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Industry funds want more Westpac heads on sticks

2 min read
http://www.afr.com/companies/financial-services/industry-funds-want-more-westpac-heads-on-sticks-20191129-p53fg5

“While the CEO has gone, other members of this executive team have also presided over stomach-churning practices,” Mr Kaine said.

Industry fund Sunsuper, which is not a member of ACSI but does take the body’s recommendations into account, said a focus on accountability is a “guiding principle” for its voting intentions ahead of the December 12 AGM.

“We think the announcement of [leadership changes last week] are in line with the accountability that should rest in this type of circumstance,”  Sunsuper chief investment officer Ian Patrick said. “We will certainly continue to pursue that principle with the company in further engagement.”

Marriott in the mix

The comments follow ACSI chief executive Louise Davidson’s attempt to distance herself from comments she made in the immediate aftermath of the release of AUSTRAC’s allegations, which indicated the powerful lobby group – which represents industry funds including First Super – supported “further board renewal”.

“Our position has been represented as baying for blood, which is not where we are. Our view is now that the board needs some really clear air to focus on the issues,” Ms Davidson clarified, adding that ACSI now supports the re-election of Westpac director Peter Marriott.

They are also at odds with industry fund UniSuper’s position that more board changes would result in “further instability for the bank”.

Mr Watson said First Super, which outsources investment management to external managers including IFM Investors, has not yet come to a firm decision on Mr Marriott’s re-election, but is willing to go against ACSI’s recommendation.

“When it comes to Marriott, our concern is around accountability and directors being held to account on behalf of those taking care of shareholders’ investments,” he said.

‘Sink like a stone’

Mr Kaine said the bank’s remuneration report, which faced a historic first strike at the 2018 AGM with 64.2 per cent of votes cast against the proposition, needs to “sink like a stone”.

“There is a monumental disconnect between pay and performance at Westpac,” he said.

“We also have deep concerns about sign-on bonuses and post-employment consultancies for former executive leaders. We will be pushing hard for our proxies to reject this remuneration report.”

Though hesitant to reveal his hand just yet, Mr Watson said First Super is no stranger to going against its fellow industry funds on remuneration.

“On remuneration, we take a substantially different position from ACSI most of the time. We have our own policy,” Mr Watson said. The fund opposes on principle any executive pay bumps that are above average weekly ordinary time earnings.

‘Material impact’

In developing its voting intentions ahead of the AGM, First Super will take into account a scandal Mr Watson believes has implications for long-term shareholder value.

“A company that we invest in has facilitated child sex exploitation and that is terrible,” he said. “What has occurred has a material impact on our members’ retirement savings.”

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