At the conclusion of the 2014 AGM season, we conducted a survey of the business of AGMs of ASX listed entities in 2014.

We have once again focussed our survey on the ASX 100, and cover the following three aspects:

  • results of voting on remuneration reports for the ASX 100;
  • special business considered at AGMs of the ASX 100; and
  • other notable trends and developments.

Voting on remuneration reports

Under the ‘two strikes’ rule, if a listed company receives a ‘no vote’ against its remuneration report of at least 25% at two consecutive AGMs, the company must, at the second of those AGMs, put to the vote another resolution that another meeting (the spill meeting) be held within 90 days, at which the company’s directors will be subject to re-election.

Key findings for remuneration report voting in the 2014 AGM season include:

  • Three companies in the ASX 100 received a first strike against their remuneration report in 2014 (the same number as in 2013).
  • For the third year in a row, no ASX 100 companies on a first strike receive a second strike.
  • Only one company in the ASX 100 reported a near miss of more than 20% of shareholders voting against the remuneration report (AGL Energy Ltd, with a 23.84% no vote). Near miss figures cannot be calculated for those 16 entities in the ASX 100 who voted on the remuneration report by a show of hands.

These results are discussed further below.

First strikes

Table 1 details the three first strikes in the ASX 100 in the 2014 AGM season, together with the percentage of votes cast against the remuneration report and the voter turnout percentage in each case.

Click here to view table.

In the case of Newcrest Mining Limited and Primary Health Care Limited, the first strikes on the remuneration report resolution were achieved by ‘no votes’ cast by shareholders holding approximately 30% or less of the company’s total number of shares on issue.

The remuneration report resolution for Harvey Norman Holdings Limited was voted on by a show of hands and therefore it is not possible to calculate the percentage of shares on issue held by voters casting ‘no votes’.  The resolution failed to pass as an ordinary resolution.

Second strikes

None of the entities in the ASX 100 that received a first strike in 2013 (of which there were three – see Table 2 below) received a second strike in 2014.

Click here to view table.

In response to the first strikes received in 2013, Alumina and Aurizon both increased their engagement with shareholders and proxy adviser groups, and obtained advice from independent remuneration consultants in relation to their respective remuneration policies and practices. As a result of these actions, the companies have made various changes to their executive remuneration policies and practices.  Examples include:

  • (for Aurizon) freezing of executives’ fixed pay for the second consecutive year, with limited exceptions (e.g. promotions);
  • (for Alumina) restructuring of CEO remuneration, including reducing STI and LTI components;
  • changes to performance hurdles and targets (e.g. replacing performance hurdles, re-weighting of performance hurdles, removal of re-testing of performance right grants); and
  • improvements to remuneration disclosures.

Other observations

  • Our survey indicates that 16 entities in the ASX 100 voted by show of hands on the remuneration report. There was some controversy in the media over the decision of entities to put the resolution to a vote on a show of hands, instead of a poll (particularly outside the ASX100).  ASIC noted that the Corporations Act did not require that these resolutions be put to a poll only and that the chair should give effect to the real sense of the meeting.1
  • Several ASX100 entities published remuneration reports or put remuneration reports to member votes, despite no legislative requirement (e.g. responsible entities of listed managed investment schemes). This included Jersey-incorporated Henderson Group Plc, which would have received a first strike (with 27.78% of total votes against the remuneration report), if it had been subject to the Corporations Act. 
  • Strikes against the remuneration report continue to be focused outside the ASX 100, with resources stocks overrepresented in the list of entities receiving strikes. 
  • Outside the ASX 100, Cabcharge Australia Limited again attracted negative attention after it received its fourth consecutive strike against its remuneration report (with a 57.38% ‘no vote’ against its remuneration report) – or in other words, the company’s second ‘second strike’ for the purposes of the ‘two strikes’ rule (i.e. as the strike ‘count’ resets to zero after a second strike). For the second time in 4 years, a board spill resolution was put to the company’s shareholders at the AGM – and once again, was voted down by a majority of shareholders (only 2.45% of votes in favour of the spill resolution).

Special business items in 2014

Approval to grant securities to directors under employee incentive schemes

  • As was the case in 2013, the most common item of special business in 2014 involved the approval of grants of securities to executive directors under employee incentive schemes. Specifically, 65 entities in the ASX 100 sought security holder approval (only a very slight increase from 62 entities in 2013).  Of these, 14 entities had either stated or suggested in their notice of meeting that approval for the grant of securities was not technically required for the purposes of the ASX Listing Rules, but sought nonetheless in the interests of good corporate governance and transparency.2 All grants of securities were approved by shareholders.
  • 20 entities in the ASX 100 stated in their notice of meeting that they may consider alternative remuneration arrangements if approval was not given for the grant of securities. Most of these entities (17) specifically noted that this may include providing a cash award equivalent in value to the securities that would have otherwise been allocated, and subject to the satisfaction of the same performance and vesting conditions.

Termination benefits approval under the Corporations Act

  • 16 entities sought approval of termination benefits to management for the purposes of the Corporations Act. Only 2 of these entities sought approval in circumstances where a retirement date had been determined. All termination benefits were approved by shareholders.
  • 7 entities sought blanket approvals, or renewal of previous blanket approvals for unnamed executives. (This is an increase from 3 in our 2013 AGM Survey.)

Approval to increase non-executive director fee pool

  • 14 entities in the ASX 100 sought increase to their general NED fee pool (only one more than in 2013). All increases were approved by shareholders.
  • The highest percentage increase was 100% (Mineral Resources Limited). The company had not increased its NED feel pool since the 2006 AGM (i.e. the year it listed on ASX). The next highest increase was 50% (Monadelphous Group Limited, which after the increase, had the smallest fee pool of the entities seeking approval). The lowest percentage increase was 10% (DuluxGroup Limited). The average percentage increase was approximately 31% (or approximately 25.5% if Mineral Resources Limited is excluded).
  • The average number of years between seeking approvals to increase the NED fee pool was approximately 4 years.  DuluxGroup in its notice of meeting stated that its preferred approach would be to consider small periodic increases to the NED fee pool (e.g. every 3 years), in the interests of good corporate governance and transparency.

Other observations

Conduct of voting

  • 74 entities in the ASX 100 voted exclusively by poll (compared with 70 entities in 2013), and 16 entities in the ASX 100 voted exclusively on a show of hands.
  • 17 entities in the ASX 100 permitted direct voting at the 2014 AGM as an alternative to appointing a proxy or attending the AGM in person (an increase of 30%, from 13 entities in 2013). There is significant potential for an increase in direct voting, given the number of ASX 100 entities with constitutions containing the option to permit direct voting.

Shareholder requisitioned resolutions under section 249N of the Corporations Act

  • 6 entities were required to address resolutions that had been requisitioned by shareholders under section 249N of the Corporations Act (compared with only 3 entities in 2013). None of the resolutions were carried.
  • 4 of these entities had shareholder requisitioned resolutions in relation to proposed director appointments of non-Board endorsed individuals.
  • 3 resolutions related to environmental matters submitted by special interest groups.  A resolution was proposed that Santos withdraw from the Narrabri Gas Project in NSW.  The shareholders that proposed this resolution held only 0.0475% of issued shares and the content of the resolution did not constitute the proper business of a general meeting (as it related to a management decision).  Santos put the resolution to the meeting but noted that, if passed, it would be advisory in nature and not binding.  2 entities (Commonwealth Bank Australia Limited and ANZ Banking Group Limited) each had to address shareholder requisitioned resolutions proposing amendments to their respective constitutions, seeking to introduce an annual reporting requirement in the constitutions regarding the company’s assessment of the quantum of greenhouse emissions for which they have been responsible for financing.


The 2014 AGM season results are relatively representative of prior years for the ASX100, with:

  • 3 first strikes and no second strikes for remuneration reports; and
  • special business focusing on employee incentive approvals for executive directors.

There has been a 30% increase in direct voting since 2013 season, with 17 entities permitting direct voting. There is significant potential for an increase in direct voting, given the number of ASX 100 entities with constitutions containing the option to permit direct voting.