12/30/2025
Opinion: Why Australian Shareholders Are Using Their Votes to Fire Directors and Reject Pay
Australian (12/30/25) Waterhouse, Rachel
Rachel Waterhouse, CEO of the Australian Shareholders’ Association, writes that in January she asked whether boards would learn from past errors. In 2025, shareholders marked the paper. At the start of this year, she argued that 2025 would test whether boards could rebuild trust through genuine transparency, stronger accountability, and better engagement with the owners of listed companies. She pointed to five pressure points: the drift away from true hybrid AGMs, the need for ethical leadership and freedom from conflicts, board effectiveness and director capacity, a more mature approach to ESG risk, and pay structures that reward long-term value rather than short-term optics. Twelve months on, the verdict has arrived in the most direct language available to shareholders: votes. That matters because Australia is a nation of investors. ASX research estimates 7.7 million Australians hold exchange investments, so AGM resolutions are not a niche concern. They are a mass market accountability mechanism. Yet one of the persistent weaknesses in our market is that too many retail shareholders remain disengaged from the companies they own. The AGM is not theatre. It is the formal forum where owners approve or reject resolutions that shape governance and value: remuneration reports, director elections, constitutional changes, and major transactions. If you cannot attend, there is still a straightforward way to participate: vote online in advance, or appoint a proxy and direct how your votes should be cast. When retail investors do not use these tools, they leave decision-making to others and reduce the pressure on boards to lift standards. The priorities retail shareholders want addressed are not hard to identify. In the Australian Shareholders’ Association’s latest Investor Sentiment Survey, 124 respondents were asked the one thing they most want ASX 200 boards to do better in 2026. The largest group, 37.90%, nominated remuneration that aligns with realized performance. Next was better capital allocation discipline, including dividends, buybacks, acquisitions and dilution, at 19.35%. Board effectiveness, including chair leadership, capability and engagement, attracted 17.74%, followed by stronger accountability at 16.94%. Clearer disclosure and transparency, including cash flow and key drivers, was selected by 8.06%. Australia’s two-strikes rule is often treated as a technicality, but it is better understood as a warning light. When more than 25% of votes oppose a remuneration report, investors are signalling that the board’s judgment is not landing. In 2025, that warning light flashed repeatedly. In 2025, Accent Group’s (AX1) remuneration report drew an extraordinary 81.97% vote against. WiseTech Global (WTC) recorded a first strike with about 49.47% voting against its remuneration report. CSL (CSL) received a second strike, with shareholders then voting down a board spill. At ANZ (ANZ), more than 32% voted against the remuneration report, delivering a second consecutive strike. It would be convenient to explain these outcomes as a revolt against pay. That misses what shareholders are actually saying. A remuneration vote is rarely only about the numbers. It is a referendum on trust: the belief that the board is exercising judgment that is fair, defensible and aligned with long-term owners. When performance is under pressure, when an organization is working through conduct issues, or when the narrative reads as curated rather than candid, investors become less tolerant of discretion, complexity and outcomes that feel insulated from consequences. Importantly, accountability in 2025 did not stop at remuneration resolutions. Director elections and other AGM motions increasingly carried the same message: shareholders will use the ballot paper when the board is not listening. James Hardie (JHX) was the clearest reminder that shareholder power is real. Its AGM resulted in shareholders voting out the chair and two directors, voting against the remuneration report, and rejecting proposed increases to non-executive director fees. That is not a routine protest. It is a board-level rebuke delivered through a company’s own constitutional machinery. It also speaks to a deeper point: when material decisions proceed without a shareholder vote, boards should not be surprised if shareholders express their view elsewhere, including in director elections. There is another irritant boards should not ignore, and it sits squarely in the AGM process. Retail shareholders do not want to see their money spent on campaigns designed to change voting outcomes rather than improve the underlying proposal. This is not about legitimate investor relations. It is about use of shareholder funds for what looks and feels like vote management: consultants, scripts, selective engagement, and pressure tactics in the weeks before a contested resolution. If a resolution is sound, make the case directly in the notice of meeting. Explain the trade-offs. Disclose the material costs clearly and prominently. Answer questions in full, including the ones that challenge the board’s preferred narrative. Then accept the vote. Spending shareholder money to manufacture consent is not a substitute for governance. It signals the board does not trust the merits of its own position.
ANZ was delivered a second strike when more than 32% voted against the remuneration report. The other arena where trust was tested in 2025 was the AGM experience itself. Hybrid AGMs are no longer novel, and they should not be framed as a concession. They are the baseline expectation for an investable market with geographically dispersed owners. A hybrid AGM works only when online participation is genuine: shareholders can ask questions, follow the process, and vote with confidence. A one-way broadcast is not access. When shareholders sense the meeting is being managed to reduce scrutiny rather than facilitate it, dissatisfaction lingers long after the chair’s closing remarks. Board effectiveness also moved further into the spotlight. Investors are less interested in generic statements about “experience” and more interested in evidence that a board can govern through complexity: a credible skills mix, genuine renewal planning and directors with the time to do the job properly. Chair leadership matters here. A strong chair does not treat the AGM as a performance to be controlled. They treat it as the owners’ forum, and run it accordingly. The survey results point to another theme that routinely surfaces at AGMs: capital discipline. Investors are watching capital allocation decisions more closely, particularly acquisitions, buybacks and the equity raisings that can dilute existing owners. When boards ask shareholders to approve a transaction, or x accept dilution through placement-heavy structures, they need to show their workings. Retail investors may not have the same access to management as institutions, but they can read a balance sheet and they can vote. Looking ahead, governance pressure will not ease. Market structure is shifting, and more Australians are exposed to assets held outside listed markets through superannuation and managed funds. As capital moves into less transparent settings, the need for robust governance, credible valuation practices and clear management of conflicts becomes more important, not less. Trust cannot be assumed when visibility declines. So what should boards take from 2025 as they look into 2026? First, treat trust as an asset that must be earned continually, not a reserve that can be drawn down whenever it suits. That means ethical leadership, clear accountability, and decisions explained in plain English, not disclosed defensively. Second, treat shareholders as owners in practice. Run AGMs for participation, not performance. Provide genuine hybrid access. Answer questions with substance. Third, stop using shareholder funds to campaign shareholders into supporting contested AGM resolutions. If the board’s position depends on consultants, scripts, and pressure tactics, it is time to revisit the substance here and now, not after the vote. Fourth, simplify and strengthen the link between reward and long-term value creation, and be candid about outcomes. If boards want shareholders to back ambitious incentives, they must be prepared to justify them clearly and accept the consequences when the justification does not hold.
Read the article