Xero defends CEO pay package amid shareholder pushback

The board decided to increase her target remuneration by US$18 million, mainly in the form of long-term equity awards split 60-40 between performance and service.

The software company said it acknowledged shareholders' frustration over the significant drop in the share price and the concerns raised about the chief executive’s decision to dispose of her entire shareholding.

In an address to shareholders, Xero people and remuneration committee chair Susan Peterson acknowledged that Xero’s share price had fallen significantly over the past 12 years. Still, she said that the share price did “not reflect the strength of Xero’s operational performance”.

“A large part of that decline reflects a global re-rating of the software sector, rather than company performance. But that reality does not make the experience any easier for shareholders,” said Peterson.

Peterson noted there had also been market scepticism towards Xero’s strategic acquisition of Melio in the US.

“The board remains strongly of the view that this aligns with Xero’s 3x3 strategy and positions us well for growth in the US market moving forward,” she said.

Xero chair David Thodey also defended the Melio acquisition, stating that it reflected the software firm’s commitment to growing internationally and its investment in the US.

“We continue to build our global executive team, global operating model, and a global people strategy and a remuneration structure that reflects the calibre of people required to compete in these markets,” said Thodey.

“Execution against our FY25-27 strategy has been encouraging, and our financial performance reflects strong demand for our products and services.”

Shareholders previously also raised concerns about the large disposal of Sukhinder Singh Cassidy’s shareholdings back in July.

Peterson informed shareholders at the AGM that Singh Cassidy needed to sell the shares to meet personal tax obligations.

“We should note that she continues to hold a substantial ongoing stake in Xero, including approximately 586,000 time-based and performance-based RSUs that have already been granted,” said Peterson.

“It is also worth noting that, as a US-based executive, Sukhinder is accustomed to the US practices where a CEO’s total shareholding is calculated based on the combination of both unvested and vested shares.”