ONE of Australia's most powerful fund managers, AMP Capital, has singled out Cabcharge, Cudeco, Linc Energy and UGL for excessive executive pay, endorsing a potentially board-spilling ''second strike'' vote against the four.
AMP, which has $126 billion under management, revealed its voting patterns for the past year, naming and shaming outliers, in its corporate governance report released on Tuesday.
After its initial scepticism about the Labor government's introduction of the two-strike rule, due to its potential to ''create unnecessary distraction and unintended consequences'', the fund manager has since backed the move.
It believes the two-strike vote encouraged broader scrutiny of executive pay, where previously its protests ''often fell on deaf ears''.
''This AGM season, we've seen a dramatic increase in the number of companies seeking to engage with us,'' said AMP Capital's head of sustainable funds, Ian Woods.
''This has provided an opportunity to not only get a greater insight into a company's priorities through
more transparent remuneration structures, but also to raise other important issues.''
Despite holding stakes in 20 companies facing a potentially disruptive second strike, AMP chose to vote only against taxi industry giant Cabcharge, contractor UGL and miners Cudeco and Linc.
It said they paid discretionary bonuses which appeared at odds with company performance, and that executive pay was too high for companies of the size.
Cabcharge was hit with a 38 per cent protest vote against its remuneration report, triggering a vote to spill the board. But shareholders overwhelmingly voted against the resolution, with more than 86 per cent voting it down.
Even so, Reg Kermode, long-time chief executive and chairman of Cabcharge, has labelled the two-strike system ''not democratic'' and against the interests of Australian business.
Likewise Linc Energy escaped a spill even after shareholders' 40 per cent protest vote at its annual meeting. Copper miner Cudeco and UGL both avoided a second-strike vote.
AMP revealed it also voted against the re-election of unnamed directors of 10 companies, including media giant News Corp and retail group Harvey Norman.
Of 20 companies in AMP Capital's portfolio facing a potential second strike only Cabcharge and Linc had one - but neither faced a board spill vote due to lack of support for the motion.
Dr Woods says the increased engagement is an important part of being an active shareholder. He also drew a link between well-structured remuneration, corporate performance and shareholder interests.
Last year, AMP Capital voted on 1734 resolutions at 332 company meetings, voting against 7 per cent. It voted against 25 remuneration reports, including Macmahon Holdings, News Corp and Nufarm.
The AMP Capital report also showed an improvement in gender diversity on boards. It found the proportion of boards without women directors had fallen from 60 per cent in 2010 to 39 per cent.
''There has been clear evidence that progress has been made with regard to increasing the gender diversity of listed company boards of directors,'' Dr Woods said.