Ardent: Voting for diversity

Jul 2022

The issue

Ardent Leisure Group Limited sought approval for three proposals, including their remuneration report and the re-election of an independent director at their AGM. At the time of announcing the AGM agenda, the company was one of the few ASX 200 companies that had an all-male board. This was inconsistent with our gender diversity expectations for developed markets of at least 30% minimum female board representation. Although the company had one female board member earlier in year, she had relinquished her role in May. The company had also again participated in the Australian federal government’s JobKeeper scheme, which had provided payroll support to companies which had experienced significant financial losses during the Covid-19 pandemic. However, it had still paid short term incentive (STI) bonuses to key management personnel for the year.

The issue

Engagement type One-to-one

Our engagement

Fidelity’s Sustainable Investing Team engaged with the company on both our board-level diversity and executive remuneration concerns.

We discussed our new gender diversity policy in detail and our current minimum threshold in Australia of 30% female board representation. As the board was all-male at the time, we outlined that our intention was to vote against the proposed director election in line with our policy.

During our engagement, the company said it would announce the intention to appoint a new female board member in advance of the AGM and make a public commitment to reach 30% gender diversity within the next year. Following these positive announcements, we decided not to vote against any proposals on the basis of this issue.

Remuneration: We met with the company Chair last year and outlined our view that companies which had required taxpayer support to meet payroll costs should not pay bonuses to key executives for the year. Despite having participated in JobKeeper 2 (the extension of the original federal support scheme, which lasted from October 2020 to March 2021) STIs were paid out with the aggregate level of cash bonuses awarded to four key managerial personnel during the year ($2.05m) representing over a third of the level of JobKeeper support ($6m). We decided to vote against the remuneration report on this basis and the company acknowledged our concerns.

The outcome

The key positive outcome linked to our voting policy was the company’s public acknowledgement and action to improve female representation on the board.

All proposals were passed at the meeting; however, the remuneration report received 38% against of votes cast and received a first strike. We will continue our engagements with the company on diversity, remuneration and broader sustainability issues in the coming year.