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Woolworths has suffered a protest vote of more than 25 per cent against its remuneration report, prompting the supermarket giant to defend its approach to reducing executive bonuses in light of two deaths in its business over the past year.
The retailer’s annual shareholder meeting was a colourful affair in which the company also defended more than $1 million in donations to organisations providing education on the Voice referendum, as well as a surprise appearance from former Woolworths chief Roger Corbett, who grilled the company on its voting intentions at Endeavour Group’s upcoming shareholder meeting.
Woolworths chair Scott Perkins and chief executive Brad Banducci (left) at the supermarket giant’s annual meeting on Thursday.
Woolworths revealed on Thursday that 28.04 per cent of proxy holders had voted against its report on executive pay, the first time investors have delivered a “first strike” against its remuneration report.
It appears that Woolworths’ approach to adjusting its short-term incentive payments after two fatalities in its business fell short of some investors’ expectations, prompting them to vote against the report.
Woolworths’ trading year was marked by two worker deaths in separate workplace incidents, for which formal investigations are ongoing.
The company told investors it had taken a “two stage” approach to reviewing staff incentives in light of the events. This involved a 10 per cent reduction in short-term incentives for leaders across the Woolworths Group, and a plan to review remuneration implications further once investigations into the incidents are complete.
But Woolworths’ chair Scott Perkins acknowledged on Thursday that not all shareholders agreed with the company’s approach.
“Some shareholders believe we should have changed our remuneration framework and made further preemptive adjustments before the investigations are concluded. As a result, we have seen a vote against the remuneration report in excess of 25 per cent of those voting today,” he said.
Perkins defended the group’s approach despite the protest vote, saying that the way the company had applied the reduction in short-term incentives had affected about 9000 team members and sent “a strong signal throughout the organisation that safety is everyone’s first priority”.
“We believe a fully informed two-stage approach is appropriate. We believe this initial adjustment is both broad and deep and enables Woolworths Group to continue to drive improvement in underlying safety metrics as well as appropriately reflect the gravity of the fatalities.”
“However, we acknowledge and will reflect on this feedback and consider whether adjustments to our remuneration framework are appropriate.”
Should shareholders vote against the company’s remuneration report at next year’s annual meeting, this would signal a “second strike” and open the door to a possible board spill.
Perkins was also on the receiving end of questions from former Woolworths boss Roger Corbett, who demanded to know why Woolworths, which owns a 9 per cent stake in Endeavour Group, had signalled it would vote against a motion to elect retail veteran Bill Wavish to the company’s board at its annual meeting next Tuesday.
Endeavour, which runs the ALH pubs and Dan Murphy’s retail business, was spun out from Woolworths and floated as a separate ASX company in 2021. The business is involved in an escalating battle against its largest investor, Bruce Mathieson senior, over the company’s performance, and Corbett has publicly agreed the company is being mismanaged.
Corbett asked Woolworths management on Thursday why it was backing the current board, given Endeavour Group’s share price performance.
“I think your shareholders are entitled to know the reason you chose that – because the status quo is so bad,” he said.
Perkins said the company had carefully considered the issue at board level and he had spoken with Mathieson and met Wavish, and it was appropriate to support the current board with a message that there is “work to do”.
“Our view going forward is that we sincerely hope that the board of Endeavour Group can resolve these issues,” he said.
Woolworths shares were 1.1 per cent weaker to $32.25 at 2pm.
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