The TechnologyOne Ltd (ASX: TNE) share price is pushing higher on Tuesday following the release of its annual general meeting update.
In afternoon trade the enterprise software company's shares are up 1.5% to $8.32.
This makes the company one of the only tech shares to be in positive territory today. At the time of writing, the S&P/ASX All Technology Index (ASX: XTX) is down a disappointing 3.7%.
Why is the TechnologyOne share price rising?
Investors have been bidding the TechnologyOne share price higher today after it reaffirmed its guidance at its virtual annual general meeting.
In his presentation, the company's CEO, Edward Chung, advised that he expects to see continuing strong growth in Software-as-a-Service (SaaS) annualised recurring revenue (ARR) and profits in FY 2021.
He notes that its momentum remains the same, and the company continues to double in size once again in the next five years.
However, as investors will have seen in previous years, TechnologyOne's sales pipeline is weighted to the second half. In light of this, the company has warned that the first half of FY 2021 will not be indicative of its full year results.
Remuneration report receives a first strike
Going into the annual general meeting, CGI Glass Lewis and Ownership Matter had recommended that shareholders vote against the company's remuneration report.
They made this recommendation because the TechnologyOne Board exercised discretion by granting long term incentives (LTIs) to employees even though targets were not achieved.
Approximately 38.27% of shareholders followed this advice and voted against it, giving TechnologyOne a first strike. Another strike next year will lead to a board spill.
Chairman strikes back
This didn't go down well with the company's Founder and Chairman, Adrian Di Marco, who believed that its executives shouldn't have been judged against pre-COVID targets and deserved to be granted their LTIs.
Mr Di Marco explained:
"TechnologyOne executive team performed exceptionally well in FY20 to deliver another year of record revenue, record profit, record SaaS growth and record dividend, all in the midst of a global pandemic. Also, no one can dispute that our Remuneration is working exceptionally well for our shareholders as TSR increased by 12.1%, while total remuneration for executives, after board discretion, was well below TSR."
"Unfortunately, some large Institutional Funds voted AGAINST our remuneration ignoring the facts above and the real-world considerations faced by our Board because they are against the use of Board discretion as a matter of policy."
"The Board is very aware of the need to retain and motivate its high performing executives.The Board believes our executives should be rewarded for the strong performance delivered during a global pandemic; as well as the very successful change in strategy to drive SaaS ARR growth, without any loss of their LTI award because of unrealistic and aggressive targets that were set prior to COVID19 or set before we changed our strategy to drive SaaS growth."
