The Goodman Group AGM resulted in a second strike against the company and mandatory spill resolution as the Board faced off against shareholders unhappy with the remuneration of the Groups’ executives.
At last year’s AGM the resolution to adopt the 2021 Remuneration Report was carried, but more than 25% of the votes validly cast on that resolution were against, constituting a “first strike”. In an attempt to avoid a second strike the Group engaged with many of its investors to obtain direct feedback on the remuneration arrangements and whilst Goodman received strong support for the Long Term Incentive Plan (LTIP) structure, the primary issue raised by investors
related to the quantum of performance rights which were granted last year to key management personnel (KMP), including the Executive Directors. This was due in part to differing approaches used in assessing the value of the proposed grants under the new 10-year plan, where the Board had adopted an economic value approach rather than the face value approach more commonly used by the market.
Goodman expected to met the approval of 70% of its investors, however two proxy firms recommended against the 2022 resolutions, and, consequently, the group failed to achieve the 75% threshold required to avoid a second strike with only 71% of shareholders voting in favour.
Goodman strongly refuted the argument expressed by the principal advisory firm which that the EPS hurdles were are not sufficiently challenging. Goodman felt that they adopted ambitious EPS growth targets given the volatile market environment with a threshold compound annual growth rate of 6% and an Upper level of 11% per annum required for full vesting over a four year testing period.
Over the past 12 months, Goodman delivered $1.5 billion of operating profit, which equates to 25% growth for the year. Investment earnings were up 20%, management up 28%, and development strong at 34%.
Company founder and chief executive Greg Goodman reaped a total package of $15.77m in the last financial year, and five other executives were paid more than $5m.
Goodman expect FY23 operating EPS growth to be 11%, which equates to $1.7 billion in operating profit at which point the key executives will meet their upper limit targets.
Notwithstanding the 2nd strike, the Spill Motion was actually defeated by 98% of shareholders enabling the Board to remain in place. We assume those advisory firms weren’t wanting to see change at the Board level but to keep the heat executive pay and the 2nd strike policy allows for Boards to openly challenged over remuneration arrangements.
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