13/11/2008 - 16:08

Eastwood hits out at proxy advisers

13/11/2008 - 16:08

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Outgoing Wesfarmers chairman, Trevor Eastwood has lashed out at the power of proxy advisers after the company's remuneration report received a majority of negative proxy votes prior to today's AGM.

Eastwood hits out at proxy advisers

Outgoing Wesfarmers chairman, Trevor Eastwood has lashed out at the power of proxy advisers after the company's remuneration report received a majority of negative proxy votes prior to today's AGM.

In what would have soured Mr Eastword's last day as board member following 45 years of near continuous formal links with the farming cooperative-turned industrial, mining and retail giant, just over 50 per cent of proxy's were against the board's recommended remuneration package for Wesfarmers managing director Richard Goyder and his executive team.

Shareholders at the meeting provided a mixed response on the subject, as Wesfarmers dealt with an issue that has hit numerous big listed companies in the wake of the stock market's drastic downturn.

Mr Eastwood said the degree of proxy adviser influence over shareholders was an unintended consequence of regulations regarding remuneration and, when combined with the presure fund managers were under to weild their voting power, had led to unfortunate results.

"I am not sure the regulators intended that so few people ... should have so much power," he said.

Prior to the actual ballot the majority of proxy's received was against the remuneration report but the vote is non-binding.

The proxy's were 50.3 per cent against the package which, amongst other things provided incentives for Mr Goyder to achieve certain targets, both short-term and long-term, including an unreleased five-year return on equity goal with big rewards should the company exceed that by 15 per cent within that time frame or earlier.

Much of the target was designed around the turnaround of Coles.

Mr Eastwood said the remuneration package was developed in the best interests of shareholders and he hoped they would understand that market sensitive information could not be released.

He said Wesfarmers waivered between the 10th and 15th largest listed company in Australia, yet Mr Goyder's pay ranked him at number 48. If he was paid equal to his peer ggroup it would have involved doubling his share price.

Instead, the board had decided to put a large amount of that increase at risk and make the rewards high if the company could achieve beyond the reasonable expectations of shareholders.

Mr Eastwood acknowldeged that the majority of shareholders had not supported the board's decision and that the directors may have to relook at how they devise remuneration in the future.

One shareholder suggested the complexity of the paperwork had influenced his decision to vote against what he believed was a payout for high fliers.

Another said that that Wesfarmers may have been on the receiving end of a general backlash against executive remuneration.

 

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