Shareholders unhappy with executive pay at Dexus

More than a quarter of Dexus shareholders have voted against the remuneration package for the property group’s highest-paid executives and directors at its annual general meeting in Sydney.

A tally of the votes revealed that 28% of shareholders opposed the remuneration report for the financial year ending June 30, 2011, despite Dexus delivering annual returns four times greater than the S&P/ASX 200 Property Accumulation Index.

Dexus is the first company in its sector to record a strike against its executive pay and only the seventh company where more than 20% of shareholders have voted against executive remuneration since the vote became mandatory in 2005.

A vote above 20% against the remuneration report is generally considered a sign of trouble for companies.

Should a similar number vote against the remuneration next year, it could force boardroom changes at Dexus.

Dexus CEO Victor Hoog Antlink received a 9.7% pay increase for the 2011 financial year, taking home $3.95 million.

In his AGM address Dexus chairman Chris Beare noted the particular media attention given recently to property sector executive pay and that of Antlink.

Beare responded to the “dissenting vote” by saying the board believed it aligned behaviour to returns for shareholders”.

The vote came as shock to Beare and the Dexus board following 96% of shareholders voting in favour of last year’s remuneration package.

“We thought investors were of a similar mind,” he said, adding that the dissenting vote “troubled” the board in a year in which it had outperformed most of its peers on measures of total shareholder returns and at the same time as it pays its CEO and key executives around the industry average.

“We have spoken to our proxy advisors and a number of investors to try to understand the recent concerns. After the AGM season we commit to consult more deeply, then undertake a comprehensive review or our executive remuneration framework,” Beare said.

Since 2005 listed companies have been required to publish a report setting out the full details of the remuneration of their ten most highly paid executives and all directors and submit it to a vote by shareholders.

In 2008 more than three quarters of shareholders voted against the excessive pay to executives at Valad Property Group shortly before its collapse.

The vote is non-binding and does not require the company to cut its pay.

Dexus will report back to shareholders on the outcome of the review at a later date.