The 2026 AGM season is expected to continue to see close scrutiny of executive remuneration, incentive outcomes and broader governance practices.

• Boards should be prepared for questions on the level and structure of executive remuneration, particularly where pay outcomes appear disconnected from company performance.
• Incentive design and Board discretion remain important areas of scrutiny.

We provide a practical checklist of questions to help Boards prepare for the questions on remuneration most likely to arise during the 2026 AGM season.

As we enter the 2026 AGM season, board chairs and directors will once again be preparing for the questions they may receive from shareholders. While the number of executive remuneration strikes may moderate from the highs seen in recent years, AI driven analysis will enable proxy advisors and institutional investors to spot any gaps in disclosure more efficiently than ever before. While the votes against executive director equity grants are generally well supported, we expect these to encounter more issues. Some issues will arise simply because AI, and those driving AI, are not sufficiently nuanced enough to discern among elements aligned with shareholder interests.

As always, by failing to prepare, you are preparing to fail. A well-developed Q&A guide that anticipates the difficult questions before they are asked will allow directors to respond consistently and confidently.

Below is a checklist of common remuneration and governance questions that Boards may encounter during the AGM season. Best be prepared.

CEO & Executive Pay

1. Overall Level of CEO Remuneration

• Why is the CEO’s remuneration at such a high level when the company’s performance and shareholder returns have not shown a corresponding improvement?
• Why has the CEO’s fixed pay increased by x% when the company’s financial performance and/or shareholder returns have deteriorated?
• The CEO’s remuneration structure differs from common market practice. What is the Board’s rationale for this approach, and how does it support the company’s strategy?
• What peer group is used to benchmark the CEO’s remuneration? How does the Board justify the inclusion of significantly larger, overseas-based and/or higher-paying companies in the comparator group?
• Why was a one-off grant of rights/options made to the CEO, and how does the Board justify the size and structure of the award? Why could the intended outcome not be achieved through the existing incentive framework?
• Why are the proposed CEO LTI performance hurdles not higher than prior?
• How does the CEO’s remuneration compare with employee remuneration, and how does the Board consider internal pay relativities when determining executive pay?
• How does the Board ensure that the CEO’s incentive outcomes remain appropriate where the company has experienced significant non-financial, governance or reputational issues?

2. Short-Term Incentive (STI) Payments

• What specific achievements and outcomes have executives delivered to justify the STI outcome?
• Why are STI opportunities weighted more heavily than the LTI, and how does this balance support the company’s short- and long-term objectives?
• Why did executives receive an increased STI payment when dividends were unchanged/reduced, financial performance remained flat or declined, and/or TSR deteriorated?
• The STI framework permits payments for non-financial performance when financial performance has been unsatisfactory. Why should shareholders support an STI outcome in these circumstances?
• The non-financial STI measures appear to reflect activities and responsibilities ordinarily expected for business as usual. Why should these outcomes attract an additional STI payment?
• The company has a history of making STI payments of broadly consistent amounts. How does the Board demonstrate that the STI remains genuinely performance-based rather than operating as an additional component of fixed remuneration?
• There is no deferral of the STI. How does the Board ensure that the STI framework appropriately manages the risk of short-term decision-making?
• The Board has discretion to adjust the STI outcome. What safeguards ensure that discretion is exercised consistently and does not undermine the link between STI outcomes and measured performance?
• All KMP executives appear to receive similar STI payouts. Why isn’t there more performance differentiation among executives?

3. STI Performance Measures & Outcomes

• The company did not disclose the STI performance hurdles last year on the basis that they were commercially sensitive. Why have these hurdles not been disclosed retrospectively now that the performance period has ended? What information can the Board provide to allow shareholders to assess whether the STI outcome was appropriately earned?
• How did the Board determine the STI performance measures? What alternative measures were considered, and why were they rejected?
• Why has the Board selected these particular STI performance measures, and how does the weighting of each measure reflect the company’s strategic priorities?
• Why is there an STI outcome for achieving budget? How does the board determine that the budget represents a sufficiently challenging performance hurdle rather than business-as-usual performance?
• Safety performance has declined, yet annual incentive outcomes have increased. Does this suggest that financial performance is being prioritised over safety, and how does the Board ensure that the STI framework appropriately reflects material non-financial risks?
• How does the STI payout curve operate across threshold, target and maximum performance, and how does the Board ensure that the resulting outcomes appropriately reflect the level of performance achieved?

4. Long-term Incentive (LTI) Design & Vesting

• Why has the LTI vested when shareholder returns over the performance period have been relatively weak? How does the Board reconcile the LTI outcome with the experience of shareholders?
• Why is underlying/adjusted EPS used to determine EPS growth for the LTI? How does the Board ensure that adjustments for charges, costs, acquisitions or other items do not result in management being rewarded for outcomes within management’s control?
• What is the Board’s rationale for using EPS growth as an LTI performance measure rather than a return-based measure such as ROE or ROIC? How does the chosen measure support long-term value creation?
• The capital efficiency hurdle has not increased from the prior year. Given investor expectations for ongoing improvement in capital efficiency, why has the Board maintained the hurdle at the same level?
• The underlying earnings measure used for the LTI excludes impairments. How does the Board ensure that management cannot be rewarded where decisions have ultimately resulted in a reduction in the value of the business?
• Why are dividends accrued during the vesting period added to LTI awards that vest?
• The company has introduced restricted stock into the LTI. What is the rationale for this change, and how does the Board ensure that the award provides sufficient alignment with long-term shareholder outcomes?

5. New CEO Pay Structure

• How did the Board determine an appropriate remuneration structure and level for the new CEO?
• Why is the new CEO’s remuneration higher than the former CEO’s?
• How has the buyout of the new CEO’s forfeited remuneration been structured to avoid rewarding unvested or unearned performance outcomes?
• Where is the new CEO’s remuneration positioned against the selected market peer group, and what is the rationale for that positioning?
• What specific circumstances justified the additional remuneration provided to secure the new CEO’s appointment?

6. Board Discretion and Incentive Adjustments

• Did the Board exercise discretion when determining the STI outcome? If so, how was that discretion applied beyond the formulaic result?
• A material incident had a significant impact on shareholder outcome, yet no adjustment was made to the incentive outcome. Why not?
• Why were incentive performance targets adjusted during the year, and how did the Board ensure that the changes did not make the incentive easier to earn?
• Value was lost as a result of management action or inaction during a prior performance period. Why has the Board not adjusted outstanding incentive awards to reflect this?
• What principles does the Board apply when exercising discretion over incentive outcomes, and how does it ensure that discretion is applied consistently from year to year?
• How does the Board factor in risk to the remuneration framework? How can shareholders be sure that if a risk event occurred there would be sufficient reflection in incentive outcomes?

7. Response to Strikes

• Following the strike against last year’s remuneration report what changes have been made to address shareholder concerns? Why do you believe these are sufficient?
• Has the board engaged with investors since the vote? How has their feedback been reflected in the remuneration framework?
• You have not made significant changes to the framework following a strike. Why should we vote ‘for’ this year?

8. Other Features

• Why has the company not adopted or disclosed a minimum shareholding requirement (MSR) for executives?
• Why is the CEO’s minimum shareholding requirement (MSR) set below 2x fixed remuneration?
• What are the key reasons shareholders should support the remuneration report this year?
• If applicable, how does the variable remuneration framework comply with CPS 511 requirements?

 

Board Remuneration

1. Director Fees and Increases

• What is the Board’s rationale for increasing the director fee pool at this time?
• What has driven the significant increase in director fees, and how was the increase determined?
• Why has the board introduced share rights in addition to NED fees, and how does this approach impact NED independence?
• How were the proposed director fees benchmarked, and where does the Board expect fees to sit relative to its selected peer group?
• Why has the increase in director fees exceeded general wage or inflationary increases?

2. Minimum Shareholding Policies

• Why has the company not adopted or disclosed a minimum shareholding requirement for Board directors?

 

Board Diversity and Gender Pay Equity

1. Board Diversity Measures

• What steps has the Board taken to improve diversity in Board composition, and what progress has been made?
• Does the company have targets or plans to improve gender balance on the Board? What are the targets, and what progress has been made against them?

2. Gender Pay Gap

• What is the company’s gender pay gap among employees, and what are the key drivers of the gap? What is the company doing to address it, and what progress has been made?
• Are there any material gender differences in remuneration among executives performing comparable roles or Board members, and if so, why?

 

What does this mean for boards?

Ahead of AGMs, directors should be ready to explain and defend remuneration outcomes, especially if not backed by strong TSR and financial performance. Before the AGM, review likely shareholder questions, test the rationale for STI and LTI outcomes, and ensure key decisions and discretionary adjustments are clearly supported by disclosure.

© Guerdon Associates 2026 Back to all articles