Westpac shareholders hand the company a first strike on executive pay

(Robert Cianflone / Getty Images)
  • More than half of Westpac shareholders voted to reject the company’s remuneration report at today’s AGM.
  • If at least 25% of a company’s shareholders reject the report again next year, it will result in a motion to spill the entire board.
  • Westpac chairman Lindsay Maxsted said the rejection “sends a strong message” to the company’s directors.

Westpac shareholders have voiced their displeasure with management, voting to reject the company’s remuneration report at today’s AGM in Perth.

Over 50% of the shareholder base voted against the report, more than double the minimum 25% needed issue a “first strike” on executive pay.

Under two-strike laws introduced in 2011, a vote of 25% or more against the remuneration report for two straight years gives shareholders the chance to spill the entire board.

A recent example of that took place at Myer’s AGM on November 30, when more than 25% of shareholders rejected the remuneration report for the second straight year.

However, a subsequent motion to spill all director positions was voted down.

In a statement prior to the meeting, Westpac chairman Lindsey Maxsted indicated that the board was preparing for a first strike.

“While the poll on the remuneration report has not been taken, based on votes already received, more than half will be against this resolution. This means we will incur a first strike. This sends a strong message to the Board,” Maxsted said.

“Feedback from shareholders has varied, but the key point from those voting against the remuneration report has been that although the Board took events over the year into account, many have questioned whether we went far enough, particularly in reducing short term variable rewards paid to the CEO and other executives.”

In response to a number of concerns brought to light by the ongoing bank royal commission, Westpac cut the short-term pay of its executive team by an average of 25%.

CEO Brian Hartzer took a 30% pay cut, equivalent to around $900,000, for the financial year ended September 30.

A short time ago, Westpac shares were up more than 1% in afternoon trade as part of a broader move higher in the ASX financials index.