Scentre, the country’s biggest retail landlord copped a lot of pressure from its tenants in Covid-ravaged 2020 – to which it responded with rent holidays, restructurings, lower rents for future years and by the end of the year had substantially recovered and was looking to a much better 2021.
In fact Scentre kept 42 of its malls open throughout 2020, even though many of its tenants were closed by the impact of the pandemic.
But yesterday’s annual meeting provided a timely reminder for the company formerly known as Westfield that executive pay can be a hot-button issue for shareholders, especially some big advisors and holders.
The AGM saw Scentre suffer a resounding swing against its remuneration report which seems to have stunned the board which described the vote as “disappointing”.
Proxy advisers Institutional Shareholder Services (ISS) and CGI Glass Lewis were among those who voted 51%-48.8% against the remuneration report.
It is the first “strike” incurred by Scentre since its listing in 2014.
A “strike” occurs when more than 25% of shareholders reject the remuneration report. Strikes in successive years can see a board spilled and new elections held.
It’s called the “two-strikes” rule and has been in force since 2011.
Oddly, the granting of performance rights to CEO Peter Allen was approved by a clear margin – 72% to 27%.
Scentre chairman Brian Schwartz said in his address, that due to COVID and the impact on its tenants, CEO Peter Allen had effectively lost $11 million in a range of incentives in his overall pay packet.
“We are disappointed given the time and focus the board devoted to these important issues on your behalf and the consideration we have given to the outcomes the group and management delivered in the most uncertain and complex operating environment,” Mr Schwartz said at the virtual meeting.
“There has been a very substantial reduction in earnings for our team. The fixed remuneration for senior management and base board fees were reduced by 20 per cent at the height of the pandemic and remained at that reduced level for three months.”
He added no increases were given to management and Mr Allen has not had an increase since taking on the role in 2014.
Mr Schwartz said the group did not claim or receive any financial support from the Australian or New Zealand governments including the JobKeeper program.
But that cut no ice with shareholders.
Mr Allen told the meeting there had been more than 450 million customer visits across its portfolio in 2020, including an average of 46 million per month for the last quarter.
“Whilst COVID-19 uncertainty remains in 2021, subject to no material change in conditions, the Group expects to distribute at least 14 cents per security for 2021.”
That’s up from 11.3 cents in 2020 (only one distribution was made at the start of the year). A 7 cents a security distribution was announced in February.
The forecast 14 cents distribution for this year will be more than a third less than the 22.6 cents a security made for 2019, the last uninterrupted year.
Mr Allen repeated previous statements that Scentre “plans to retain earnings to cover operating and leasing capital expenditure, fund strategic initiatives and reduce net debt.”
So the days of the 20-plus cents a security distribution are history for the time being.
Scentre securities edged 0.5% up to $2.90