Originally published in Investment Magazine (December 2018)

Most ASX listed companies hold their annual general meeting (AGM) between September and November each year. The recent AGM season was characterised by several larger than usual votes against management recommendations. This is indicative of a loss of trust in company boards, arguably triggered by the ‘banking’ Royal Commission, although 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 companies that are well governed (and effectively manage their environmental and social impacts) and sustainable long-term returns. 


ACSI’s 2018 CEO pay report revealed that CEO pay has hit record highs, with bonus payments a major contributor. Investors are increasingly concerned that incentives have become an expectation in many listed companies, and often find bonuses awarded with little regard to performance. Concerns about executive pay delivered two of the most significant outcomes we saw 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 voted against the company’s remuneration report. Upfront bonuses awarded for completing the Tatts transaction were among the concerns raised at the company’s AGM. This vote demonstrates the preference of Australian investors for incentives to be aligned with the successful integration of acquisitions, rather than windfall gains simply for ‘doing the deal’.

A number of other companies narrowly avoided votes against their remuneration reports but should consider themselves on notice that investors are concerned about the direction of their remuneration strategy.

Board accountability

As mentioned, the Royal Commission undoubtedly influenced investors' voting intentions during the AGM season. 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. There, we observed a degree of wariness among investors to deliver their ‘verdict’ before the Royal Commission’s final recommendations are published, with a significant number submitting an ‘abstain’ vote rather than a vote in favour of the re-election of directors.

It will be interesting to observe the eventual AGM outcomes at the other major banks. Factors which we predict may influence investors’ voting decisions include relatively high bonus awards despite flat or declining cash profits and significant remediation provisions prompted by revelations during the Royal Commission. 

Board gender diversity

Investors’ efforts to improve diversity on ASX200 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 ASX200 has resulted in improved board diversity.

In keeping with our policy, we continued to recommend against the election of directors to ASX200 companies with poor board gender diversity. At the ARB Corporation AGM, close to one-third of shareholders opposed director elections, demonstrating that investors are clearly concerned about this issue.

In fact, there are now only three all-male boards in the ASX200; ARB, TPG Telecom and Tassal Group. Today it is clear that these companies are not just out of touch with community and investor expectations, they’re out of step with their peers.

Shareholder resolutions

The recent AGM season saw a record number of proposals put forward by shareholders, many involving climate change disclosure. Recognising the clear link between climate change risk management and long-term sustainability, investors continued to show strong support for increased reporting of this issue.

One significant result was at Origin Energy, where 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 again highlight the need for reform to improve the existing legal framework in this area. Our research has found that shareholders see value in ‘non-binding’ resolutions but are tired of the current system which requires each proposal to have a constitutional amendment attached. We are advocating for the introduction of non-binding shareholder resolutions in Australia to address this issue.


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.


Louise Davidson, CEO, Australian Council of Superannuation Investors