Goodman Group shareholders deliver 40 per cent ‘no’ vote on executive pay

Goodman Group chief executive Greg Goodman, left, and chairman Ian Ferrier, who said: “The board takes these things very seriously, and we need to deal with them.” Photo: Anthony JohnsonShareholders in Goodman Group have shown their disapproval at chief executive Greg Goodman’s pay and bonus, with 40 per cent voting against the commercial property group’s remuneration report.

Following the so-called “strike” – a vote of more than 25 per cent against a company’s executive pay report – chairman Ian Ferrier said the company would talk to the proxy advisors and shareholders who voted against the resolution, which gives Mr Goodman a bonus of up to $16.5 million in performance shares.

The vote is non-binding and Mr Ferrier said the dissenters were primarily domestic-based institutional investors.

In an at times feisty exchange with the Australian Shareholders’ Association, Mr Ferrier said the risk around the performance shares was all held by Mr Goodman.

“He doesn’t get a performance bonus until the security holders get their distributions,” he said. “He is the one who holds the risk.”

Mr Ferrier said proxy advisors and shareholders should know that Mr Goodman was ranked 7th in the Harvard Business Review’s list of the best-performing chief executives, based on total shareholder returns over the past 20 years.

After the meeting, Mr Ferrier said: “We will be obliged to speak to the people [about the ‘no’ vote] … the board takes these things very seriously, and we need to deal with them.”

The 2016 annual meetings have seen an escalation in shareholders flexing their muscle over remuneration.

The “two-strikes” rule, which has been in force since 2011, enables them to register a strike against the board if 25 per cent of the shares vote against salary packages of key executives. If this happens two years in a row, it triggers another vote on whether to force the board to stand for re-election.

“There is a need to understand what is the issue. If the issue is with Greg’s bonus … then we have to deal with that and we will,” Mr Ferrier said.

“The [two-strikes] rules are fine … what happens is that the proxy advisors don’t come and engage with the board. We never hear from them, they have never rung me.”

He said while the larger institutions voted in favour, some were involved with the proxy advisors.

“I imagine, and my view is, in some way they abrogate their personal view to the advisors,” Mr Ferrier said.

“I think the proxy advisors have made errors in their judgement.”

The ASA’s representative, Allan Goldin, said the group was against the extremely large performance rights being offered, the all-cash short-term incentives (STIs), limited transparency on issuing of STIs, the fact long-term incentives were over three years, and a non-independent board.

“That all means the ASA will be voting its open proxies against this resolution,” Mr Goldin said.

At the meeting, Mr Goodman declined to comment on the remuneration report and vote.

He said the operations were solid due to the urban renewal in cities, where industrial land was in demand for residential redevelopments.

“Goodman is achieving substantial results, with $2.4 billion of sites conditionally contracted for sale, and has a pipeline of 35,000 apartments providing long-term opportunities,” Mr Goodman told shareholders.

“I reaffirm the forecast full-year 2017 operating earnings per security guidance of 42.5¢, up 6 per cent on the 2016 year, and the full-year forecast distribution of 24.5¢, up 6 per cent on 2016.”

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