Xero’s latest annual general meeting exposed increasing tension between shareholders and the board, with nearly half of investors voting against the executive remuneration report. Although the vote carries no formal consequences under New Zealand regulations, it sends a strong message of dissatisfaction with the escalating pay of Xero’s top executives, particularly as the company accelerates its expansion into the U.S.
The New Zealand-based accounting software firm came under scrutiny after raising its chief executive’s total compensation to $23.5 million, up from $8.5 million the previous year. This increase was designed to align with U.S. compensation models, but raised concerns among proxy advisers and key investors who viewed the remuneration as excessive. In addition, the CFO, who joined from the U.S. in February, received a substantial sign-on package of $21.9 million, further intensifying investor unease.
Just under 49% of votes were cast against the pay proposal, well above the 25% threshold that would trigger a formal strike under Australia's Corporate Governance standards. However, since Xero is domiciled in New Zealand, no automatic penalties were applied. The board acknowledged the signals sent by shareholders and committed to reviewing its approach while continuing efforts to attract global talent.
The matter arises as Xero deepens its presence in the competitive U.S. tech market, spending $3.9 billion to acquire Melio Payments. This marks the company’s largest acquisition to date and is expected to almost triple its U.S. revenue by closing. The move also reflects a broader trend towards hiring U.S.-based executives who typically command higher salaries. Expanding its American footprint is key to Xero’s global strategy, though maintaining support from investors at home remains equally critical.
