HESTA votes against Santos chief's remuneration

HESTA chief executive Debby Blakey has issued a statement after the super fund voted against the remuneration plan for Santos chief executive Kevin Gallagher.

At the Santos annual general meeting, HESTA voted against the remuneration and the grant of share acquisition rights to Gallagher.

"As a long-term investor on behalf of our members, HESTA continues to engage closely with Santos' directors and management on the company's long-term strategic direction and climate transition ambition," Blakey said.

"While we were pleased to see continued progress of Moomba CCS, we are concerned by the limited pipeline of new energy projects and declining green capital expenditure."

Blakey said the company's short-term incentive scorecard lacked the ambition the $100 billion super fund expected to see which was the main driver behind the decision to vote against the remuneration.

"In our view, remuneration outcomes for chief executive Kevin Gallagher are not adequately justified given underlying company performance and the breakdown of a third acquisition proposal in seven years, both of which have weighed on shareholder value," she said.

"The short-term payout relied on metrics that we don't believe delivered true stretch. Share acquisition rights also appear to lack challenge, with these rights having the potential to curb appetite for new energy projects due to their narrow focus."

As a result, Blakey said Santos will remain on its watchlist of companies.

"Our engagement will focus on seeking a more credible pipeline of new energy and transition projects, stronger performance hurdles in executive remuneration frameworks, and clear succession planning," she said.

"These are long-term issues and HESTA will continue to push for progress on behalf of our members."