ACCORDING to the latest Index of Shareholder Confidence from a GPS / Melbourne Institute survey, investors expect to see little to no short terms gains and share trading will also drop.
The survey reveals that there is major public concern about executive pay at Australian publicly listed companies with two in three shareholders believing that current remuneration is “excessive” and that higher executive pay is not linked to better company performance or greater returns for shareholders.
GPS director Andrew Thain says the results highlight that executive remuneration is still very much a “hot” button for retail investors.
“With the AGM season just around the corner it is clear that focus will again be on the salaries and bonuses paid to the CEO, especially if shareholder returns aren’t aligned with executive pay outcomes.
Already, we have seen several companies receive “strikes” over their remuneration reports, with a well-known IT company receiving a staggering 70 per cent ‘against’ vote.”
The two strikes rule came into effect on July 1, 2011 and allows shareholders to vote against the remuneration report at the company’s annual general meeting; if 25 per cent of shareholders vote against two consecutive reports, a resolution is put forward to dump the board.
Last year saw a jump in strikes against listed companies, from 95 to 113 – the highest number in three years. The number of those that involved a second strike more than doubled, from 10 to 22. Seven of the companies that received strikes were in the ASX200.
In real terms, the salaries of Australia’s business elite still tower over those of the average worker.
Findings from a recent Harvard Business Review study show that the average ratio between the pay of a chief executive and an unskilled worker in Australia is 93 times, while in the US it is about 350 times. There is such concern about pay disparity that the UK wants to pass a law for UK publicly listed companies to disclose the executive to average worker pay ratio.