Media and information releases
05-346 ASIC asks Novogen to set the record straight on director pay vote
Thursday 3 November 2005
The Australian Securities and Investments Commission (ASIC) today announced that, following discussions with Novogen Limited, the company had agreed to send a letter from its Chairman to all shareholders apologising for not putting to a poll a resolution seeking a non-binding vote on its remuneration report.
The letter, which has been announced to the market, also clarifies:
- that approximately 70 per cent of proxy votes submitted were directed against the approval of the remuneration report; and
- what steps the company proposes to take in response to the vote.
There were two issues of concern for ASIC:
First: ASIC was concerned that the Chairman of Novogen let the resolution to approve the remuneration report pass on a show of hands without calling a poll when it was clear that the majority of proxy votes submitted were against the resolution. This was contrary to the duty of a chairman of a meeting (in the absence of a valid request to do so) to call a poll when it is clear that it would produce a different result from a vote on a show of hands.
Second: Novogen issued a release to the market that was potentially misleading to shareholders in that it presented the ‘no vote’ as a proportion of the whole issued share capital, rather than as a proportion of the number of votes reflected in proxy forms lodged prior to the meeting. This had the effect of reducing the apparent ‘no vote’ from approximately 70 per cent (of directions in proxy forms lodged) to 12.5 per cent, creating an entirely different perception of the level of disapproval of the remuneration report.
Good corporate governance also dictates that even though a vote to reject a remuneration report is not binding, a company should explain to its shareholders what action, if any, it intends to take in response.
‘Even though these votes are non-binding, ASIC is concerned that listed companies do not muzzle the voice of their shareholders (eg. by not calling a poll) or obfuscate a negative result in subsequent market disclosures’, Mr Jeremy Cooper, ASIC Deputy Chairman said.
‘ASIC is calling for companies to play with a very straight bat in relation to non-binding votes on remuneration reports, even where they might disagree with the vote or believe it to be misinformed.’
‘We will be on the look-out for ‘spin’ and misleading disclosures of the results of non-binding votes on remuneration reports. The regime must operate with a high degree of transparency and fairness in order to be effective’, Mr Cooper said.
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