AUSTRALIA

By Ana Bautista

In the third quarter, the most common resolutions on Australian meeting agendas were company-specific equity related proposals, approval of option grants, ratification of past issuance of shares, and miscellaneous proposals that are company-specific.

Harvey Norman’s Retreat Signifies Emerging Shareholder Power

At the company’s July 29 EGM, shareholders opposed Harvey Norman’s option grants to six executive directors. Under the proposal, the board will grant an aggregate of 14.5 million options, which represents 1.4 percent of the total shares outstanding. From the retailer’s perspective, the repricing of the options was meant to encourage better performance from their executives.

Though these grants have an acceptable dilution of 1.4 percent of the total outstanding, the fact that the options have been repriced and are offered at a discount with no performance hurdles or other vesting conditions make these grants less attractive for shareholders to support. Five of the Australian retail group’s largest shareholders opposed the plan, which would have seen the group’s executives receive a “gift” of almost $A 6 million ($4.1 million). Two of the five largest shareholders include ING Investment Management and Colonial First State who voiced out their objections to the scheme believing that it does not take into account shareholder interest. Harvey Norman’s retreat in the face of such disapproval shows the growing influence of institutional investors on corporate boards.