As I write this final (short) article for 2023, I am enjoying a 30-degree day with a swimming pool nearby. Holiday mode is very close to setting in. And yet for many, 2023 has been a difficult year. The impacts of rising interest rates have been felt by all, with the resultant slowdown in consumer spend and cutbacks by businesses to suit dwindling cashflows. As we have seen over the past fortnight, the new government has not been afraid to cut its cloth to suit the new reality.
Perhaps that is why NZSA has seen a significant ‘uptick’ in activity in the latter part of the year. As times get tough, listed issuers are doing their best to save money for their shareholders – with the occasional foray into reducing the ‘good costs’ associated with governance. I certainly don’t mean director fees – there were a total of 31 resolutions to increase director fees during 2023 (NZSA voted against six of these and encouraged one company to withdraw its resolution completely). Ultimately, though, NZSA sees governance costs as ‘good costs’ for retail shareholders, especially when it comes to issues like maintaining good quality hybrid shareholder meetings, director independence and maintaining shareholder communications.
Here are a few highlights from the year that stand out to me…and offer a ‘look ahead’ to some of our priorities in 2024.
Advocacy to the fore
NZSA utilises a set of researched, best-practice policy positions as the basis for assessing governance quality at listed issuers. We began the process of renewing / refreshing our entire policy set in early 2021. This year, we focused on renewing our policies relating to Director Independence and Executive Remuneration. Our proposed new Director Independence policy is now out for consultation, and includes encouragement for the adoption of a minority interests regime when it comes to shareholder voting, a framework that would recognise the interests of differing shareholder classes when it comes to independence.
When it comes to a review of Executive Remuneration practices, we have not done this work in a vacuum. A real highlight for NZSA was its membership of the NZX Corporate Governance Institute, a body that acts as an advisory board to the NZX for the Listing Rules and Corporate Governance Code. We have not rested on our laurels – NZSA has championed and participated in the development of a new NZX Remuneration Reporting Template as a voluntary component of the Listing Rules. The aim is to provide a practical template for issuers to help them provide better remuneration disclosures. NZSA believes that this is a major step in bringing issuer disclosures up to the standards associated with other markets (including the ASX), while still retaining a fit-for-purpose approach commensurate with the scale of NZ companies and the needs of investors.
We want to make it easy for issuers to adopt the voluntary template – ultimately leading to better clarity, consistency and comparability for investors.
In 2024, we’ll look to finalise our new Director Independence policy, update our CEO Remuneration policies (to incorporate the new NZX Template) and begin work on refreshing our audit-related policy set.
Companies and Proxy Voting
This now forms the core service that NZSA provides to the NZ investment ecosystem. In practice, our proxy service and the resulting engagement with companies are the practical manifestation of our key advocacy positions and how we encourage their adoption in the market.
In 2023, we covered 147 annual or special meetings – nearly every listed company on the NZX (excluding Smartshare passive funds), representing nearly 15,000 shareholdings. The reality is that we would like that number to be much higher. Anyone can give us their proxy – including any institutional investors or fund managers who choose to do so. The service we offer is unique in that is not just researched, but includes local context and local relationships that other proxy services cannot provide. Of course, if a shareholder does not agree with our position, they are always able to over-ride our proxy by voting themselves.
With some dual-listed companies now choosing to operate a single (Australian) registry, we have recently established a new standing proxy service with Computershare Australia. We also provided an assessment of issuer’s environmental sustainability and disclosure practices.
Companies that came under additional scrutiny included Synlait, Pushpay, Gentrack, 2 Cheap Cars, EROAD, Sanford, Chatham Rock Phosphate, Enprise, Channel Infrastructure, Fletcher Building, Sky TV, Colonial Motor Company, Burger Fuel, Geneva Finance and many more.
For 2024, our aim is to significantly increase the number of shareholdings we represent and to continue to ‘fight for fair’ in public markets.
During the year, we were pleased to welcome MasterJack to the NZSA family, to help us further develop our social media and content marketing approach. This has most visibly resulted in a significant improvement in the quality of our content posted on LinkedIn, Facebook and Instagram.
It has also allowed us to develop website-based content (such as this article) into a fully-fledged blog.
During 2024, you’ll see us intensify our efforts to improve NZSA awareness through direct activity on social media and through physical events (including branch event topics that reflect core advocacy ideals, as well as corporate speakers).
Business as Usual
Early in 2023, we held an Investor Conference at the Vodafone Events Centre in Manukau – those attending the event reflected well on its quality and the calibre of the speakers. We also held our annual Beacon Awards (well done Mark Verbiest) and most recently, the 2023 NZ Business Journalism Awards (with the support of Simplicity and the NZX). Branches held close to 50 events around the country, with a plethora of site visits to factories and offices of listed issuers in Auckland proving highly popular.
In the course of our work, we collect plenty of data – much of which we have now collated into a form that can be published on our website. This is one of our early objectives for 2024.
Our website content continues to act as the core repository by which NZSA supporters access information. We’ll continue to make improvements in 2024, particularly on making it easier for visitors to join NZSA. Individual membership continues to ‘flatline’ – although we were pleased to welcome Infratil as a new corporate member during the year. During 2024, we will look to broaden our membership base by creating new offers for new types of membership – a process that is well underway as we close off 2023.
The sunshine is getting even stronger. The pool is beckoning. I am sure that I’ve missed plenty of highlights in my brief summary above, and I’ve probably missed achievements that stand out for Teresa, Grant, Arend, Andrew and the Board.
On that note, a huge thanks to the NZSA team (including our dedicated volunteers) that supports me in getting our messages out there. We want to make sure we maintain our strong voice for investors – let’s make sure we can rest well and do it all over again in 2024!