Below are key takeaways from ISS’ recently released 2024 Australia Proxy Season Preview. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Knowledge Center and its Library tab and to corporate subscribers by logging into Compass then selecting Governance and the Governance Library or Governance Exchange tab.
- A continued shift towards problematic executive remuneration practices: Early indications show a continuation in concerns for board discretion in bonus determinations, use of opaque and readily achievable non-financial performance measures, tenure-based retention/one-off bonuses, and poor and absent disclosure of targets. All of which point to an increase in discretionary assessments of performance by boards, often being misaligned with performance and shareholder returns.
- High director turnover and focus on board accountability intensifies: Over recent years, there has been a rising trend of shareholders holding directors accountable for governance and performance failures, resulting in substantial board turnover. There are a number of emerging and continuing controversies in 2024 regarding problematic pay practices, failures of board oversight, regulatory intervention, and governance failures. As a result, elevated votes against director elections may continue, as well as a continuation in board refreshment and turnover.
- Subdued activity on E&S proposals: After eight of the largest ASX 100 companies submitted their management-endorsed say on climate resolutions in 2022, accompanied by eleven companies with shareholder proposals, activity on environment proposals has been subdued. In 2023, there were only six companies with shareholder proposals and three more companies submitting their management say on climate resolutions. For the 2024 AGM season, preliminary market soundings indicate that activity on E&S proposals will continue to be subdued.
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By: Vas Kolesnikoff
