Telstra Might Witness A Strike In AGM: What You Should Know?

  • Oct 15, 2018 AEDT
  • Team Kalkine
Telstra Might Witness A Strike In AGM: What You Should Know?

Telstra Corporation Limited (ASX: TLS) is expected to witness a strike in its annual general meeting or AGM which would be commencing from tomorrow. It is expected that the proxy advisers, as well as shareholders, might stand up against the pay report of the executives. The market broadly anticipates that almost all the industry funds, even AustralianSuper, would be standing against at the time of the discussion of the remuneration vote. The bonuses have been disbursed to Andy Penn, the company’s chief executive officer or CEO, which might be a concern for the investors in the AGM. This meeting would be ending by November end.

The primary reason that such events are being expected by the markets is that the stock price of the company has been witnessing a strong downtrend. At each of the AGM, the remuneration reports are needed to be presented and the shareholders need to cast a vote. These reports provide a detailed description of the bonuses and salaries which have been disbursed to the executives. However, if over 25% of the shareholders’ votes are against the agenda, it would be termed as “strike.” Amidst strong downward trend in Telstra’s shareholder value, the report which would be discussed in the AGM would be providing the details of Mr. Penn’s income as he is entitled to get 66% of the target bonus. The chief executive is expected to get bonus payments amounting to $2.1 million in addition to the fixed salary amounting to $2.3 million. The market participants need to look out as to what would be the share price movements at the time of the strike. 

The raised eyebrow from the shareholders has been experienced primarily because the stock performance of the company in 2018 has been favorable. Majority of the proxy advisers are already in talks that they would be recommending no to the remuneration plan when it would put in front of them. As per the market players, if the industry funds would be giving a “no” collectively, it would be sufficient. The requirement of 25% votes to be cast against for the strike would be met. Another company which is under the radar of the markets is Tabcorp. The market broadly expects this company is expected to witness a strike on Wednesday because Ownership Matters, ISS as well as retail shareholders would be voting against the fact that substantial amount of bonuses have been disbursed post the merger with Tatts. David Attenborough, chief executive officer, has got the merger bonus amounting to $6,30,000 which includes the cash amounting to $315,000.

According to the top management of ISS Australian, the companies have been convincing the shareholders to assume the risks which arise from the merger and acquisition transactions but at the time of pay rises, the management or CEO are the ones which are the beneficiaries.

At the time of writing, the share price of Telstra Corporation Limited is trading at A$3.080 per share. The company has a market capitalization or cap amounting to $36.63 billion. The company has an annual dividend yield of 4.87%.

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