TPG hit with first strike on executive pay

TPG Telecom has been hit with a first strike over executive pay as its smaller shareholders lodged a protest vote.

Almost 30 per cent of shareholder votes went against TPG’s remuneration package for 2016/17 at the company’s annual general meeting on Wednesday.

A no vote of at least 25 per cent at TPG’s next AGM could lead to a board spill, under the current ‘two strike rule’.

Executive chairman David Teoh and his wife Vicky Teoh own a 34.3 per cent stake in the company, while investment company Washington H Soul Pattinson and Co owns about 25 per cent.

TPG director Denis Ledbury, who was re-elected to the board on Wednesday, said he was disappointed given the company’s nine consecutive years of earnings per share growth and board stability.

“We are disappointed in the number of votes against the remuneration report, especially when you consider the structures we’ve had in place,” Mr Ledbury said.

“We don’t believe that outcomes for companies that take a more box-ticking approach lead to a better outcome than what we’ve achieved.”

He acknowledged that TPG’s approach to remuneration was different to other companies, and said the board will take the warning into consideration.

Mr Teoh said he was unsure of the reasons for the vote, and said TPG’s remuneration policy had been the same for almost a decade.

He recognised that the rollout of the NBN had weighed on the company’s share price over the past year, but said he was confident TPG’s investment in its mobile network would benefit shareholders in the long term.

TPG shares have slid about nine per cent since this time last year, and about 41 per cent over the past two years.

They were up nine cents, or 1.5 per cent, at $6.12 at 1450 AEDT.

Mr Teoh reassured shareholders at the AGM that TPG was “uniquely positioned” to leverage the infrastructure and customer bases it had built, including developing its own mobile network, to drive growth and deliver value to its shareholders.

“Each of us is, of course, disappointed about the margin headwinds that the group is facing as a result of the building of the NBN network, and the consequential decline in the company’s share price over the past year,” he said.

TPG’s $1.9 billion mobile phone network, announced in April, is aimed at increasing control of its infrastructure in Australia and Singapore, and targets a highly competitive market dominated by big-name telcos Telstra, Optus and Vodafone.

Mr Teoh insists there is “plenty of room for everyone” adding that TPG does not plan on taking the spot of third-place rival Vodafone.

“We are not greedy,” he said after Wednesday’s AGM.