Nearly half of Xero’s shareholders vote ‘yeah, nah’ on CEO’s $25 million pay packet

Fun fact: A Xero user on ASX-listed accountancy platform’s 2nd top tier of $100 a month would need to subscribe for nearly 21,000 years to cover the cost of CEO Sukhinder Singh Cassidy’s annual pay packet.

Luckily, Xero (ASX:XRO) has more than one customer. As the company’s remuneration committee chair, Susan Peterson, outlined at the AGM in Wellington, New Zealand, this week, the software business saw revenue grow 23% to $2.1 billion for a “Rule of 40” outcome exceeding the SaaS benchmark at 44.3%. Xero delivered a Total Shareholder Return of 16% in FY25 and 73% since FY23.

But that didn’t impress everyone when it came to the CEO trying to make a living. Nearly 60 million proxy votes against the remuneration report, delivering a 48.74% rejection of US-based Singh Cassidy’s compensation package.

Under the ASX’s second strike rule, a remuneration report with a “no” vote exceeding 25% at its second AGM would trigger a shareholder vote on board re-elections. But because Xero is a New Zealand-domiciled company, the Australian law strike system does not apply.

Xero chair David Thodey defended the CEO’s pay and how its incentives are laid out on the basis that Xero is “one of the few truly global SaaS companies on the ASX”.

The board has argued previously that her pay is on a par with other US software businesses such as DocuSign and Atlassian. Xero is trying to crack the US market but for now gets most of its revenue from the Australian, NZ and UK markets.

Thodey told shareholders that executive pay “is founded on strong principles that connect reward to performance and is designed to attract the world-class talent needed to deliver our global strategy”.

Not everyone agreed, with two key proxy advisors, Institutional Shareholder Services and Glass Lewis, recommending a no vote on the remuneration report.

Meanwhile, the chair and Peterson held around 50 meetings with shareholders over the last year to go through the details of the CEO’s pay, receiving that the latter described as “frank and constructive feedback”.

In response, the Remuneration Report now includes retrospective disclosure of short and long-term incentive targets and outcomes, and greater detail on the benchmarking process.

The committee also reviewed the compensation deal, reducing the CEO’s base pay and short-term-incentives while upping the equity component. At least 96% of the CEO’s remuneration is now performance-based or linked to share price performance.

Sing Cassidy told the AGM that they were “really pleased with our FY25 results” adding that “Xero is a macro-resilient business”.

Adjusted EBITDA of $641 million was up $114 million (22%) on last year.

The median realised pay of an ASX100 CEO was $4.15 million in FY2024.

Last month one of the few CEOs in the same pay stratosphere as Xero’s boss, Macquarie Group’s Shemara Wikramanayake, on $24 million, also copped a first strike against the banker’s remuneration report – the first time it’s happened at the business once dubbed “the millionaires factory”.