Institutional Shareholder Services (ISS), a leading proxy adviser, has called on shareholders of the Australian Securities Exchange (ASX) to vote against the upcoming remuneration report. In a statement released ahead of the ASX’s annual general meeting on October 22, ISS said the company’s short‑term variable remuneration (STVR) does not reflect its statutory results or the experience of shareholders.

ISS’s concerns about executive bonuses

ISS argued that the STVR outcome is “misaligned with the company’s statutory results and shareholder experience,” and that a vote against the remuneration report is warranted. The adviser highlighted that the board kept the bonus pool at 100% of target despite a 23.6% decline in the ASX’s share price for the year and weaker total shareholder returns compared with peers and the broader index.

Former CEO Helen Lofthouse received her full target bonus even though the company reported declines in profit, dividends and total shareholder return. ISS noted that a significant portion of the bonuses were tied to a profit measure that omitted costs borne by shareholders, including A$51.5 million in losses from regulatory fines and expenses related to a clearing‑system replacement project.

Half of the executive bonuses were also based on non‑financial performance measures such as employee engagement, which ISS described as akin to executives’ “day jobs.” The adviser concluded that the board did not use its discretion to reduce the bonus pool in light of the company’s financial challenges.

Contrasting view from CGI Glass Lewis

While ISS recommends a “no” vote, another proxy advisory firm, CGI Glass Lewis, has taken the opposite stance. CGI Glass Lewis advised shareholders to endorse the remuneration report at the upcoming meeting. The firm acknowledged that shareholder returns have been weak but pointed to operational progress, including the delivery of the first phase of the new Clearing House Electronic Subregister System.

Both advisers note that under Australia’s “two‑strikes” rule, a “no” vote exceeding 25% triggers a strike. A second consecutive strike would force shareholders to consider a vote on removing the entire board. The ASX received its first strike in 2024 over similar concerns but avoided a board spill after shareholders endorsed the pay plan last year.

What this means for investors

Shareholders now face a clear split between two influential proxy advisers. ISS’s criticism focuses on the perceived disconnect between executive compensation and the company’s recent financial performance, while CGI Glass Lewis emphasizes operational improvements and the importance of continuity.

Investors will need to weigh these arguments when casting their votes at the October 22 meeting, which will be the first under new CEO Anthony Attia, who succeeded Lofthouse in May. The outcome will signal how the market views executive pay structures amid ongoing governance scrutiny and recent platform outages that have raised concerns about the ASX’s ability to deliver reliable market infrastructure.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.