ASX listing rule 10.14 prevents any directors of a company from being issued equity under an employee share scheme without prior shareholder approval. Equity granted under long-term incentive or service-based equity schemes to managing directors is the most common type of equity grant vote. We analysed 5 years of equity grant vote outcomes in the ASX 200 to see if there were any trends in shareholder support.

Our findings include:

• At the median and the 75^th percentile, a slight downward trend in support is observed.
• On average, shareholder support for equity grants has trended downwards in the past 3 years after peaking in 2021.
• Most of the downward trend in the average is likely driven by a substantial fall in voting support at or below the 25^th
• Since 2022, the proportion of voting outcomes greater than 90% in favour declined from 84% to 72%.

The analysis considered the ASX 200 constituents as at the start of each calendar year. Voting outcome data was sourced from Diligent Market Intelligence and AGM result releases. Votes are classified into the calendar year in which they occurred.

Figure 1 shows the annual distribution of CEO equity grant voting outcomes in the ASX 200.

Figure 1: Percentage of votes in favour of CEO equity grants in the ASX200.

At the median, the greatest support was observed during 2021 with 98.2% in favour. This support has decreased slightly to 97.3% in 2024. At the 75^th percentile, voting outcomes have remained stable over the past 5 years. At the 25^th percentile, voting outcomes have trended downwards since 2021 with 94.6% votes in favour and only 87.6% votes in favour in 2024. This lower support at the bottom quartile of outcomes corresponds with the decline in average votes over 5 years, falling to 91.9% in 2024 (2021: 94.7%). These results combined with the relative stability of the median and the 75^th percentile suggests a greater comfort in expressing dissatisfaction in voting. Further, there seems more consensus around what is not acceptable.

Table 1 highlights the trend of downward support in recent years. In 2021, 83% of equity grant proposals received at least 90% of votes in favour, falling to 72% in 2024.

Table 1: Proportion of CEO Equity Grant outcomes greater or equal to 90% in the ASX 200

 

Increasing resistance from shareholders is a trend mirrored in our analysis of remuneration report voting outcomes HERE. Whilst more time is needed to determine if this is the new normal or just a passing phase, it seems shareholders are becoming more comfortable voicing their dissatisfaction.

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