The Kogan.com Ltd (ASX: KGN) share price has come under pressure on the day of its annual general meeting (AGM).
In afternoon trade the ecommerce company's shares are down over 3% to $17.72.
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How did the voting go at the AGM?
As readers might be aware, there was a lot of controversy over Kogan's AGM this year due to its plan to issue options to its Chief Executive Officer, Ruslan Kogan, and its Chief Financial Officer, David Shafer.
The Kogan board was wanting to grant 3.6 million share options to Mr Kogan and a further 2.4 million share options to Mr Shafer. These retention options, as they have called them, have been proposed as an incentive for the two executives to stay with the company for the next three years.
They will be exercisable for $5.29 per share in three years if the executives remain with the company.
This means for ~$19 million and ~$12.7 million, respectively, the two directors can convert these options into shares worth ~$93.7 million and ~$42.5 million, respectively, at today's market price.
This plan did not go down well with many investors and particularly proxy advisors, who urged shareholders to vote against the issuing of these options at its AGM.
Though, for extra controversy, the Kogan board suggested it would just buy the shares on-market in the future and gift them to the executives if shareholders voted against their issue at the AGM.
But that won't need to the case, because today Kogan shareholders narrowly voted in favour of the issue of these options.
According to the release, 56.35% of votes were in favour of granting options to Mr Kogan and 56.3% of votes were in favour of granting options to Mr Shafer.
Remuneration report receives a first strike.
Proxy advisers may not have been able to block the options from being granted, but they delivered Kogan a first strike for its remuneration report.
A total of 43.74% votes were against the report according to the release (compared to the 25% required for a strike). This means that if Kogan receives a second strike next year, the Kogan board could be voted out of office.
The company's Chairman, Greg Ridder, was perplexed by the strike. Prior to the vote, he commented: "Based on Proxies received to-date, the vote on adopting the Remuneration Report is also interesting."
"For a company that delivered strong returns in FY20; was right at the top of performance relative to peers and ASX200 companies; did not pay any LTI to Executive Directors; and had Executive Directors with their pay at the bottom of the peer set (many of whom didn't generate positive shareholder returns), it was perplexing to see proxy advisers recommend a vote AGAINST the adoption of the Remuneration Report, and for many super funds to follow the proxy advisers' recommendations."
"While the Remuneration Report is retrospective, it appears many of the votes received are prospective and we will receive a "strike", albeit that – based on Proxies – it does seem that a majority of Shareholders are in favour of adopting the report," he added.
