Shareholders grilled the annuities and investment group on its choice to pay executives short-term bonuses after a deteriorated performance through COVID, with around 28 per cent voting against the company’s remuneration report.
Challenger had decided to reduce its leadership’s rewards for the 2020 year, after it copped a statutory net loss after tax of $416 million for the year. No cash short-term incentives were paid, with them being fully deferred into equity vesting over four years and fixed remuneration was stagnant.
Total short-term incentives for key management were down 56 per cent on the prior year, with chief executive Richard Howes seeing his short-term bonus slashed by 60 per cent to a total of $500,000.
On average, short-term incentives for key management were a third of their maximum, with Mr Howes’ payment being 20 per cent of its maximum.
In contrast, the CEO had seen a total STI of $1.2 million in 2019, although his fixed salary had risen year-on-year.
However, the group received a slew of questions during its annual meeting on Thursday morning as it commenced business on the remuneration report for financial year 2020, with one shareholder asking why it had decided to pay bonuses at all, especially as the share price declined.
The Australian Shareholders Association had recommended investors vote against the remuneration report, alongside proxy firms Ownership Matters and Institutional Shareholder Services (ISS), while CGI Glass Lewis backed the report.
During the meeting, the tally of votes for the remuneration report came to 70 per cent, with 28 per cent of shareholders voting against the executive salaries.
Chairman Peter Polson commented the board believed it had struck the right balance with the remuneration report, although he acknowledged protests from shareholders.
“We recognise that while many shareholders and advisers have expressed their support for our approach, a number have relayed concerns about the reward decisions we have made in light of the disappointing shareholder outcomes experienced this year,” Mr Polson said.
“The board accepts this feedback and takes these concerns very seriously. We will continue to engage with shareholders, proxy advisers and other stakeholders on this important matter.”
He later added that executive pay should not purely reflect the share price.
Challenger had also decided to miss the final dividend for FY20, which shareholders also quizzed the group on.
Mr Howes reported the group expects to return to paying dividends this coming financial year.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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