The issue

Charter Hall Group Shareholders were asked to approve a special performance-based retention award to the CEO with a face value of A$16m at grant. If the performance hurdle is achieved at close to the middle of the target range, the award will be worth approximately A$32m at vesting. The award was intended to supplement the CEO’s regular remuneration arrangements, which are competitive for the market and sector. Similar retention awards were granted to around 25 of the company’s key executives.

In order for the award to vest, the company’s total shareholder return (i.e. TSR, share price performance plus dividends) must increase by between 12% - 15% over the next five years on a compounded annual basis, and must also rank in the top three of a bespoke peer group of 20 Australian property companies.

The outcome

The resolution was approved, with 61% of votes cast in favour and 39% voting against. Approximately 5% of votes abstained on the resolution. We anticipate that the high level of dissent should discourage companies in the market from granting one-off retention awards unless this is supported by a strong performance rationale.