Seventeen companies in the top 300 in Australia that received government subsidies paid out dividends to investors totalling more than $250m, according to new research by proxy firm Ownership Matters.
In a report sent to clients on Wednesday afternoon, Ownership Matters, which advises superannuation funds and other investors on corporate governance issues, also said 25 companies in the ASX300 index received jobkeeper support payments and then paid their executives bonuses totalling more than $24m.
The report comes amid attacks by Labor and investors on the practice, dubbed “dividendkeeper”, of using jobkeeper payments – which are supposed to support employment during the coronavirus crisis – to prop up dividend payments to shareholders.
Labor MP Andrew Leigh has also raised concerns over the bonuses paid out to executives at companies that have received government support.
Ownership Matters said that up until 30 June, ASX300 companies received a total of almost $1.8bn in government subsidies, of which at least half was jobkeeper.
The subsidies to some companies with overseas operations also included subsidies from foreign governments.
Qantas received the largest government subsidy of $525m, including $267m in jobkeeper, Ownership Matters said. It did not pay any dividends or bonuses.
“Casino operator Crown Resorts was the next largest recipient of JK [jobkeeper] at $111m, followed by Star Entertainment Group receiving $65m; both entities disclosed that a proportion of JK was paid to employees who continued to work,” it said.
Ownership Matters’ figures do not include department store Myer, which on Thursday announced it received $93.1m in jobkeeper, of which $41m went to pay casual or part-time staff, who are likely to have enjoyed a pay rise as a result.
Myer declared a loss of $172m for the year to 25 July, down from a modest profit of $24.5m the previous year.
Ownership Matters said 17 companies that received government subsidies paid dividends after 30 March, the date jobkeeper was announced and almost a month after the Australian government declared the Covid-19 outbreak was a pandemic.
Those included shoe retailer Accent Group, which received almost $25m in subsidies and paid shareholders more than $20m in dividends, and logistics group Qube, which took almost $20m in taxpayers’ money and paid dividends of more than $40m.
On executive bonuses, Ownership Matters said Star was also the biggest recipient of government subsidy to reward bosses with extra payments.
“The casino operator’s board elected to award bonuses as deferred equity to the disclosed executives at an average 40% of target ($1.39m across four executives including $830,000 for the CEO),” Ownership Matters said in its report.
“The cultural signal of a board deciding to pay – and a management team electing to receive – bonuses in a year where a listed entity received significant government subsidies is an important one for investors to consider, especially for listed entities with significant exposure to government as a regulator or customer.”
It said investors should be aware of the impact of jobkeeper and other subsidies on company accounts.
“Investors should also give consideration to the sustainability of results in cases where employees receiving JK continued to work and so wage expenses for non-stood-down employees were being directly subsidised,” it said.
“Similarly, judgement should be made about the potential impact of temporary reliefs such as rental deferment (or forgiveness) and lending concessions made in favour of ASX listed entities – major listed landlords had disclosed at least $658.5m in rent concessions to tenants in FY20.”
