With the profit reporting season soon to be in full swing, Australias listed companies are grappling with one of the more contentious issues stemming from CLERP 9 non-binding shareholder resolutions on the director and executive remuneration report.

For most companies, this marks the first year that director and executive remuneration reports must be subjected to a shareholder resolution at their annual general meeting (AGM).

The implementation of this practice raises many questions, which this survey seeks to answer by exploring listed companies preparation and experiences if the AGM has been held.

1. Where in your AGMs order of business have you placed (will place) consideration of the director and executive remuneration report and why?

Please indicate in the context of the AGM agenda.

a) Immediately after considering the financials 47%
b) Later in the agenda 20%
c) Last on the agenda 10%
d) Not yet decided 23%
e) Other

Comments

constitution makes it 'special business', i.e. not standard agenda item, plus as it is a non-binding vote some shareholders may chose to leave earlier
Later in the agenda because it makes sense logically to place it before the resolution on the CEOs remuneration (and after election of directors) rather than straight after the consideration of the financial reports

2. Is it explained in your companys notice of meeting that the resolution to adopt the director and executive remuneration report is non-binding on the company?

Yes? 90%
No?
Not decided yet 10%

Comment

The wording of s250R(3) has been used "the vote upon the resolution is advisory only and does not bind the directors or the company
Not all shareholders will understand that CLERP requires this vote to be taken but that it is not binding. Comment is included to provide transparency for those shareholders
The explanation is in the Explanatory Memorandum

3. Is it explained in your companys notice of meeting that, while the vote is advisory only and will not bind the directors or the company, the board will take the outcome of the vote into consideration when reviewing remuneration practices and policies?

Yes? 44%
No? 44%
Not decided yet 12%

Comment

Subject to review prior to release of notice.
No - the Board did not want to say this.
Not all shareholders will understand that CLERP requires this vote to be taken but that it is not binding. Comment is included to provide transparency for those shareholders.
The board always considers the views of the shareholders prior to making any decision.
The directors have to act in the best interests of the company. Shareholders do not have the same obligation. The shareholder vote can only be taken into account if it is in the best interests of the company to do so. A commitment in the Notice of Meeting must be qualified to this extent and therefore the better approach may be to not make a commitment.
Such a statement is not required

4. What level of shareholder rejection of the remuneration report would prompt your company to review its remuneration policies and practices? A no vote of:

a) 0-10 percent
b) Between 10 15 percent 8%
c) Between 15 20 percent 12%
d) Between 20 25 percent 20%
e) Between 25 35 percent 8%
f) Between 35 - 50 percent 28%
g) Over 75 percent 4%

Not decided yet 20%

Comment

The directors are required to manage the company and should act in the best interests of the company not according to a popular poll.
over 50%, but any volume (say greater than 10%) would be considered by the board
This is an arbitrary estimate only as ultimately it is a decision for the Board after the AGM
We would expect no more than 5% against any motion, so if it is greater than 10%, there must be an issue that needs further thought
To be determined in the light of prevailing circumstances
No specific percentage

5. How much time have you allowed for discussing and voting on the non-binding shareholder resolutions on the remuneration report?

a) Under 30 minutes 77%
b) Between 30 to 60 minutes 8%
c) Between 1 to 2 hours
d) Over two hours

Not known yet 15%

Comment

6. How do you propose to conduct the shareholder vote in relation to the remuneration report?

a) By a show of hands 63%
b) By a show of hands and then to a poll 11%
c) Straight to a poll 15%

Not known yet 11%

Comment

A poll can be called in accordance with the Constitution no decision has been made on circumstances in which a poll might be called
Normal voting protocols would apply. We would ask for a show of hands and only go to a poll if specifically requested or a vote was unable to be readily determined by a show of hands
On the hands first as required by constitution, and if hands result is contrary to proxy position (i.e. a 'no' vote on the hands vs 'yes' vote by proxies), then Chairman will call poll
Given the relatively small shareholder representation at the meeting, it is considered preferable to use a poll to determine the resolution