Our latest Intelligence Report covering company meetings held in Australia during 2012

1. Intelligence
Report
> Insights from company meetings held in 2012 - Australia
February 2013
COMMERCIAL IN CONFIDENCE
1
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2. Introduction
Welcome to Computershare’s fourth annual report of company meetings held in Australia during 2012. This unique publication
provides you with insights into the trends, issues and innovations that dominated your most significant annual securityholder event.
In 2012 we observed in Computershare client companies a two-speed voting pattern, where voting participation was up for the
larger companies but down ‘across the board’. For most issuers, 90% of proxy votes were rushed through the door in the final days
before cut-off. In a concerning but unsurprising trend given what we’ve seen in recent years, very small numbers of securityholders
attended meetings in person.
Investors continued to swap paper for convenience in 2012 with a record number of securityholders lodging their proxy vote online.
Institutional investors also made their online presence felt, lodging nearly a quarter of the total issued capital voted via Intermediary
Online, Computershare’s dedicated web service for custodians and nominees.
In 2012 we saw the first group of companies face their ‘second strike’ and contemplate the practical implications in regards to
communicating with their securityholders and planning for a potential spill meeting. And in June 2012 Parliament passed an
amendment to the two strikes legislation in order to make certain that the Chair can vote undirected proxies on the remuneration
report resolution with an express authority.
Also in this report our Chief Legal Counsel and Company Secretary, Dominic Horsley, discusses the Corporation and Markets
Advisory Committee (CAMAC) review on the ‘The AGM and shareholder engagement’; summarising Computershare’s response,
discussing the key themes contained in submissions from across the industry, and envisaging what might be next in this review.
I hope you find the insights in this report to be useful, and please do contact me if you have any questions or comments.
Kind regards
Greg Dooley
Managing Director
Computershare Investor Services & Funds Services
greg.dooley@computershare.com.au
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3. Insights from company meetings held in 2012
Highlights from 2012
Attendance and voting
Very small numbers of securityholders Voting ‘across the board’ appears to …but voting participation continues
are turning up to meetings be resuming its downward trend… to increase in the ASX200
UP
5.4%
0.17% 42.8% 62.0% from
2011
of securityholders of issued capital of issued capital
attended meetings was voted across was voted across
in 2012 DOWN all meetings in DOWN all meetings in
10.5% 7.6%
from 2012 from the ASX200
2011 2011
Most proxies are submitted in the Overvoting continues to cause
last few days before proxy close headaches for issuers
Over 90% In 2012 we
of votes were lodged identified 187 cases
in the last 2 of overvoting
business days before affecting
the proxy close 117 issuers
date
Report methodology: The data contained throughout this Intelligence Report is based solely on Computershare’s client meetings, unless otherwise denoted. As a leading
provider of share registry and meeting management services, we are uniquely capable of analysing and reporting on data collected from hundreds of meetings each year.
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4. Insights from company meetings held in 2012
Highlights from 2012
Use of technology
Securityholders are swapping Investors show their support for mobile device Institutional investors show strong
paper for convenience voting – a new and convenient way to vote support for online voting
23.3%
UP
12.6% One company 23.3% of UP
60.7%
from
reported that 57.8% the total issued from
of securityholders 2011
capital voted in 2012 2011
voted online in of its total online was lodged via our
meetings that offered votes were lodged via dedicated online service
online voting mobile devices for institutional
in 2012 investors
Voting on the remuneration report
More companies received a ‘strike’ 25 companies received a second strike How they decided –
in 2012 than in the previous year in 2012, requiring them to take a vote show of hands versus a poll
on the spill resolution
124 companies 72% of
received either a first Nearly a quarter companies decided
or second strike of the companies who the remuneration
compared with 114 received a first strike report resolution via
companies receiving in 2011 received a a show of hands.
a first strike second strike 28% conducted
in 2011 in 2012 a poll.
Report methodology: The data contained throughout this Intelligence Report is based solely on Computershare’s client meetings, unless otherwise denoted. As a leading
provider of share registry and meeting management services, we are uniquely capable of analysing and reporting on data collected from hundreds of meetings each year.
3

5. Insights from company meetings held in 2012 Attendance and voting
Attendance and voting
Very small numbers of securityholders are turning up to meetings
Over the last four years less than a quarter of one per cent of securityholders’ have been turning up to meetings each year. A
continuous downward trend in attendance has been observed over the same period, with attendance dropping by approximately
10% per year.
Proportion of securityholders attending meetings
2009 0.25%
2010 0.21%
2011 0.19%
2012 0.17%
Figure 01: Very few securityholders show up to meetings and attendance levels are continuing to drop.
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6. Insights from company meetings held in 2012 Attendance and voting
A significantly smaller proportion of securityholders are attending meetings for companies in the ASX200 (0.13% in 2012) than is
observed for all companies. The difference is even more apparent in ASX50 companies where only 0.09% of securityholders walked
through the venue door in 2012. It appears that attendance may still not have yet hit its low.
Proportion of securityholders attending by ASX index
0.11%
2012
0.11%
ASX 50
0.11% 2011
0.09%
2010
0.14%
0.13%
ASX 100 2009
0.12%
0.12%
0.15%
0.14%
ASX 200
0.13%
0.13%
0.00 0.03 0.06 0.09 0.12 0.15
2009 2010 2011 2012
Figure 02: Larger companies see a significantly smaller proportion of shareholders walk through the venue door.
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7. Insights from company meetings held in 2012 Attendance and voting
Voting participation continues to increase in the ASX200
Our analysis of Computershare client meetings shows that there is a two-speed voting pattern; while voting in companies ‘across the
board’ resumed its downward trend in 2012, voting participation is in fact much healthier in larger companies.
Computershare clients in the ASX200 have seen a marked increase in the proportion of issued capital voted in the last four years;
from 48.2% in 2009 to 62.0% in 2012, indicating that institutional holders are increasingly taking up their vote in larger companies.
Proportion of issued capital voted by ASX index (all meeting types)
51.2% 2012
56.2%
ASX 50
57.0%
63.2% 2011
50.9%
58.6% 2010
ASX 100
59.8%
63.3%
2009
48.2%
57.5%
ASX 200
58.8%
62.0%
42.1%
41.4%
ASX Other
42.3%
36.5%
0% 20% 40% 60% 80% 100%
2009 2010 2011 2012
Figure 03: Over the last four years, companies in the ASX200 have seen a marked increase in the issued
capital voted across all meeting types.
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8. Insights from company meetings held in 2012 Attendance and voting
Voting ‘across the board’ appears to be resuming its downward trend In a 2012 securityholder
survey, Computershare
In 2012 the total number of securityholders voting across all Computershare client meetings slipped to 5.9%. The overall issued found that nearly half the
capital voted was 42.8%, the lowest level seen in the last four years. In 2011 we observed a marginal increase in voting which respondents who said that
pointed to a potential advance in securityholder engagement. However, an ‘across the board’ increase in engagement appears to be they wouldn’t vote in 2012
debatable given the downward voting trend that resumed in 2012. cited their small holding not
making a difference as the
reason.
Proportion of securityholders voting and issued capital voted (all meeting types)
50%
“I am generally happy with
the direction of the company
40% 46.1% 46.3% and if I become unhappy I
44.1% 42.8% will sell out.”
SURVEY RESPONDENT
30%
20%
7.5% 6.6% 6.9% 5.9%
10%
0%
2009 2010 2011 2012
Issued capital voted Securityholders voting
Figure 04: Voting for all meeting types appears to have resumed its downward trend in 2012.
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9. Insights from company meetings held in 2012 Attendance and voting
Over the last four years, Scheme Meetings and AGMs have typically attracted the largest proportion of votes by issued capital. In
2012 the issued capital voted by meeting type was higher for Scheme Meetings (59%) than any other meeting type, followed by
AGMs, with 47.4% of issued capital voted.
Proportion of issued capital voted by type of meeting
42.8%
2012
Annual
48.3%
General
Meeting 50.6% 2011
47.4%
2010
31.2%
General 37.0%
Meeting 2009
33.3%
31.4%
39.4%
Scheme 61.5%
Meeting
54.4%
59.0%
0% 10% 20% 30% 40% 50% 60% 70%
2009 2010 2011 2012
Figure 05: Scheme meetings followed by AGMs have attracted the largest proportion of votes by issued capital.
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10. Insights from company meetings held in 2012 Attendance and voting
Few companies have adopted direct voting
Nine Computershare clients (predominently in the ASX50) offered direct voting in 2012, down from ten in 2011. While adopted
by only a handful of companies, the proportion of securityholders who vote in meetings where direct voting is used tends to be
marginally higher than in companies who do not use this voting model. We also analysed companies before and after they adopted
direct voting and observed no meaningful difference in voting participation.
Proportion of securityholders who voted in meetings using
direct voting vs. overall voting at all meetings in ASX50
8% 7.5%
6.8%
7% 6.4%
6% 6.5%
5.4%
6.2%
5.9%
5%
5.3%
4%
2009 2010 2011 2012
Overall voting in ASX50 Direct voting
Figure 06: The proportion of securityholders who vote in meetings where direct voting is used
tends to be marginally higher than in companies who do not use this voting model.
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11. Insights from company meetings held in 2012 Attendance and voting
Most votes are submitted in the last few days before proxy close
Based on a sample of companies from the ASX50, in the lead up to AGMs in 2012 most retail securityholders voted in the first few
business days after proxies were dispatched, yet just over 90% of issued capital voted via proxy was lodged in the last two business
days. These findings are consistent with our analysis in previous years which clearly demonstrates that retail securityholders move
quickly and vote shortly after receiving meeting materials, while votes from institutional investors embark on the long journey down
the chain, firstly to the vote service provider and then to the nominated custodian before finally arriving at the registry just prior to
proxy close-off.
Proportion of securityholders who voted and issued capital received prior
to the proxy close date
80%
70%
60%
50%
40%
30%
20%
10%
0%
18 days 13 - 17 days 8 - 12 days 4 - 7 days 3 days 2 days 1 days Proxy close date
BUSINESS DAYS FROM PROXY CLOSE DATE
% of issued capital received % of securityholders voted
Figure 07: In 2012 most retail securityholders voted in the first few days after proxies were dispatched,
yet the majority of votes were lodged in the last two days before the proxy close date.
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12. Insights from company meetings held in 2012 Attendance and voting
Voting reminders play an important role for companies who are looking to increase their overall voting participation. Companies
who issue a ‘reminder to vote’ to their securityholders in the days before the proxy close date see a noticeable increase in voting
participation within a short time after the email communication is sent. A day after one company issued a reminder communication
in 2012, they experienced a fivefold increase in the number of holders who voted online and an uplift of twelve times the issued
capital received compared to the previous day.
Companies who issued a voting reminder in 2012- proportion of securityholders
who voted and issued capital received prior to proxy close date
80%
70%
60%
50%
40%
30%
20%
10%
0%
18 days 13 - 17 days 8 - 12 days 4 - 7 days 3 days 2 days 1 days Proxy close date
BUSINESS DAYS FROM PROXY CLOSE DATE
% of issued capital received % of securityholders voted
Figure 08: Companies who issue a voting reminder in the days before the proxy close date see a noticeable increase in voting participation.
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13. Insights from company meetings held in 2012 Attendance and voting
Over-voting continues to cause headaches for issuers What’s the difference
between a ‘designated’ and
There has been plenty of discussion recently across the industry and in the media regarding the issue of proxy ‘over-votes’. Over- ‘pooled’ account?
voting occurs when more shares are instructed to be voted than the actual number of shares owned by a registered securityholder.
It can occur when there is an imbalance between the perceived voting entitlements of individual investors whose shares are pooled A pooled account is the
with other investors within a nominee holding and the actual (lesser) voting entitlements held by the nominee on the share register. combination of client assets
held through an omnibus
The impact on issuers is significant; from meetings held in 2012, we identified 187 cases of over-voting affecting 117 issuers. Over- account in the name of the
voting represented more than 20% of the issued capital voted for four companies and in the most extreme case, one issuer saw custodian or its nominee,
over-voting make up 56.8% its issued capital voted or 31.7% of its total issued capital.
rather than in individual
accounts for each underlying
98.9% of the over-vote cases in 2012 were lodged via paper proxy forms. To encourage a reduction in paper proxies and combat
over-voting, Computershare launched Intermediary Online in 2008; the only online service offered by a registry that is specifically client. For example,
designed to meet the needs of institutional investors. Intermediary Online supports real-time proxy processing which means that HSBC Custody Nominees
when a lodged vote causes a securityholding to move into an over-vote position, an on-screen alert is immediately broadcast to the (Australia) Limited or
user. In addition, if an over-vote occurs sometime after lodgement of an electronic vote, the custodian or nominee receives an alert National Nominees Australia
about the over-vote via email. Limited.
Chasing over-votes is a time consuming and time critical exercise. It requires significant rework for all parties, mostly in the last A designated account is the
two days prior to the proxy cut-off date. Computershare endeavours to contact any proxy agent who lodges an over-vote position. segregation of underlying
In only three of the 187 over-vote cases in 2012 were we not able to contact the lodging agent and resolve the issue. However, the investors into individual
impact on these three cases was that votes had to be
accounts on the share
disregarded in their entirety. We then reviewed the results
for all resolutions put to meetings where there was an register. For example,
over-vote, and found that the inclusion of the over-vote QIC Limited <c/- National
position would not have changed the outcome in all three Nominees Limited> or INVIA
instances. Custodians Pty Limited
<Sample Superfund>.
In our recent submission to CAMAC’s review of ‘The AGM
and shareholder engagement’, we discuss how the current Designated or segregated
practice of custodians and nominees holding institutional accounts can be established
investors in pooled account structures rather than in within CHESS and directly on
designated accounts named on the company register is
the share register, facilitating
contributing to a number of market inefficiencies, including
the issue of over-voting. The pooling of investors into one direct communications and
account on the register means that over-voting cannot voting between companies
be adjusted by a simple pro-rating down of votes ‘for’ or and shareholders.
‘against’.
Figure 09: Computershare’s Intermediary Online supports real-time proxy
processing which is helping to combat the incidence of over-voting.
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14. Insights from company meetings held in 2012 Use of technology
Use of technology
In a 2012 securityholder
survey, Computershare
found that 73% of personal
investors said that they
Securityholders swap paper for convenience would prefer to ‘go paperless’
While the move to online voting appeared to pause for breath in 2011, an increasing proportion of securityholders lodged their proxy and vote online.
online in 2012. This safe, simple and convenient voting channel is now used by nearly a quarter of all securityholders who participate
in meetings that offer online voting.
In 2012 we saw a number of companies shift to online voting in order to enhance the service provided to their overseas
securityholders. For some issuers overseas holders account for a significant portion of the register, and online voting means that
this group no longer needs to wait for their mailpack to arrive or risk their paper proxy form not reaching Computershare on time.
We expect that the launch of Digital Post Australia, a new communication channel, will encourage even more securityholders to
move away from paper proxy forms in 2013.
Digital postal mail is an
enhanced digital replica of
Proportion of securityholders who voted online in meetings that offered online voting the communications that
30% consumers receive in their
physical mail boxes. Powered
23.3%
by Digital Post Australia,
20.7% 20.7% a Digital Postbox allows
consumers to receive their
20% important mail, such as
15.5%
bills, statements, insurance
documents, government and
10.5% registry communications in
one central and secure online
location.
10%
Want to know more
about this exciting new
communication channel?
Speak with your relationship
0% manager or contact us here
2008 2009 2010 2011 2012
Figure 10: In meetings where online voting was offered in 2012, over 23% of securityholders who voted chose to do so using this convenient channel.
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15. Insights from company meetings held in 2012 Use of technology
An Australian first – introducing another convenient way to vote
At the end of June 2012 there were 16.2 million mobile handset subscribers in Australia who were able to access the internet via
their devices.1 Having observed this strong growth in mobile handset ownership, Computershare developed mobile device voting for
our own AGM in 2011 before launching this new module of InvestorVote in 2012 with a pilot group of 13 clients.
Across the pilot program, an average of 6.7% of securityholders chose to lodge their proxy vote via their mobile device instead of
using the desktop version of InvestorVote. Mobile device voting accounted for 7.1% of total proxy votes lodged via all online channels
in 2012. In a show of securityholder support for this new channel, one company reported that 10.1% of its investors who voted online
in 2012, lodged their proxy vote using a mobile device. This represented 57.8% of this company’s total votes lodged online.
Proportion of holders who used the mobile device module of InvestorVote vs.
the desktop version of this web service (2012 pilot group companies)
Co1 96.6% 3.4%
Mobile
Co2 92.9% 7.1%
Co3 96.3% 3.7% Desktop
Co4 91.0% 9.0%
Co5 96.0% 4.0%
90.8% 9.2%
COMPANIES
Co6
Co7 94.7% 5.3%
Co8 89.9% 10.1%
Co9 95.8% 4.2%
Co10 91.5% 8.5%
Co11 87.1% 12.9%
Co12 95.8% 4.2%
Co13 93.5% 6.5%
80% 85% 90% 95% 100%
Desktop Mobile
Figure 11: In a 2012 pilot 6.7% of securityholders lodged their proxy vote via their mobile device.
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1
Australian Bureau of Statistics, June 2012

16. Insights from company meetings held in 2012 Use of technology
A promotional flyer for the new module of InvestorVote accompanied the AGM mailpacks sent out to the securityholders of two In the lead up to their
companies. This offline campaign proved to be effective, resulting in a higher proportion of securityholders lodging their proxy via AGM in May 2012, AMP’s
mobile compared with the overall average of the pilot. securityholders became
some of the first in Australia
After the success of 2012, mobile device voting will be available for all Computershare clients to offer to their securityholders in to lodge their proxy votes
2013. With strong consumer uptake of mobile device technology in Australia, we expect to see a growing proportion of votes lodged
using a mobile device.
via this channel in the future.
Scan here to go directly to the
AMP mobile voting website
Our new mobile voting website is designed specifically
for smartphones, so you can now vote on the go.
Simply scan the QR code above with your smartphone
or log on to www.investorvote.com.au from your phone.
You will need the control number, holder number and
postcode for your shareholding. These can be found in
the top right corner of your enclosed proxy form.
To scan the code above you need to have already downloaded
a free QR code reader application to your smartphone.
“This is about keeping AMP’s
AGM contemporary and
relevant as shareholders
change the way they view
and use information, and
Figure 12: A convenient way to vote; securityholders simply need to scan a QR code to access Computershare’s mobile device proxy voting service.
communicate with us. The
To learn more about this service click here.
site is easy to read and
designed to suit mobile
devices rather than desktop
computers.”
MARNIE REID – AMP HEAD OF
SHAREHOLDER SERVICES
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17. Insights from company meetings held in 2012 Use of technology
Institutional investors show strong support for straight-through processing
Although institutional investors who voted online in 2012 accounted for only 0.4% of securityholders, this small group certainly
made their presence felt by lodging proxies online for nearly a quarter of the total issued capital voted.
Since our launch of Intermediary Online in 2008, Computershare is the only registry to offer an online service specifically for
institutional investors. This unique technology enables custodians and nominees who hold securities on behalf of institutions to
swiftly lodge proxies electronically, ensuring straight-through processing for issuers’ largest investors. Users receive an immediate
vote confirmation upon lodgement and are able to run real-time proxy status reports.
Accounting for only 8.9% of issued capital voted in 2010, volumes have nearly tripled in the last three years resulting in
Intermediary Online processing 23.3% of the total issued capital voted in 2012.
Securityholders who voted by channel Issued capital voted byVote
Investor channel Traditional Intermediary Online
Intermediary Online Intermedia
15.7% 84.2% 0.1% 15.4% 75.7% 8.9%
2010 2010
Traditional Traditional
Investor Vote Investor Vo
17.0% 82.7% 0.3% 2011 9.0% 76.5% 14.5%
2011
20.8% 78.8% 0.4% 2012 11.3% 65.4% 23.3%
2012
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
InvestorVote* Traditional Intermediary Online InvestorVote* Traditional Intermediary Online
* Includes mobile device voting
Figure 13: 23.3% of all issued capital voted in 2012 was submitted via Intermediary Online, a Computershare web service designed to meet the unique needs of
institutional investors.
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18. Insights from company meetings held in 2012 Use of technology
Using voting handsets at meetings maximises attendee experience “We’ve now used the handset
voting system at the ANZ AGM
Faced with needing to hold two consecutive meetings on the same day in 2012, Woolworths since 2006. It’s easy to use for
opted to use voting handsets instead of traditional voting cards, this allowed securityholders the shareholder, and enables the
to register for both the AGM and General Meeting at the same time. votes cast electronically at the
meeting to be tallied and displayed
IML, a Computershare company, and Computershare Investor Services worked closely with instantly at the meeting – this
the company prior to the meetings, establishing the rules and protocols for voting and is a significant improvement
determining when results for each resolution would be available to view. compared with using voting cards
and has most certainly enhanced
At registration, hundreds of securityholders were swiftly provided with a personalised
the AGM ‘experience’ for those in
smartcard programmed with their specific voting privileges which was then inserted into an
accompanying IML Connector handset. When voting opened, attendees cast their votes using attendance.”
the handsets, which immediately recorded and processed the data and then added it to the
JOHN PRIESTLEY –
total results.
ANZ COMPANY SECRETARY
Using the handsets simplified the complex logistics associated with running two meetings,
thereby providing comfort to Woolworths that voting was being managed efficiently. This
technology also ensured a better experience for their securityholders who did not need to
re-register between meetings.
Extending the AGM to an online forum
Retail shareholders are adept with
While current legislation does not specifically authorise companies to offer their securityholders the opportunity to participate
in an online AGM, the Corporation and Markets Advisory Committee (CAMAC) will no doubt address this as part of their technology and open to being
recommendations to the government in response to their review of the ‘The AGM and shareholder engagement’. engaged via digital channels.
We have observed the virtual AGM taken to the extreme in the United States, where some states permit online-only meetings 66% of respondents in a recent
and as a result a degree of securityholder scepticism has emerged. For example, securityholders have expressed fears that their Computershare survey said that
questions have been prioritised, rephrased and ignored or responses have been delayed to be answered outside the meeting, and they would participate in an online
are therefore not on public record. Concerns have also been expressed regarding the transparency of securityholder questions and AGM if it was offered.
management’s answers, as well as whether or not securityholder questions asked online are visible to everyone at the meeting.
In our submission to CAMAC, Computershare put forward our support for hybrid meetings – that is, a combination of the physical
and online AGM. We do caution however that it should ultimately be the company’s choice as to whether they adopt this practice.
Computershare is ready to offer its clients an online AGM service pending confirmation that securityholders are able to participate
in a meeting via this channel. We will continue to participate in industry dialogue on this matter.
17

19. Insights from company meetings held in 2012 Voting on the remuneration report
Voting on the remuneration report
The Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill was passed in July 2011. This
legislation introduced the ‘two strikes’ rule which was designed to provide investors with a greater say on executive remuneration.
In 2012 the level of investor discontent about executive pay was higher in companies outside the ASX200 than in larger companies.
An analysis of the proportion of votes lodged against the remuneration report shows that the average percentage was 5.5% in the
ASX50 versus 7.4% for all companies outside the ASX200.
Average proportion of votes cast against the remuneration report in 2012
ASX50 5.5%
ASX100 6.9%
ASX200 7.1%
ASX Other 7.4%
0% 1% 2% 3% 4% 5% 6% 7% 8%
Figure 14: Across the entire ASX, the proportion of votes cast against the remuneration report in 2012 was lower in larger companies than it was for those outside
the ASX200.
Data source: 2012 AGM results (all companies), Financial Review Business Intelligence, January 2013.
18

20. Insights from company meetings held in 2012 Voting on the remuneration report
Fewer companies received a first strike in 2012 than in the previous year
In 2012, 124 companies received either a first or second strike compared with 114 companies receiving a first strike in 2011. However,
it should be noted that in 2011 only AGMs held from July onwards were subject to the new rule.
Looking across the entire ASX, 15 fewer companies received a first strike in 2012 (99) when compared to 2011 (114). Two thirds of the
companies who suffered a first strike in 2012 received 25-49.9% of votes against their remuneration report resolution, with nine per
cent receiving more than 75% of votes against this resolution. The highest percentage of votes against the remuneration report
resolution for an individual company was 95%.
First strike - how securityholders voted on the Remuneration Report
75
25-49.9%
66
% VOTES AGAINST REMUNERATION REPORT
2012
23 2011
50-74.9%
24
16
75-100%
9
0 20 40 60 80 100
NUMBER OF COMPANIES
2011 2012
Figure 15: 99 companies across the entire ASX received a first strike in 2012, 15 fewer than the previous year.
Data source: 2012 AGM results (all companies), Financial Review Business Intelligence, January 2013. 19

21. Insights from company meetings held in 2012 Voting on the remuneration report
25 companies received a second strike in 2012
114 companies (just over 6% of the entire ASX) received a first strike in 2011. Ten companies who received a first strike in 2011 did not
hold an AGM in 2012 for a variety of reasons including:
>> ASX suspension / delisting
>> Corporate structure changes as a result of a takeover or Scheme of Arrangement
>> Liquidation
>> ASIC extension granted to hold the AGM at a later date
Interestingly, we observed that 65 of the 104 companies facing a second strike who did hold an AGM in 2012, held the meeting in the
last eight days of November.
Nearly a quarter of the companies who received a first strike in 2011 received a second strike in 2012, requiring those companies to
subsequently take a vote on the spill resolution.
Companies facing a second strike in 2012 - how securityholders voted
0-9.9% 55
% VOTES AGAINST REMUNERATION REPORT
24 2012
10-24.9%
25-49.9% 18
50-74.9% 3
75-100% 4
0 20 40 60
NUMBER OF COMPANIES
Figure 16: 25 companies across the entire ASX received a second strike in 2012
20

22. Insights from company meetings held in 2012 Voting on the remuneration report
Spill meetings are still being held in 2013 Companies who plan to hold
their AGM and a spill meeting (if
Of the 25 companies across the ASX who received a second strike in 2012, six companies received more than 50% of votes in required) on the same day should
favour of the spill resolution which required them to hold a spill meeting within 90 days of the AGM. At the time of writing, four consider replacing traditional
companies are still yet to hold their spill meeting. voting cards with digital voting
handset technology at the meeting
Penrice Soda Holdings Limited (PSH) was the first company required by the ‘two strikes’ rule to hold a spill meeting. After having to enable securityholders to
received more than 25% ‘no’ votes on the remuneration report resolution and more than 50% ‘yes’ votes on the spill resolution register for both meetings at once.
at their AGM held on 30 October 2012, requirements stipulate that the spill meeting must be held within 90 days of the AGM. This
meeting was held on 25 January 2013.
Click here to find out how this
technology assisted a company
At the spill meeting two incumbent directors, who under the two strikes legislation ceased to hold office at the conclusion of
the meeting, offered themselves for re-election and were both successfully re-appointed. The company had also received three manage its complex meetings in
additional nominations for Board positions, but all three failed to get the required securityholder support. 2012.
The second company to conduct a spill meeting was Globe International Limited (GLB). GLB received a second strike at their
2012 AGM held on 14 November 2012. The remuneration report resolution received more than 85% of votes against, and the spill
resolution received more than 85% of votes in favour which triggered the requirement to hold a spill meeting. The spill meeting was
held on 6 February 2013. The three directors who stood for re-election were all re-appointed, each director receiving almost 90% of
votes in support of their re-election. There were no additional nominations for the Board positions.
Careful consideration required for arranging a spill meeting
We also observed that three companies arranged for a spill meeting to be held on the same day as their AGM, in the event that they
received a second strike and the spill resolution was passed. This pre-arranged meeting was intended to avoid the substantial costs
associated with staging a second meeting within 90 days, although these companies did incur an upfront cost associated with the
printing and mailing of a second Notice of Meeting and proxy form for a meeting that might not take place. None of these three
companies did in fact have to hold their spill meeting, although two of the three companies did receive a second strike.
How they decided – show of hands or poll?
Across all Computershare clients who held their AGM in 2012, we observed that 72% of clients decided the remuneration report
resolution via a show of hands while 28% of clients conducted a poll.
Based on our review of all of the 104 companies facing a second strike at their 2012 AGM, we observed that the proportion of
companies who decided the remuneration report resolution via a show of hands was 52% with a corresponding 48% conducting a
poll.
For the 25 companies who received a second strike and then had to put a spill resolution to the meeting, the proportion of
companies going to poll on the spill resolution was 68% with 32% voting on the spill resolution by a show of hands.
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23. Insights from company meetings held in 2012 Voting on the remuneration report
The practical application of the two strikes legislation puzzles many
An analysis of Computershare clients who were facing their second strike in 2012 reveals
that for more than three quarters of these companies, a higher proportion of proxy votes
in favour of the spill resolution than against the remuneration report was recorded.
Although for many companies the difference was marginal, in several the difference was
substantial. In one extreme example, a company had its remuneration report resolution
pass by more than 95% on proxies, yet it had more than two thirds of proxies also vote in
favour of the spill resolution.
Our analysis indicates that the mechanics of the two strikes / spill resolution process is not
yet fully understood by securityholders, and we suspect that this outcome will occur less
frequently in the future as investors of all sizes become more familiar with the process.
We believe the single most likely reason for these results is that securityholders who
are generally supportive of the company will vote in favour of all resolutions, without
understanding that a vote in favour of the spill resolution is supportive of calling the spill
meeting. This is despite concerted efforts by companies to provide detailed explanations
of the process in their notices of meeting and proxy forms. This may mean that many
securityholders either do not read meeting materials thoroughly or do read them but do
not fully understand their content; a likely scenario given the significant legal technicalities
that the documentation is required to comply with.
Computershare did observe the trend of proxies in favour of the spill resolution being
greater than proxies against the remuneration report emerging in some of the early
meetings of our clients who were facing a second strike. As a result we also communicated
with the institutional investor community to explain how the two strike and spill resolution
process works.
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24. Insights from company meetings held in 2012 Voting on the remuneration report
Use of express authority clarified for use on proxy forms
On 18 June 2012 Parliament passed an amendment to the two strikes legislation in order to make certain that the Chair can vote
undirected proxies on the remuneration report resolution with an express authority. Prior to the long awaited clarification that this
amendment delivered most companies were adopting the ‘deemed direction’ approach on proxy forms (in accordance with ASIC
guidelines released in August 2011) and of these the majority were requiring securityholders to use a tick box to give that direction.
Proxy form approach % of companies who used this approach for AGMs % of companies who used this approach for AGMs held
held 1 Jan 2012 to 17 Jun 2012 18 Jun 2012 to 31 Dec 2012
Deemed direction with a tick box 52.8% 0.4%
Deemed direction with no tick box 30.2% 0.7%
Undirected proxy votes not available to Chair 9.4% 0.7%
Express authority with a tick box 3.8% 10.1%
Express authority with no tick box 3.8% 88.0%
Figure 17: Once legislation was amended in June 2012, the deemed direction approach was rarely used on proxy forms.
The data in figure 18 above clearly demonstrates that once the legislation was amended, the deemed direction approach was rarely
used. We understand that of the small proportion of companies who did use this approach after 18 June 2012, most had prepared
their proxy forms prior to the amendment being passed.
After the legislative amendment, we updated our standard proxy forms to accommodate the granting of an express authority on
the remuneration report (and other remuneration related resolutions) without a tick box. An alternative form that incorporated a
tick box was also made available to clients on request. There seems to be consensus across the industry that an express authority
can be granted without a tick box; as corroborated by the 88% of Computershare clients who adopted that approach for their proxy
forms after 18 June 2012.
Valuable votes continue to be lost
Analysis of a sample of companies who did use a tick box to authorise the Chair to cast their open votes on the remuneration
report, reveals that approximately two thirds of securityholders appointing the Chair as their proxy on an undirected basis did not
tick the box which meant that their votes could not be counted on the remuneration report resolution.
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25. Insights from company meetings held in 2012 What does the future hold for the AGM and shareholder engagement?
What does the future hold for the AGM and
shareholder engagement?
In December 2011, the then Parliamentary Secretary to the Treasurer, the Hon. David Bradbury MP, requested that the Corporations
and Markets Advisory Committee (CAMAC) inform the government on:
>> The future of the annual general meeting (AGM) in Australia, including how documents and meeting forms should change to
meet the needs of shareholders in the future.
>> The risks and opportunities presented by advances in technology, in the context of maintaining the ongoing relevance and
efficacy of the AGM.
>> The challenges posed to the structure of the AGM by globalisation, including potential increases in international share ownership Dominic Horsley,
and dual-listing. Computershare’s Chief
Legal Counsel and
In September 2012 CAMAC released their discussion paper, ‘The AGM and shareholder engagement’, and called for industry Company Secretary,
submissions in response to the questions contained in the paper. 36 public submissions were received by CAMAC – these can be discusses the Corporation
viewed here. and Markets Advisory
Committee (CAMAC) review
Our review of these submissions affirmed to us that there is still strong support for the AGM and there is substantial backing for on the ‘The AGM and
engaging with securityholders through a greater range of online communication channels.
shareholder engagement’.
He summarises
Computershare’s submission focused on improvements that we believe would benefit our clients; either as a result of addressing
current market inefficiencies, improving securityholder engagement or by lowering the costs to our clients of holding an AGM Computershare’s response,
discusses the key themes
contained in submissions
from across the industry, and
hazards a guess as to what
might be next for this review
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26. Insights from company meetings held in 2012 What does the future hold for the AGM and shareholder engagement?
Here are some of the key points from our submission:
>> Computershare has been campaigning for some time now on what we believe is an obvious solution that will remedy market
inefficiencies caused by ‘pooled’ accounts, such as over-voting, transparency issues and timing concerns. Institutions and
nominees should be encouraged to use designated accounts and consideration should be given to making designated accounts
the default for institutional securityholders. Rather than market participants such as custodians pushing for changes to the
legislative environment to overcome the lack of transparency caused by the administrative approach they adopt, they should be
asked to explain why they cannot use designated accounts to solve the identified issues.
>> In a recent Computershare survey, nearly 80% of securityholders said that they would prefer to receive their AGM
communications electronically (email, SMS or digital mail box). However, our data shows that the actual average number of
securityholders who receive their Notice of Meeting via email is 18.5%. We therefore recommend regulatory change that allows
companies to require securityholders to opt in to receive physical proxy material and Notices of Meeting. Issuers will benefit under
this change from a decrease in communication costs.
>> We do not recommend moving the record date as it will introduce concerns about people voting who are no longer
securityholders by the time the meeting takes place. We believe that the Australian proxy voting processes are better than in any
other developed jurisdiction. In the United States the record date cannot be less than 10 days before the meeting and it is often 45
days before the meeting. In our experience this results in ‘stale’ voting, where investors have sold out of the stock by the meeting
date. In some European jurisdictions, if you want to vote at all, you have to ‘block’ your shares (deny yourself the right to sell them)
for an even longer period before the meeting.
Although our own submission focussed on some suggested practical improvements to the AGM, other submissions proposed
more radical changes to the format of the AGM with some support for separating out the decision making function of the AGM
and having voting take place outside of the meeting itself. We wait with interest to see how CAMAC will respond to the many and
varied opinions that have been provided in the submissions. However, we do expect that the AGM will be retained, albeit allowing for
potential changes to its format, and we certainly expect there to be strong support for making technology integral to the AGM in the
future.
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27. Insights from company meetings held in 2012 Highlights from around the globe
Highlights from around the globe
While we have provided a snapshot of meetings trends from around the globe in this report, we are also developing analysis based
on our global proxy research. This detailed analysis will be released later this year – pre-register here to receive this report.
United Kingdom
Voting, as a percentage of issued share capital for FTSE 350 AGMs, has risen by 2.6% since 2010, as the introduction of the UK
Stewardship Code and increased media coverage have encouraged higher shareholder participation. There was also a 5% increase
in FTSE100 companies experiencing a high degree of opposition to remuneration resolutions. On this issue, the UK is considering
additional legislation in the future to give shareholders more say over companies’ remuneration policies.
Northern Europe
Shareholder activism took a slightly different form from that in other regions. When challenging boards over issues such as
remuneration, shareholders chose to take more responsibility in their role as company owners, and focussed on discussing the
design of longer term executive remuneration systems. In Sweden, there is provision for shareholders to suggest alternative Littleton
remuneration proposals relating to the pay of the board elected at the AGM.
Bahrain
United States and Canada
The greatest change in the US AGM space was the ongoing impact of the introduction of ‘Say on Pay’ rule, that gives shareholders a
non-binding vote on levels of executive compensation. This vote is mandatory for all public institutions within the US, however many
Canadian companies voluntarily chose to hold a ‘Say on Pay’ vote to support good governance.
In Canada, new Notice-and-Access regulations come into effect in February 2013 whereby issuers can choose to mail a Notice of
Meeting and include ‘Access’ information that, in lieu of the customary full proxy package, details where the proxy materials are
located on the internet. Issuers will benefit from reduced printing and postage costs by using the Notice-and-Access method for
mailing proxy materials. These regulations have been in place in the United States for some time.
Ireland
Irish shareholders increased their participation in meetings during 2012, not only voting in greater numbers but also being
noticeably more willing to verbally challenge the board at AGMs. This rise in opposition from shareholders has led to an increase in
the number of companies using proxy solicitation services.
Maroochydore
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28. Insights from company meetings held in 2012 Highlights from around the globe
Central and Southern Europe
Low level shareholder activism was seen across the region, with most companies experiencing little or no opposition. German
and Dutch shareholders currently have a binding vote on the remuneration policy, whereas France is currently debating the
implementation of a ‘Say on Pay’ style shareholder vote. In Italy, the introduction of a ‘Designated Representative’ policy enabled
shareholders to vote via a web portal.
Russia
The number of retail shareholders attending AGMs has decreased slightly over the last three years, while overall voting participation
has remained steady. If new legislation initiatives announced in 2012 are enacted, it will be possible for shareholders from across the
region to participate in AGMs online.
China and Hong Kong
Companies in Hong Kong and mainland China saw an increase of more than 44% in shareholder attendance from 2011, with this
figure more pronounced for larger companies, while voting figures have declined over the same period.
Littleton
India
Bahrain
Foreign Institutional Investors continued to have a growing influence at AGMs, and collaborated with proxy advisors to actively
challenge the companies in which they held securities. Legislation now allows companies to dispatch AGM notices and annual
reports by email, and it is compulsory for the top 500 listed companies to record a securityholder’s email address (where provided)
for the electronic distribution of proxy information.
South Africa
Following the enactment of the New Companies Act in May 2011, companies now need to obtain shareholder approval for
remuneration policies, company financial assistance, conversion to no par value shares and adoption of a new MOI. This has led to
an increase in the number of general meetings facilitated within the season and has seen higher numbers of shareholders voting.
Although shareholder activism is not yet a major concern, it is growing and more campaigns are expected in the future.
Maroochydore
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29. Insights from company meetings held in 2012
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