Premier Investments chairman Solomon Lew has hit back at proxy advisors, after the business received a first strike against its remuneration report.
During its virtual AGM, more than 25% of votes were cast against the resolution '2 Remuneration Report', which constitutes a first strike for the purposes of the Corporations Act 2001.
The results of the AGM show that the number of votes cast on the poll For the resolution was 51.49% (34,649,268 votes) while the number Against was 48.51% (32,648,296 votes), with 579,365 votes Abstaining.
According to Lew, the report should not have received a strike against it, as the business and its leaders delivered significant results, even during the pandemic.
During FY20, Premier Investments reported net profit after tax (NPAT) of $137.8 million, up 29.0% on FY19, with like for like (LFL) sales up 7.6% (constant currency) with total sales of $1.22 billion down 4.3% on FY19.
Meanwhile, Premier Retail’s online sales for the first 18 weeks of FY21 increased by 70% over the same period of last year.
"It’s clear that we have suffered a first strike against our remuneration report, but it’s completely unclear to me how it can be justified in relation to the outstanding performance that our Board, CEO and management team have delivered.
"What is clear is that this strike has been driven by some proxy advisors.
"I would remind them that remuneration is meant to reward performance and align management and shareholder interests.
"The FY20 remuneration report details the bonus Mr McInnes received in FY20 due to the FY19 record underlying earnings being up 11.5%.
"The quantum of this bonus was exactly the same as the prior year when Premier received a 96% vote in favour of the remuneration report.
"Where management teams deliver outstanding results, they should be rewarded for doing so," he said.
In its Remuneration Report (in its annual report), Premier Investments states that CEO Mark McInnes is entitled to receive a short-term incentive (STI) if performance targets are met - with the STI based on growth of Premier Retail's EBIT.
If EBIT growth of 5% is achieved when compared to the previous financial year, McInnes is entitled to receive $1,375,000 while if 5-10% growth is achieved he can be paid a maximum of $2.75 million, unless he applies for additional payment which is up to the discretion of the chairman (which he has not used during the 2019 or 2020 financial years).
In FY20, Premier Retail saw EBIT increase 11.9% to $187.2 million during the period, with McInnes receiving a STI payment of $2.5 million, reflecting the EBIT growth.
McInnes' annual fixed remuneration increased from $2.5 million to $2.75 million at the beginning of the 2020 financial year.
This is his first increase in his fixed remuneration since the end of the 2015 financial year.
McInnes also has long-term incentive remuneration arrangements in place, further details available here.
Lew went on to specifically praise Premier Retail CEO Mark McInnes' performance and leadership.
"Our CEO, Mark McInnes, and his team under the direction of our experienced Board have delivered record results every year for the past nine years, and this year Mark has steered us through the extraordinary challenges of COVID-19.
"As shown on page 24 of Premier’s annual report, Premier’s total shareholder return (including record dividends) over the past nine years has outperformed the ASX 200 by over 200%.
"This demonstrates that Premier is consistently one of the best performing companies on the ASX.
"Today we announced another record online sales performance with growth in online sales of 70% for the first 18 weeks of FY21.
"When combined with our current optimism for the rest of the season’s sales and profits, Premier is once again demonstrating further evidence of the unique strength of our Board and management team," he said.
Remuneration of non-executive directors (NED) is an approved aggregate amount of no more than $1.5 million per year.
In response to COVID-19, Premier's NEDs voluntarily did not receive any remuneration for the month of April and reduced their fees by 20% for the months of May-July 2020 to support the business.
In his usual fashion, Lew declined to accept any remuneration for his role as a director or for his role on any committees.
Lew added that had he and associated entities chosen to vote on the report, the strike would not have resulted.
"I also note, despite the fact that I received no remuneration from Premier, 40.4% of shares owned by myself and my associated entities elected not to vote on the remuneration report resolution.
"Had these shares been voted, there would not have been a strike recorded," he said.