Future Fund to vote against Qantas director Todd Sampson

Future Fund chairman Peter Costello also chairs the board of Nine Entertainment, publisher of The Australian Financial Review.

The Australian Council of Superannuation Investors has recommended investors vote against Mr Sampson, with many industry pension funds set to follow the advice, sources confirmed.

Ownership Matters, an influential proxy advisory group, has also recommended investors rebuke Mr Sampson over brand failings and for his role on the Qantas remuneration committee.

Qantas chairman Richard Goyder has previously said he will retire before the company’s annual meeting next year. That leaves the airline searching for a new chairman, as well as two new directors – three if Mr Sampson is not re-elected at the annual meeting in November.

While Qantas investors have benefited from a surge in travel, and higher airfares, the company has been buffeted by regulatory and legal issues, as well as customer anger over poor service.

It has committed to spending more than $80 million on service improvements, even as it faces potential fines of as much as $250 million after the competition regulator alleged it sold tickets on thousands of cancelled flights. Qantas has also decided to scrap the expiry date on $570 million of flight credits.

While local investors, including Australian equities funds, have indicated they will vote against Mr Sampson, it remains unclear if offshore index funds – dominated by Vanguard, BlackRock and State Street – will do the same, given two other proxy advisory firms, Glass Lewis and Institutional Shareholder Services, have recommended his re-election.

In a summary of its Australian proxy voting data for the year to June 30, Vanguard supported 96 per cent of director elections at 320 companies where it voted. It voted in favour of all Qantas motions last year.

BlackRock does not break its voting down by region, but said it had backed 89 per cent of director re-elections globally last year, while State Street said it voted in favour of 80 per cent of management proposals in the three months to March 31.

However, sources said that some of the index funds had engaged with Qantas over governance issues.

If Mr Sampson does not receive a straight majority of 50 per cent plus one vote, he will exit the Qantas board at the meeting in Melbourne next Friday. Shareholders in EML Payments voted against the re-election of chairman Peter Martin last November, forcing him out of the company.

Qantas’ remuneration report is almost certain to receive a first strike, with Ownership Matters, Glass Lewis, ISS, ACSI and the Australian Shareholders Association all recommending investors vote against it.

“We believe the remuneration structure was poorly aligned with customer outcomes and other stakeholders, which has contributed to Qantas’ damaged reputation,” Glass Lewis said in a note to clients.

“On this basis, we are in opposition to the remuneration report at the 2023 AGM.”

After two strikes, shareholders can move to spill a board, although the Qantas board will already be significantly different by next year’s meeting.

The airline’s board has also increased the weighting of customer metrics in deciding executive remuneration in response to investor feedback, as well as withholding 20 per cent of short-term incentives to punish Mr Joyce and other leaders for customer-related performance in the last financial year.