Shareholders hit back at executive remuneration

Shareholders have been keeping a watchful eye on executive remuneration reports at annual general meetings (AGMs), with 2018 witnessing a historically high number of strikes against the extortionate pay checks of top execs, which have progressed from a Royal Commission call-out to a sustainability risk.

Måns Carlsson-Sweeny, head of ESG Research at Ausbil Investment Management, said during the AGM season, fund managers, including Ausbil, exercised their right to vote against several remuneration reports.

“While some individual companies have made significant changes to their executive remuneration structures, we believe these large ‘against’ votes, combined with continuous engagements, will hopefully lead to further improvements in governance in the coming year,” he said.

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The ESG head said corporate culture was a cornerstone of the fund manager’s ESG analysis, and many of the risks the firm lagged in 2016, including concerns about cultural factors in the banking and franchise industries, hit headlines in 2018.

“They continue to be a focus of our ESG engagements in 2019,” he said.

Another issue that gained some traction last year was modern slavery, with the Australian and NSW Governments passing the Modern Slavery Act in response to ESG engagement with corporates across global supply chains.

Carlsson-Sweeny said active investors in particular had many avenues through which they could engage and influence ESG behaviors like capital allocations, meetings with governors and management, direct company engagement and advice and shareholder activism.

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