Telstra Corp. Ltd.'s board suffered a "first strike" as a majority of its shareholders voted against high executive salaries and moved to stall the passing of a resolution related to the company's remuneration report for the year ended June 30.
There were 61.98% votes cast against the nonbinding resolution of the Australian carrier, while 38.02% of the shareholders voted in favor of the motion, according to an Oct. 16 filing.
"As more than 25% of the votes were cast against this resolution, this constitutes a first strike for the purposes of the Corporations Act 2001," Telstra said.
If more than 25% of shareholders vote against the remuneration report at the annual general meeting in 2019, it would be a second strike and could force a spill of board positions, The Guardian reported.
Earlier, during an Oct. 15 analyst call, Telstra Chairman John Mullen said there is a merit in doing away with "complicated" remuneration structures and go back to a "fixed salary commensurate with the difficulty of the role." Mullen said payments can instead be done half in cash and half in shares, locked up for five years.
According to the chairman, even when the board chose to reduce the remuneration of the CEO and group executives by 30% to an average of nearly 33%, the shareholders did not agree.
"I do personally believe that executive salaries are too high across the board in Australia. But changing this takes time and needs to be embraced by all of corporate Australia, not just one company or one industry, as the marketplace for talent is international and is industry-agnostic," Mullen had said on the analyst call.
Telstra had announced in June its plan to shed 8,000 jobs to cut costs, sell up to A$2 billion in assets over two years and restructure its operations as part of the Telstra2022 strategy.
The company also reorganized its leadership team, including the departure of Chief Marketing Officer Joe Pollard and CFO Warwick Bray.