Investor Relations Spotlight and Key Trends

Remuneration Reports:

The 2024 AGM season saw a continued rise in investor dissent regarding executive remuneration, with approximately 15% of ASX 300 companies receiving a ‘strike’ up from approximately 13% in 2023. This ongoing discontent reflects persistent shareholder frustration over perceived excesses in executive pay.

That said, MUFG Corporate Markets Investor Relations’ proxy campaign data indicates an increase in institutional investor support, with 72.52% of institutional investors voting in favour of the remuneration reports, up from 70.10% in 2023.

This trend of improved voting support among is consistent across all institutional investors categories including superannuation funds (73.99% in 2024 vs. 72.40% in 2023), investment managers (75.24% in 2024 vs. 73.94% in 2023) and sovereign wealth funds (78.86% in 2024 vs. 77.87% in 2023). These results suggest that institutional investors broadly saw improvements in remuneration practices or better communication from listed Australian companies regarding their pay structures for the 2024 period relative to 2023.

26.48% of institutional investors voted against the remuneration reports in 2024, highlighting the need for companies to focus on transparency, fair pay structures, and robust engagement with all shareholder groups to retain support on remuneration.

Director Elections:

Similar to executive remuneration, there was slight uptick in institutional voter support for director elections in 2024 (84.49%) compared to 2023 (83.55%). This increase may be attributed to continued improvements in enhanced communication and engagement strategies by corporates, or that director elections (unlike remuneration) are not consistent across all companies or sectors, and certain segments of the ASX may face more substantial opposition due to segment-specific governance issues or performance concerns relative to others that would be overlooked by the data aggregation.

Reframing ESG:

ESG issues remain a focal point for both investor engagement and activism. In addition to the usual emphasis on climate and social sustainability issues, the 2024 AGM season also saw investors, activists and advisors rigorously questioning companies about their ethical impact and the overall robustness of their corporate governance practices. Some instances demonstrated investors and proxy advisors using their voting rights and influence to address significant governance failures within organisations.

The fallout from these failures emphasise, the importance of transparency, accountability, and alignment with governance principles in addition to the perennial focus on environmental or social issues.

Meeting Formats:

The format of AGMs remains a topic of debate, reflecting differing preferences among investors and issuers. The 2024 AGM season showcased a variety of approaches, with some companies opting for hybrid or virtual only meetings, while others continued with the traditional in-person format.

This fragmentation highlights the ongoing deliberation over the most effective and inclusive meeting formats following the COVID-19 pandemic. Some companies argue that returning to physical meetings can help reduce costs and simplify processes. On the other hand, other issuers maintain that virtual and hybrid formats offer greater flexibility and accessibility, allowing broader investor participation, particularly for retail investors.

Notable Developments

New Reporting Standards:

The Australian Federal Government, overseen by the AASB introduced mandatory climate disclosures in January 2025. This significant change requires Australian companies to provide more detailed reporting on their climate-related risks and opportunities with greater transparency. This new responsibility will inevitably increase scrutiny on companies’ sustainability practises by their stakeholders, providing fertile ground for shareholder activism. Shareholder advocacy groups see this as an opportunity to push for greater accountability and alignment with global standards and best practises among Australian companies, compelling them to not only report but also act on their sustainability commitments.

Shareholder Activism:

After a relatively subdued 2023, the 2024 season witnessed a resurgence in activity from shareholder advocacy groups such as ACCR and Market Forces. These groups targeted Australian companies on climate and ESG-related risks and disclosures through shareholder requisitioned resolutions. Activist groups in 2024 leveraged members' statements to comment on existing business items without necessitating a vote for constitutional amendments. These campaigns were used effectively against Woodside Energy Group, contributing to a 16.6% vote against the re-election of Woodside’s chair, Richard Goyder, in their 2024 AGM. The rise of these new tactics underscores the importance of engagement between issuers and investors on ESG topics. The growing sophistication of shareholder activist campaigns underpins the need for Australian corporates to listen to and proactively address investors’ ESG concerns.

Overview

The 2024 Australian AGM season has highlighted the importance of transparency, accountability, and alignment with investor expectations, with many companies finding themselves under significant scrutiny over executive remuneration, director elections, and ESG issues. The introduction of mandatory climate disclosures in January 2025 by the Australian government and the re-emergence of shareholder activism underlines the need for listed corporates to enhance their governance practices, engagement efforts and sustainability reporting.

As the landscape of investor expectations continues to evolve, Australian corporates must remain vigilant and responsive to these changing dynamics to maintain investor confidence and support. The notable trends from the 2024 AGM season made it clear that institutional and sophisticated investors are active participants who demand not only sustainable growth but accountability from the companies they invest in.