Guerdon Associates hosted our 19^th annual Remuneration and Governance Forum on 18 March 2025 in conjunction with Glass Lewis. The Forum began with a presentation by Glass Lewis on proxy voting trends for the 2024 season. This article highlights the key takeaways of the proxy voting review.

Calendar year 2024 closely followed 2023’s record-breaking 41 strikes against remuneration report proposals, with 40 strikes in 2024. Prior to 2023 the average number of strikes since 2011 was around 20. The number of strikes in 2024 confirms that 2023 was not an outlier – it was the emergence of strong shareholder dissent.

2024 saw an increase in the number of companies receiving repeated strikes, with 3 companies receiving their 4th (or higher) consecutive strike, and 10 other companies each receiving their second strike in 2024. There can be varying reasons for continuing strikes, but many generally reflect the difficulties boards may have in responding to investor feedback. In other cases, boards with unique characteristics such as founders or long-tenured directors seemed to prioritise executive retention, therefore being less responsive to shareholder pressure. Despite the increased number of consecutive strikes that trigger a spill resolution vote, there has still not been a board spill following a second strike since the introduction of the two strikes rule in 2011.

The average ‘against’ vote to remuneration report proposals that received strikes has decreased to 42% in 2024, down from 46% in 2023. An increase in strikes that occurred with a lower range of ‘against’ votes (25-35%) was observed in 2024.

Common themes among remuneration reports that received strikes were attributes such as:

• Poor shareholder returns and performance issues;
• Unjustified incentive payouts;
• Retention awards;
• Excessive fixed remuneration increases;
• Short-term remuneration structures that lack skin in the game; and
• Long-term financial targets that are not challenging.

A further discussion of ‘skin-in-the-game’ was the subject of its own panel discussion in the 2024 Annual Forum – our summary article can be found HERE.

In terms of director election votes, there was a high level of dissent in 2024 compared to past levels, but a significant drop compared to 2023. Seventeen board directors received more than 25% ‘against’ votes in 2024, largely tied to themes such as:

• Poor shareholder returns/performance issues;
• Board independence; and
• Questionable remuneration practices.

Five out of 17 directors that faced opposition also recorded remuneration report strikes on their board – these issues often go hand in hand.

The number of resolutions centred around the environment and social (E&S) aspects is decreasing. Glass Lewis considers that investors have pursued other ways to raise E&S issues in AGMs. These include through ‘Say on Climate’ votes, and through more companies including member’s statements in their Notice of Meeting, a rising trend since 2023. However, E&S issues did remain a dominant theme in proposals. Three of the 4 major banks had resolutions around climate-related topics. Biodiversity and ethical sourcing appeared on the ballots of Woolworths and Coles, prompted by the emerging Sustainable Investment Exchange activist known as SIX.

Glass Lewis summarised the proxy voting observations by concluding that shareholder opposition usually reflects dissatisfaction with company performance and concerns with the remuneration structure. Companies with the weakest total shareholder returns (TSR) were more prone to remuneration strikes. However, this trend does not hold when it comes to director votes.

See Glass Lewis’ proxy season trends presentation HERE.

A Guerdon Associates article from our March 2025 release detailing recent strike trends further can be viewed HERE.

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