The peak body for Australian retail shareholders has pushed for the resignation of one of Woolworths' board members following the company's $300 million underpayment scandal.
The Australian Shareholders Association (ASA), which primarily represents Mum and Dad investors, has advised its members to vote against the re-election of board member Holly Kramer at the company's annual general meeting on Monday, December 16.
Woolworths and Australia Post director Holly Kramer.
Ms Kramer, a former AMP director and Best & Less chief executive, chairs the retailer's people and performance committee. The ASA argues she should step down from that role, claiming she didn't act quickly enough to slash Woolworths executives' bonuses.
"[Ms Kramer] must bear some responsibility for the failure of the company to act promptly to reduce bonuses in light of the underpayment scandal," the ASA said.
Woolworths chief executive Brad Banducci and chairman Gordon Cairns announced last week they would cut their bonuses and pay in response to the scandal revealed in October, which saw the retailer admit it underpaid 5700 of its salaried employees as much as $300 million over a 10-year period.
The ASA is taking issue with the month-long delay in the response, saying the retailer had known about the underpayment since February and cuts should have been made earlier.
Any material increase [to fixed remuneration] in light of the wages scandal would not be a good look, to say the least.
The shareholders' organisation said that while Mr Banducci's $2.6 million bonus cut was an "appropriate first step", it would have liked it to come closer to the announcement of the underpayment.
Apart from the ASA's recommendation against Ms Kramer, Woolworths is likely to face minimal opposition to its resolutions at its annual shareholder meeting, with proxy firms ISS Governance and Glass Lewis supporting all of the retailer's proposals.
Despite the support, both firms have raised concerns over the underpayment issue and raised expectations of further bonus cuts.
Woolworths CEO Brad Banducci will forgo his $2.6 million short-term bonus this year. Credit:Janie Barrett
Glass Lewis said following the company's review of the underpayment scandal it expected Woolworths to further implement its malus policy, which allows the board to reduce or cut bonuses where appropriate, including where "significant reputational damage" has been caused.
"It is unclear the extent to which these underpayments would have impacted vesting outcomes under the company's incentive schemes," Glass Lewis said. "We expect the board to make any adjustments as appropriate once the facts are known."
It also warned the company against any future increase to Mr Banducci's $2.66 million in fixed remuneration, saying in light of the wages scandal it "would not be a good look, to say the least".
ISS also warned shareholders may want senior executives other than Mr Banducci and Mr Cairns to be held accountable, and that some may feel the response so far has been "not sufficient".
"Shareholders may want to retain scrutiny regarding this issue over the coming months and year, as the company conducts a full investigation and determines further consequences," the proxy advisor said.
Woolworths has highlighted the board will consider "further consequences" at the completion of its review, expected by the end of the financial year.
The company also assured the ASA that direct reports to Mr Banducci would forego 20 to 30 per cent of their long and short term incentives as the company's return on funds employed (ROFE) would be lost due to remediation expenses.Source: Read Full Article