In a rebuff to Telstra’s board and senior management, the Future Fund, the operator’s biggest shareholder, voted against all resolutions at the annual shareholder meeting on Friday.
The state-owned fund voted against re-electing director Nora Scheinkestel, and also declined to approve the remuneration report and changes in the company’s constitution.
The opposition of the Future Fund, which owns 9.9% of Telstra shares, was not enough to prevent the measures from being passed.
But the vote shows its lacks confidence in the company’s direction under CEO David Thodey and his efforts to strike a deal on the NBN.
In rejecting Scheinkestel, the Future Fund said in a statement that the operator “would benefit from increasing the level of telecommunications experience among its non-executive directors.” especially given the massive impact of the NBN.
The reelection of her and the reduction of the number of directors by two would “have the effect of filling the board and preventing the appointment of non-executive directors with appropriate telecommunications experience,” it added.
The fund also expressed disappointment at Telstra's latest executive pay proposals – including a 15% pay rise for Thodey – at a time when future earnings potential hinges on negotiations over its participation in Australia's NBN fiber broadband project.
“The [fund] is concerned at the use of a free cash flow measure as a hurdle for the Long Term Incentive Plan while the company is negotiating payments from NBN Co - and the limited clarity on how this approach will align remuneration to the creation of shareholder value,” it said.
The Future Fund has a long-stated goal of reducing its portfolio's reliance on Telstra stock. The investor has lowered its stake from 16.4% since August last year, and is planning more sell-offs over the medium term.
Telstra's stock price has fallen from a high of A$3.60 to its current level of A$2.65 over the 18-month period.
The Fund is sworn to agree to rules not disrupt financial markets with its stake purchases and sales, The Australiansaid.
The Future Fund and Telstra have been at loggerheads over whether the recent divestments have contributed to Telstra's declining share prices.
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