Proxy adviser calls for Australia's ASX shareholders to reject pay report

SYDNEY, Oct 1 : Influential proxy adviser Institutional Shareholder Services has urged Australian Securities Exchange invsetors to vote against its pay plans, saying executive bonuses were "misaligned" with its recent performance.

ISS said that the ASX's short-term variable remuneration, or STVR, failed to reflect its financial results and shareholder returns.

"The STVR outcome is misaligned with the company's statutory results and shareholder experience as the key concern", it said.

"A vote AGAINST the remuneration report is warranted."

The ASX did not immediately respond to a request for comment.

It is due to hold its annual meeting on October 22, the first under new CEO Anthony Attia, who took over after Helen Lofthouse stepped down from the top job in May.

MOUNTING SCRUTINY AFTER SERIES OF OUTAGES

The ASX has come under pressure from investors and regulators in recent years over its governance and ability to deliver market infrastructure after a string of platform outages and other missteps.

Its share price closed the year down 23.6 per cent, ISS said, and one-year total shareholder returns underperformed peers and the index.

Despite this, ISS said the board did not use its discretion to reduce its bonus pool, which remained at 100 per cent of target.

Lofthouse received her full target bonus "despite declines in profit and dividends and negative TSR (total shareholder return)", it said.

Bonuses were largely driven by a profit measure that failed to reflect costs borne by shareholders, including A$51.5 million ($35.73 million) in significant item losses from regulatory fines and expenses related to a project to replace its clearing system.

Half of the bonuses were also based on non-financial performance measures, some of which were akin to executives' "day jobs", such as employee engagement, ISS said.

Under Australia's "two strikes" rule, companies must put a remuneration report to a shareholder vote annually.

A "no" vote above 25 per cent is a strike. When "no" votes occur two years in a row, shareholders then hold another vote on whether to remove a company's entire board.

The ASX received a first strike in 2024 over similar concerns regarding executive bonuses, but avoided a potential board spill when shareholders endorsed its pay plans last year.

CGI Glass Lewis, another proxy advisory firm, recommended shareholders endorse the pay report at the upcoming meeting.

While it said shareholder returns were weak, it noted operational progress such as delivering the first phase of the new Clearing House Electronic Subregister System.