Charter Hall bonus scheme passes despite proxy firm outcry
Charter Hall’s shareholders have voted in favour of a generous remuneration scheme for its top executives, backing the property fund manager which delivered them total returns of 64 per cent in 2021 and rejecting proxy advisers’ recommendations against the plan.
The up-sized reward and retention scheme delivers chief executive David Harrison a $16 million bonus on top of an expected $6.75 million in reported pay and takes in 27 other key executives as well.
Chairman David Clarke told shareholders at their annual meeting on Thursday that the board had moved to lock in the company’s top executives to fend off poaching raids and after consistently strong performance by the company.
“Our people have increasingly been sought out by others, keen to emulate our success. That’s why, this year, we made it a priority to reset our remuneration structure, introducing a retention and outperformance plan for our leadership team,” he said.
The overall strategy won support in shareholder soundings, Mr Clarke said, but “the issue is the quantum”. The board’s generous reward scheme was shaping as a flashpoint at Thursday’s annual meeting after proxy firms ISS and CGI Glass Lewis recommended against elements of the package.
In the end, Charter Hall narrowly avoided a strike against its remuneration report, with a 77.5 per cent vote in favour. The motion to secure Mr Harrison’s long-term retention with $16 million in performance rights was also carried, although with less enthusiasm, with a 61.3 per cent vote.
Arguing the case for the bonus plan, Mr Clarke noted Charter Hall had upgraded its earnings guidance three times during financial 2021 before delivering a 19.6 per cent lift on its original guidance. Shareholders can expect a 6 per cent rise in distributions this year.
Driving Charter Hall’s success is a steadily mounting pool of funds under management, which rose to $52.3 billion in 2021. Another $3 billion has been added this year so far.
“This performance is not a one-off,” Mr Clarke said. “While there have been significant tailwinds for the real estate sector and funds management industry, these results are significantly better than most peers, all of whom had the same tailwinds and benefits.”
Further drama emerged at the meeting, held virtually, when Mr Clarke and the company’s auditor, PwC partner Ewan Barron, were quizzed over a report in The Australian Financial Review this week revealing an auditing hub set up by PwC in Parramatta with unqualified workers.
“Our firm first became aware of some of these matters earlier in 2021 and a full review was undertaken at that time and there were definitely some learnings for us as a firm and we implemented a number of measures prior to 30th of June 2021,” Mr Barron told the meeting.
“No audit quality issues were identified in this review.
“In terms of the Charter Hall audit, our team did use the Parramatta team referred to in the article, but I would say it was used in a very small area of the audit. All audit work performed by that team was overseen by qualified professionals with the right skills and experience,” Mr Barron said.
