Shareholders of Slater and Gordon have hit back at bonuses and incentive schemes for senior executives at the troubled law firm.
There were 27,900,081 votes, or 43.15%, against the company’s remuneration report presented to the company’s AGM today.
This is a first strike vote with 25% or more of shareholders voting against. If this happens a second time, directors get spilled from their board positions.
However, the remuneration report still goes through this time, meaning incentive schemes apply for senior executives.
Shareholders have seen their investment shrink. The shares today were trading at $0.355, valuing the company at $123.3 million. In March 2015, when the shares were above $8 each, the company was valued at $2.8 billion.
The world’s first stock exchange-listed law firm also faces a $250 million class action, the largest by shareholders in Australian legal history.
“The current voting indicates a first strike,” chairman John Skippen told the AGM today.
“In light of this we will review our remuneration structure and this will be reported to shareholders in our FY17 remuneration report.
“We understand shareholder concerns about the current value ascribed to their shares, but we aimed to balance that against the need for us to provide market competitive remuneration packages to attract and retain staff and to address some of the critical matters that faced the business last year.”
CEO Andrew Grech missed out on a short term bonus in 2016 after the company profits fell with a poor performance from the UK business.
Grech offered his resignation to the board of directors in February but this was rejected.
He also didn’t get an annual raise. His pay in 2016 was $607,468.
However, chief financial officer Bryce Houghton did get a $189,000 bonus and chief operating officer Felicity Pantelidis $93,750.
At the same time, shareholders didn’t get dividends.
Among those voting against the remuneration report was the Australian Shareholders Association, a not-for-profit lobby representing investors, which is also concerned at fees for board directors.
Skippen’s annual fee as chairman increased to $240,881 from $161,966 as part of a general 46% raise for directors in July 2015.
“Board fees were reviewed by an external remuneration specialist in April 2015, based on a comparator group of companies of similar size to Slater and Gordon,” Skippen said today.
“This resulted in fees being adjusted from 1 July 2015 to enable the recruitment of new directors with the appropriate skills and experience to enhance the board and to assist with the substantial increase to the workload of directors.”
The company in August posted an annual loss of $1.017 billion.
The result included a $879.5 million non-cash impairment against the value of goodwill after its UK business earnings were worse than expected.
Today Slater and Gordon said first quarter earnings in the UK were slightly ahead of budget. In Australia, they were in line with budget.