ASX faces proxy advisor push to reject executive pay
Institutional Shareholder Services (ISS) urges Australian Securities Exchange investors to vote against its pay report, citing a 23.6% share price drop last year and A$51.5 million in losses, ahead of the October 22 annual meeting.
Proxy Adviser Recommends Against Pay Report
Influential proxy adviser Institutional Shareholder Services (ISS) has called on Australian Securities Exchange (ASX) investors to reject the company's executive pay plans. ISS stated that the ASX's short-term variable remuneration (STVR) was "misaligned" with its recent financial performance and shareholder returns.
The firm explicitly recommended a vote against the remuneration report, highlighting a core concern that STVR outcomes did not reflect the company's statutory results or the experience of its shareholders.
Performance Metrics Under Scrutiny
ISS pointed to a significant decline in the ASX's share price, which closed last year down 23.6%. This performance underperformed both its peer group and the broader market index. Despite these challenges, ISS noted that the ASX board did not use its discretion to reduce the executive bonus pool, which remained at 100% of its target.
Former CEO Helen Lofthouse reportedly received her full target bonus, even with documented declines in profit, dividends, and negative total shareholder return (TSR).
Bonus Structure Criticised for Exclusions
The proxy adviser further criticised the bonus structure, asserting that it was largely driven by a profit measure that failed to account for A$51.5 million in significant item losses. These losses included regulatory fines and expenses tied to a project to replace the exchange's Clearing House Electronic Subregister System (CHESS).
Additionally, half of the executive bonuses were based on non-financial performance measures, some of which ISS deemed similar to executives' routine job functions. The ASX annual meeting, the first under new CEO Anthony Attia, is scheduled for October 22.
Under Australia's "two strikes" rule, companies face a potential board removal vote if shareholders register a "no" vote above 25% on remuneration reports for two consecutive years. The ASX received a first strike in 2024 over similar executive bonus concerns, though it avoided a board spill last year.
While ISS recommends rejection, another proxy advisory firm, CGI Glass Lewis, advises shareholders to endorse the pay report, citing operational progress, including the initial phase delivery of the new CHESS system. The October 22 vote will signal investor sentiment on ASX's governance amid ongoing scrutiny of its market infrastructure.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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