Australian shareholders have continued to call for improved disclosure around remuneration, pay targets and performance, according to AXA Investment Managers, as remuneration accounted for 68 per cent of AXA IM’s votes against management in Australia.
By comparison, that number stood at 42 per cent in the Eurozone, 26 per cent in Asia-Pacific and 24 per cent in North America.
According to AXA IM’s global head of responsible investment, Matt Christensen, market disclosure around executive remuneration in Australian companies continued to lag other developed markets.
“This opaqueness makes it difficult for shareholders to visualise a clear line of sight between executive reward and company performance, to ensure that executives are not unduly rewarded for performance that does not align with shareholder wealth outcomes,” he said.
“When looking at examples such as the recent $700 million fine Commonwealth Bank received for money laundering and terror financing breaches, it would be difficult for companies to justify how executive pay would continue to pay out substantially while shareholders foot the bill for executive mismanagement at the top,”
The AXA IM’s report, “2017/18 Responsible Investment and Stewardship,” also showed that globally there was a tendency to move away from a sole focus on aligning executive rewards with share price performance and to focus on how executive remuneration aligned with the general workforce and social expectations.
“AXA IM is always supportive of reforms that require improved and increased disclosure in markets, allowing shareholders further clarity and better oversight of the companies in which they invest,” Christensen said.
“However, it remains to be seen whether these reforms will lead to long-term shifts in the way boards and companies think about executive pay and reward.”