TPG Stung By First Strike On Executive Pay
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TPG shares ended the day up 1.35 after the telecom reaffirmed its 2018 financial guidance given in September, but it suffered as shareholders gave the telecommunications provider its first strike over executive pay.
The company said it expects underlying earnings before interest, tax, depreciation and amortisation of between $800 million to $815 million.
That saw the shares end the session at $6.11
But in a warning shot to the company’s executive chairman, David Teoh, shareholders staged a protest vote over executive pay.
Some 29.9% of shares were voted against TPG’s remuneration report, well over the 25% limit to register a strike.
But he vote was more than symbolic because it revealed unease among non-insider shareholders.
Mr Teoh owns 34.4% of the company’s shares and Washington H Soul Pattison, whose chairman Robert Millner sits on the TPG board and owns 1.6% per cent on his own, accounts for another 25.2% of the issued shares. So 61% of the company is tied up by insiders.
That means nearly 75% out shareholders, outside of Mr Teoh and Mr Millner, voted against the remuneration report - a real thumbs down from people and groups independent of the board.
“We are disappointed in the number of votes against the remuneration report, especially when you consider the structures we’ve had in place have been very successful over the years," TPG director Denis Ledbury said.
But the company will have to make some changes to meet these concerns.
At the meeting Mr Teoh moaned about the weakeness in TPG’s share price - perhaps the protest vote helps explain why?
TPG shares are down more than 10% so far in 2017, and over the last 18-months they’ve slumped more than 48% per cent to $6.11 at yesterday’s close. Investors have sold as profit margins fall because of the National Broadband Network, but Mr Teoh is confident the company’s investment in mobile and fibre infrastructure will pay off in the long-term.
He told shareholders that the telco was still in the early stage of its business lifecycle and had already amassed an enviable set of assets.
"This year has seen us take the initial transformational steps for the next stage of TPG's growth and I am tremendously excited about the opportunities that our mobile projects offer to our Group," Mr Teoh said.
Perhaps there was an element of punishment in the strike vote (a second vote next year could see the board spilled) after TPG cut the dividend from 7 cents a share to 2 cents back in September to preserve cash while building is new mobile network.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.