ONE of Australia's most powerful fund managers, AMP Capital, has singled out Cabcharge, CuDECO, Linc Energy and UGL for excessive executive pay, endorsing a potentially board-spilling "second strike" vote against the four.
AMP, which has $126 billion under management, revealed its voting patterns for the past year, naming and shaming outliers in its corporate governance report.
After initially being sceptical over the introduction of two-strike rule, due to its potential to to "create unnecessary distraction and unintended consequences", the fund manager has swung behind the move.
It believes the two-strike vote had brought broader scrutiny on executive pay, where previously its protests had "often fell on deaf ears".
"This AGM season, we've seen a dramatic increase in the number of companies seeking to engage with us," AMP Capital's head of responsible investing, Ian Woods, said.
"This has provided an opportunity to not only get a greater insight into a company's priorities through more transparent remuneration structures, but also to raise other important issues."
Despite holding stakes in 20 companies facing a disrupting second strike, AMP chose to vote only against Cabcharge, UGL, CuDECO and Linc. It said they paid discretionary bonuses which appeared at odds with company performance, and that executive pay was too high compared to similar companies.
Cabcharge was this year hit with a 38 per cent protest vote against its remuneration report. This triggered a vote to spill the board. But shareholders overwhelmingly voted against such a move. Even so, Reg Kermode, the long-time chief executive and chairman of Cabcharge, has labelled the two-strike system as "not democratic".
Linc escaped a spill even after shareholders issued the energy with a 40 per cent protest vote at its annual meeting. The copper miner CuDECO and UGL both avoided a second-strike vote.
AMP revealed it also voted against the re-election of unnamed directors in 10 companies, including News Corp and Harvey Norman.
Dr Woods says the increased engagement is an important part of being an active shareholder. He also drew a link between well-structured remuneration, corporate performance and shareholder interests.
The AMP Capital report also showed an improvement in gender diversity on boards. It found the proportion of boards with no women directors had fallen from 60 per cent in 2010 to 39 per cent.
"There has been clear evidence that progress has been made with regard to increasing the gender diversity of listed company boards of directors," Dr Woods said.
AMP Capital issues a ‘‘second strike’’ against:
And voted against a director in: