Strike threat keeps lid on top packages
Executive remuneration will be a key focus in the coming annual meeting season, with some real estate investment trusts sitting on one strike from last year after shareholders rejected high salaries.
The latest set of accounts for 2012-13 show most real estate investment trust senior managers received pay rises. Some were more modest than past years but others attracted attention for being very high.
Lend Lease has one strike and has restructured the package of chief executive Steve McCann, while Charter Hall on Tuesday updated the contracts of its joint managing directors, David Harrison and David Southon.
Investors have said they will focus on the remuneration reports in the AGM season, even though the REIT sector had one of its best-performing periods for some time, up to the end of the reporting season in August.
The weakening office market, concerns about bond rates and continuing takeover speculation between DEXUS Property and Commonwealth Property have dampened REIT returns on the sharemarket in recent weeks.
Maxim Asset Management managing director Winston Sammut said, noting the new employment arrangements proposed for Charter Hall's joint managing directors, it will be most interesting to see how investors and the various proxy houses approach the coming AGMs at which shareholders will vote as to how the remuneration packages will pan out.
"No doubt, of particular interest given the 'three strikes' policy now in place, will be the outcome for a number of companies which include Lend Lease," Mr Sammut said."
Under the Charter Hall contract, Mr Harrison and Mr Southon have entered into new employment contracts providing for much longer notice periods and the introduction of restraint provisions.
The contracts, if approved by security holders, will include a one-off three-year long-term incentive award for each managing director of a $30,000 rise in their fixed remuneration for next year to $1.08 million.
There will also be a target short-term incentive (STI) opportunity from the 2013-14 financial year of $660,000 for Mr Southon and $760,000 for Mr Harrison.
The actual STI outcome will depend upon Charter Hall Group's and the managing directors' performance during the year. Two-thirds of any STI for 2013-14 will be delivered in cash and the balance in deferred performance rights.
The managing directors have also had the three-month notice period for resigning extended to 12 months if they are sacked and six months if they resign.
Lend Lease renewed Mr McCann's contract in August and his remuneration package was restructured to increase the emphasis on long-term incentives, with a related reduction in short-term incentives.