Louise Davidson ACSI CEO (Photo: Matt Fatches)

On a day where the National Australia Bank has received an unprecedented first strike against its remuneration report at its annual meeting, Australian Council of Superannuation Investors’ chief executive Louise Davidson writes that the increasing value to investors of good corporate governance is reflected in the number of ‘no’ votes and shareholder resolutions during recent AGMs.

Most ASX-listed companies hold their annual general meeting between September and November. The recent AGM season was characterised by several larger-than-usual votes against management recommendations. This is indicative of a loss of trust in boards, arguably triggered by the ‘banking’ royal commission, which was by no means limited to that sector.

These outcomes are also noteworthy for another reason. They demonstrate how seriously institutional investors are taking their role as stewards of capital. As the examples in this article illustrate, investors are voting to hold companies to account for behaviour that falls below community and market expectations. In doing so, investors acknowledge the strong link between good corporate governance (including effective management of their environmental and social impacts) and sustainable long-term returns.


ACSI’s 2018 CEO pay report revealed that pay for chief executives has hit record highs with bonus payments a major contributor. Investors are concerned that incentives are often awarded with little regard to performance.Concerns about executive pay delivered two of the most significant outcomes during the AGM season. Telstra received an astonishing 62 per cent vote against its remuneration report. This has been widely reported as the result of awarding significant incentives to executives despite substantial losses in shareholder value.

Another prominent vote occurred at Tabcorp, where 40 per cent of shareholders said no to the company’s remuneration report. Upfront bonuses for completing the Tatts transaction were among the concerns investors raised at the company’s AGM. This vote demonstrates Australian investors’ preference for awarding incentives based on the successful integration of acquisitions, rather than granting windfall gains simply for doing the deal.

A number of other companies narrowly avoided votes against their remuneration reports.


As mentioned, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry influenced voting intentions. In determining our voting recommendations, ACSI is looking for evidence that those responsible for overseeing poor conduct have been held to account.

Of the major financial institutions to front the royal commission, only Commonwealth Bank had held its AGM at the time this article was written. At the bank’s meeting, we observed wariness among investors about passing judgement before the royal commission’s final recommendations are published. A number of shareholders abstained.

It will be interesting to observe the AGMs at the other major banks. Factors we predict may influence investors’ voting decisions include relatively high bonus awards despite flat or declining cash profits, and remediation provisions prompted by revelations during the royal commission.

Gender diversity

Investors’ efforts to improve diversity on ASX 200 boards have continued this AGM season. We now have clear evidence that the decision of ACSI members and others to vote against all-male boards in the ASX 200 has resulted in improved board diversity.

In keeping with our policy, we continued to recommend against the election of boards with poor gender diversity at ASX 200 companies. At the ARB Corporation AGM, close to one-third of shareholders opposed director elections, clearly demonstrating that investors are concerned about this issue.

There are now only three all-male boards in the ASX 200 – ARB, TPG Telecom and Tassal Group.


Shareholders put forward a record number of proposals during this year’s AGM season, many involving climate-change disclosure. Recognising the clear link between climate-change risk management and long-term sustainability.

At Origin Energy, 46 per cent of investors voted to support a resolution asking the company to provide more transparency on its climate-change lobbying and industry associations.

Recent shareholder resolutions once again highlight the need to improve the legal framework in this area. Our research has found that shareholders see value in non-binding resolutions and are tired of the current system, which requires that each proposal have a constitutional amendment attached. To address this, we are advocating for the introduction of non-binding shareholder resolutions in Australia.

As these outcomes show, the collective voice of investors is proving to be extremely effective at holding companies to account for their ESG performance and ensuring they remain focused on delivering long-term value for investors.

Davidson will appear on a panel at the Investment Magazine Chair Forum to be held between January 30 and February 1, 2019 at the RACV in Healesville, Victoria. Click here for more information.

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