As it is now the AGM season, we are receiving the Proxy Forms and instructions for voting.
I have decided that I will start voting (I rarely send back the forms) against the renumeration report and increase of payments to non executive directors. I realise that this is largely symbolic because the boards do not have to accept the vote on this issue. However I think it is time for shareholders to voice their displeasure at the level of fees paid to directors, and in particular the increases being sought. For example BHPB are seeking to increase the pool from $3.0m to 3.8m this year.
My reasons for this are:-
1) Why should directors fees go up when the share prices are going down. For example, BHPB is now back to 2005-2005 levels, yet the directors argument is that they havn't had a pay rise since 2006. Ok, you can have CPI but not 27%. BHPB is a dreadful company. Whilst their P/E might be OK, the yield to shareholders is pathetic.
2) Shareholders worth is going down. Directors must also feel some of this pain. You are obviously not performing. But of course they will say, it is because of events outside of their control. Which begs the question "Why have highly paid directors if you have no control over events?"
3) I am sick of the argument that they need high fees to "attract the best". Sorry guys that doesnt' wash up either. There are plenty of talented people around. Market forces should set the renumeration, not the back room scratch my back directors club. Fees are currently set by an oligarchy. This must change; it is killing our companies and soaking up shareholder funds in the oligarchy pockets.
I urge all small shareholders to start rejecting these fee increases. At least the amount of paperwork going back to the companies will send a signal. And dare I say it, how about the institutions coming onboard. After all, it is not "your" money, it is "our" superannuation money that you are playing with.