor backlash is on track to pass high investor outrage in 2013, 2015 and 2016, after a moderate AGM season last year.
The average vote last year against the remuneration report when strikes were registered was 35.5 per cent but has jumped to 45.7 per cent with individual directors being targeted more than even before.
“In the face of the royal commission hearings, where we have often seen a lack of urgency from directors about dealing with the issues that have come to light, shareholders seem to be expressing their concern through voting,” chief executive of the Australian Shareholders Association Judith Fox said.
Major super funds including Australian Super, UniSuper, Cbus and Hostplus are expected to vote against the remuneration reports of Westpac, NAB and ANZ with CEO of the Australian Council of Superannuation Investors Louise Davidson asking “If they didn’t cut the pay this year, when would they [bonuses] ever be zero?”
Major proxy firm ISS – which can influence up to 30 per cent of the vote – has joined the industry super funds in taking issue with NAB and Westpac’s pay after its CEO Brian Hartzer received a $2.2 million bonus last financial year, despite forfeiting $4.3 million in long-term incentives.
The proxy firm have also recommended a vote against a proposed grant of $6 million in shares and performance rights to Mr Hartzer which they label as “excessive”.
Proxy firm CGI Glass Lewis and the ASA have recommended against the re-election of Westpac director Craig Dunn and ISS have flagged concerns because of his role as chair of the Westpac’s remuneration committee and former AMP CEO ahead of next Wednesday’s AGM.
“We believe that directors have a collective corporate responsibility and Mr Dunn was on the Westpac board in 2015 when matters were being overlooked,” the ASA said. “In addition Mr Dunn was a CEO at AMP when there were serious corporate governance problems.”
NAB also faces a ‘strike’ at its AGM on December 19 with ISS among those taking issue the bank’s “new combined plan” which removes the old long-term financial metrics with chairman Ken Henry admitting “there’s a mix of views”.
“Others would prefer that NAB executives be rewarded more in the way that they [have been] rewarded, which is for outstanding share price performance,” Dr Henry told the bank royal commission last week.
ANZ safe, Dwyer not
ANZ looks likely to avoid a strike at its December 19 AGM despite CEO Shayne Elliott receiving a bonus of $1.7 million, in addition to base pay of $2.1 million after being backed by proxy firms ISS and CGI.
However ANZ director and Tabcorp and Healthscope chairman Paula Dwyer is facing a significant protest vote with CGI recommending against her re-election and ISS also flagging concerns. It is not expected the protest votes against Ms Dwyer or Mr Dunn will reach the 50 per cent required to block their re-election, but they will be hefty.
“Both Tabcorp and Healthscope received a ‘first strike’ against the remuneration report [this year] and Tabcorp has been subject to a regulatory investigation and subsequent penalties … in relation to breaches of anti-money laundering,” ISS said.
The bank backlash follows a fiery AGM season which has delivered record high protest votes against individual directors including Myer’s Lyndsey Cattermole (42.74 per cent against) and Dave Whittle (36.27 per cent against); Andrew Harmos at AMP (37.6 per cent against) and directors at APA, Computershare, Japara and Ramsay Health.