Woolworths shares lower after first-ever strike against pay

Woolworths shareholders aren't happy with the way the board is rewarding itself.

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Woolworths Group Ltd (ASX: WOW) shares are falling on the day of the retail giant's annual general meeting (AGM).

In afternoon trade, the company's shares are down 1.5% to $35.15.

While nothing new operationally has been revealed since the release of Woolworths' first quarter sales update yesterday, there was one big piece of news at the event.

That was that angry shareholders have fought back and voted against a key resolution at today's meeting.

What happened at the Woolworths AGM?

At the event, shareholders were asked to vote on numerous items. This includes the re-election of directors, the granting of performance rights, a new approach to termination benefits, director equity plans, and the remuneration report.

All resolutions received overwhelming support from shareholders except for one. That was the company's remuneration report, which had 28.04% votes cast against it.

As this is greater than 25%, it means that Woolworths has received its first-ever strike. Should shareholders do the same at next year's annual general meeting, it will cause a board spill vote.

When this happens, if 50% of votes are in favour of a board spill, a new meeting will be called within 90 days and all directors must stand for re-election.

Why the first strike?

According to the AFR, shareholders are understood to have voted against the remuneration report after taking exception to the company rewarding its executives despite the tragic deaths of two staff members over the last 12 months.

Woolworths has acknowledged the first strike but hasn't responded to it. It stated:

All resolutions were passed as ordinary resolutions and decided by way of poll. As more than 25% of the votes were cast against Resolution 3 on the adoption of the Remuneration Report, this constitutes a first strike for the purposes of the Corporations Act 2001 (Cth).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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