Shareholders narrowly approve $110 million bonus scheme for Kogan founders
Shareholders in online retail giant Kogan have narrowly approved a controversial $110 million share grant to its top executives while also issuing a warning shot against the business’ broader remuneration practices.
Kogan has attracted controversy in recent weeks after the country’s three main proxy firms advised shareholders vote against a proposal to grant founders Ruslan Kogan and David Shafer a parcel of share options worth a collective $110 million, labelling the deal “excessive”.
However, a slim majority of shareholders approved the grant at the company’s annual general meeting on Friday, with 57.5 per cent voting in favour. At the meeting, chairman Greg Ridder praised the “quiet majority” of investors who voted in favour of the options grant.
“They, like your board, believe that having Ruslan and David – in my view the two best ecommerce operators in Australia – retained, motivated and aligned to drive another three and a half years of growth is in the best interests of all shareholders,” Mr Ridder said.
Mr Ridder criticised those who had opposed the options grant as being recent entrants on Kogan’s share register, claiming that many who voted against the grant bought shares during Kogan’s June capital raising when the plans to award executives the bonuses were well-known.
However, Mr Ridder also simultaneously panned a number of Kogan’s largest investors for voting in line with proxy advice and issuing the company a ‘first strike’ against its remuneration report.
Close to half, or 43.7 per cent, of shareholders opposed the remuneration report, constituting a sizeable protest vote well above the 25 per cent threshold required for a ‘first strike’.
Mr Ridder said it was “perplexing” to see “many super funds” follow proxy recommendations to vote against the report given Kogan’s strong returns through the last financial year and the company’s relatively low executive remuneration.
The generous bonuses offered to the company’s top executives has attracted significant controversy in recent weeks, with shareholder activists such as Stephen Mayne slamming the proposal.
Mr Mayne asked a number of questions at Kogan’s meeting on Friday and also received a 14 per cent vote in favour of his bid to be elected to the company’s board in an attempt to boost its level of independent directors.
Mr Ridder has pledged to elect a new independent director within the next two months. The chairman also expressed regret that Kogan did not hold an extraordinary general meeting (EGM) in May when Mr Kogan and Mr Shafer’s bonus plan was announced, saying the scheme would have been less controversial as Kogan’s share price was far lower.
“With the benefit of hindsight, I think that, had the EGM been held shortly after announcement of the retention options, proxy advisers and media would not have been distracted by the recent gains in share price when considering the value of the executive awards at the time they were announced,” he said.
In a trading update provided at the AGM, Kogan revealed the company’s sales had doubled from July to October, and gross profit had rocketed more than 130 per cent.
Shares were down 1.25 per cent to $18.11 by midday, with RBC Capital Markets analyst Tim Piper noting the growth at the company was beginning to “moderate” from the COVID-induced peaks reached earlier this year.
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Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.
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