Preparing for AGMs

As AGM season approaches, board chairmen will be considering likely questions from the floor. To assist, we have considered the issues that may arise in regard to questions on remuneration and governance. To an extent, the questions on these matters will be contingent, in part, on the effectiveness of remuneration disclosures in the remuneration report and notice of meeting explanatory notes on remuneration resolutions. So, while we have addressed AGM questions in this article, also consider the extent that issues can be addressed with effective disclosures.

Here is a checklist of some common questions that have surfaced at or prior to AGMs that many companies have been ill prepared for, and failed to answer coherently or well.

CEO and executive pay

  • Why is the CEO’s remuneration so high when the company’s performance in the last three years has not shown any significant improvement?
  • The CEO’s fixed pay has increased by x% in the last year when EPS and other critical financial metrics have deteriorated:
    • why has fixed pay increased during the time of weak performance?
    • why should shareholders support the remuneration report?
  • What has the CEO done to get the “bonus” you have paid him/her?
  • Did the board exercise discretion when determining the bonus? How? That is to say, did the board pause and consider the outcome in the context of the current environment beyond the formulaic result. Refer to our summary of the ASIC 245 Information sheet HERE.
  • Why did the CEO get an STI payment when dividends did not increase/were reduced and profit has remained flat?
  • How did the Board determine the pay structure for the new CEO?
    • why is the new CEO paid more than the CEO that has been replaced?
    • how did you determine an appropriate level?
    • how have you structured the buy out of prior benefits to take into account performance?
  • Why has the LTI vested when the shareholder returns have compounded at less than the bank interest rate?
  • Why was there a one-off grant of rights/options/SARS to the CEO?
  • Why have the STI performance measures not been disclosed?
  • How did the Board determine the STI performance measures?
    • what other measures were considered?
    • why were they rejected?
  • Why does the CEO get half of his/her bonus entitlement simply for achieving budget? Isn’t that what their fixed pay is for?
  • Why is underlying/adjusted EPS used for the determination of the EPS growth for the LTI? Management have been responsible for those charges/costs/acquisitions etc. so why are they excluded when calculating the EPS growth rate?
  • Why is the CEO’s STI weighted to be more than the LTI?
  • What did the CEO achieve to warrant the level of STI payments awarded?
  • The pay structure permits STI payments for non-financial results when the financial performance has not been satisfactory. Why should the shareholders support this position?
  • The non-financial STI measures appear to be what we ordinarily expect the CEO would be required to do in any event. Why is an STI payment being made for what is expected of the role?
  • The company has a history of making consistent STI payments broadly of a same amount. Why is this called a STI when it appears to be like fixed pay?
  • The company did not disclose the STI performance measures last year for this year’s STI on the basis they were commercially sensitive. Can you now advise the performance measures retrospectively?
  • What is the Board’s rationale for using an EPS hurdle for the LTI rather than a measure of ROE or similar returns measure?
  • Why isn’t a minimum shareholding policy disclosed or in place for the executives?
  • Safety performance has declined, yet annual incentives have gone up. Is the board valuing financial results over safety?
  • An annual incentive was paid for the 12 months when the company received JobKeeper and/or other government support. Was this considered in assessing performance for the annual incentive?
  • It appears positive discretion was exercised to increase the incentive payment above what would be appropriate for the performance delivered. How can this be justified?
  • It appears that discretion was applied in “moving the goal posts” during the year to make it easier for an incentive to be earned. How can this be justified?
  • The underlying earnings measures used for incentives exclude impairments. This suggests management can be rewarded even if they reduce the value of the business. Why this earnings measure definition?

Board remuneration 

  • Why is the Board seeking an increase in the director fee pool if there is no immediate need for it
  • How can you justify the significant increase in Board fees?
  • Why doesn’t the company have a minimum shareholding policy for non-executive directors?

Board diversity

  • What action has the Board taken to improve the diversity on the Board?
  • Does the company have targets to improve the gender balance on the board?
  • What is the average pay difference between men and women? Why? What is the board doing to rectify this?


  • Has the company disclosed any framework to address climate change (e.g. reduce emission targets)?
  • What strategic goals are in the pipeline to improve carbon emissions?
© Guerdon Associates 2024
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