This was 2.25 times the median pay for CEOs of comparable retail companies such as JB Hi-Fi,Woolworths,Super Retail and Domino's,ISS said.
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A Wesfarmers spokesperson said the company was"surprised"by ISS's revolt,noting other proxy firms had given its remuneration deal a tick.
"We are surprised about the ISS view because we have had strong support from our shareholders during our recent meetings with them and from other proxy advisers who are recommending in favour of the remuneration report,"the spokesperson said.
ISS also took issue with Wesfarmers'measures of success for awarding performance-based shares,saying they were unclear and largely unjustified by the company,which provided only"general commentary".
Rewards for executives based on non-financial measures,such as gender diversity and better data analytics,also drew ISS'ire,saying it was unreasonable that 40 per cent of executives'remuneration hinged on responsibilities shareholders may consider"part of the day job".
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"Soft targets such as strategic,people and culture-based objectives are difficult to quantify and typically result in a higher assessment of performance,"ISS said.
"Shareholders are concerned with the high weighting to these objectives at such senior levels in the company,which invariably lead to higher awards."
Chairman Mr Chaney's fees of $785,000 were also criticised by the firm for being too high.
Other proxy firms,such as Glass Lewis and the Australian Shareholders'Association (ASA),each raised similar concerns about the company's lack of clear bonus targets but advised shareholders to vote for the report,saying the company's adjustments post-demerger were"appropriate".
Last year,just 6.1 per cent of shareholders voted against the company's remuneration report. While it's unlikely the company will face a strike this year,it's one of the highest-profile companies to face a protest vote on pay this AGM season. A strike refers to a shareholder vote of more than 25 per cent against a company's remuneration report. If a company gets two strikes in consecutive years,it triggers a further vote on whether to spill the board of directors.
Wesfarmers faced criticism earlier this year followingtwo underpayment issues in quick succession, one at Bunnings and another in its industrials and safety divisions,yet none of the proxy firms raised concerns over the wage issues.
However,supermarket giant Woolworths will not escape criticism over its mammoth $300 million underpayment case,with theAFR reporting the ASA will grill chairman Gordon Cairns ahead of the company's AGM next month.