Push for shareholder votes on executive pay: Auckland Airport promises more transparency

Auckland Airport is part way through building a new integrated jet terminal. Photo / Michael Craig

Auckland Airport bosses say the time’s not right to follow overseas rules that allow shareholders to have their say on executive pay.

One investor told the company’s annual shareholder meeting that New Zealand risked being made to look like a “governance backwater” by not following Australia’s lead.

In Australia, listed companies will be required to publish a report setting out the full details of the remuneration of their 10 most highly paid executives and all directors and submit it to a vote by shareholders. All public companies will be obliged to hold such a vote at their AGMs from next year, the Australian Institute of Directors says.

Such a vote is optional this year, but some companies may proceed with it to establish the pattern, the institute says.

Australian activist shareholder Steven Mayne asked the Airport for its comments on the issue.

“What harm is done from asking your shareholders what they think about our remuneration policies? Not doing this makes New Zealand look like a governance backwater”

Outgoing Auckland Airport chair Patrick Strange said he didn’t believe it would be good for governance in New Zealand.

“It’s not required under the NZX. And certainly to this point, the board does not support putting rem [remunaration] matters out to a non-binding vote. Australia’s a different regime and we respect that.”

At Auckland Airport, chief executive Carrie Hurihanganui’s total remuneration for the 2023-24 financial year was $1.938m. The second-highest-paid executive was paid between $750,000 and $760,000. The pay band for the top 10 started at $440,000 to $450,000.

Newly elected chair Julia Hoare told the meeting that the company was trying to ensure its disclosures were open and transparent.

“Patrick and I have had quite a number of sessions with investors over the past couple of weeks with suggestions as to how we might think about improving our disclosures and continue to evolve those.”

Speaking after the meeting she told the Herald that new remuneration guidelines over remuneration transparency required by the NZX provided consistency.

“That said, we are looking at providing more than what the NZX is proposing.”

She said the company had been asked by some of our shareholders to provide some ‘‘more flavour’' in methodology around pay, including what goes into determining long- and short-term incentives for executives.

She is a director on the Meridian board and the issue was raised at a shareholders’ meeting recently.

“We are seriously looking at that, and I’ve organised some meetings over the next few weeks with a number of the shareholders who raised it,” she said.

Asked about pay levels at Auckland Airport, Hoare said it was key “to attract really good people and to keep them. We spend a lot of time looking at rem to make sure that we think that (it) is reasonable and attractive without being excessive as well.”

Auckland Airport was in the midst of a $6 billion rebuild and its executives were in demand.

“If you think about the level of infrastructure build and some of the large infrastructure builds globally and that our people are internationally portable, it’s quite critical that we make sure that we seriously look at rem each year.”

Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.