Good afternoon everyone and welcome to the 2024 Annual General Meeting. I'm Warwick Negus, Chair of the Board of Directors of Dexus Funds Management Ltd. Before we start the meeting, I'd like to acknowledge the traditional custodians of the land on which we're presenting from today and pay our respects to their elders, past and present. I would also like to extend that respect to and welcome any First Nations people who are joining our meeting today. On behalf of the Dexus Board, I welcome you to our AGM and it's great to see you all back in person. Again. Before we start the meeting, can I ask our audience in the room to ensure that mobile phones are switched off or silenced in the event of an emergency? The fire exits are located along the corridor outside this room. This is also where you will find the restrooms.
I will table my appointment as Chair of today's meeting and open the meeting. We appreciate that not all security holders can attend in person and have provided the opportunity for anyone to participate in the meeting through our hybrid meeting format. Our online platform provides a live video feed so that security holders dialing in can view the meeting in real time, submit questions and vote while the meeting is underway. A conference call facility is also available through which security holders can ask questions directly to the meeting. For security holders online, if you are yet to access your voting card on the resolutions for the meeting, you should click the Get a Voting Card button. It's pretty obvious at the top of your screen to register first, which will then enable you to submit your vote at any time during the meeting.
If you're a security holder, you will need your security holder number and postcode to register your vote. If you are a proxy holder, please enter the proxy number issued to you by Link Market Services in the Proxy Details section and then click the Submit Details and Vote button. Online voting will close five minutes after the close of the meeting and the results will be released to the ASX later this afternoon. If you have any questions to put to the meeting and you are not on the conference call telephone line, we suggest that you submit your questions as early as you can, specifying whether the question relates to general business or a specific resolution, and these will be addressed at the appropriate time during the meeting.
For our security holders joining us today in the room, please raise your admission card during the question time to indicate that you have a question. We will take questions from the floor, then ask for questions on the conference call telephone line, followed by questions submitted via the online platform. We will endeavor to answer all questions during the AGM and for any questions that we do not have time to address, we will ensure that we get back to those investors separately. Today I am joined by our Independent Directors, Paula Dwyer, Mark Ford who chairs our Audit Committee, Piyush Gupta, Rhoda Phillippo, Nicola Roxon, Elana Rubin and Dexus new Group CEO. I don't know if we should call him new anymore. Group CEO and executive director Ross Du Vernet. It's a pleasure to have them here today.
We will hear from Piyush on his election and Mark on his re-election later in the meeting. In December last year we announced Ross as the new Dexus Group Chief Executive. This is our first annual general meeting with him in this role and I would like to formally congratulate him on his appointment. Ross's deep property investment expertise, his track record of setting and delivering on strategy and his knowledge of the Dexus business has made him the ideal successor. The Board ran an extensive external and internal recruitment process in 2023 which resulted in the decision to appoint Ross as the Group CEO. The Board retains strong conviction that Ross and our highly regarded executive leadership team are well placed to lead Dexus through its next stage of growth.
I would also like to welcome our company secretaries and representatives from the Executive Committee along with a representative from our auditors at PwC and lawyers at King & Wood Mallesons. Finally, I would also like to welcome one of the original Directors and Inaugural Chair of Dexus, Chris Beare to the meeting. Welcome Chris, it's nice to see you. I'd like to make two other important acknowledgments. First, I would like to acknowledge Penny Bingham-Hall, who retired from the board in March 2024. Penny was an independent NED of Dexus for nearly 10 years and made a significant contribution to the Board as well as the people in Remuneration and Governance and Sustainability Committees. Her passion for sustainability, governance and the property sector helped shape key policies and initiatives during her time on the board.
Penny also drove the Board's thorough review of the remuneration framework in 2022 which resulted in an increased weighting to long term incentives. We thank Penny for her significant contribution to Dexus. I would also like to take a moment to acknowledge our former Chief Executive, Darren Steinberg. Darren was instrumental in the growth and evolution of Dexus over the past 12 years. Under his leadership, the platform's total funds under management increased significantly while maintaining portfolio quality and diversifying into new sectors including alternative investments and infrastructure. Darren and I had a relationship anchored in mutual trust and respect with robust discussions to say the least, that led to a constructive Chair and CEO dynamic. On behalf of the Board, thank you Darren for your strong leadership and your contribution to shaping Dexus as it stands today.
I will now commence the meeting with my address which will provide you with an overview of our positioning and key aspects of our FY24 result. I'll then hand over to Ross who will discuss our quarterly update, the revised Capital Allocation Framework and Dexus medium term priorities. We will then turn to the formal aspects relating to the resolutions which were outlined in the Notice of Meeting and Explanatory Memorandum sent out on the 27th of September. On the 24th of October we announced to the ASX that we had withdrawn Resolution 2 for the FY25 grant of long term incentive options to the Chief Executive. Over the course of meetings with proxy advisors and investors it became clear that while many were supportive of options based LTI plan, there were concerns about aspects of the plan design.
Given these concerns raised by investors, Dexus has decided to withdraw the resolution. We will consider the feedback received and we will determine the best approach going forward. Withdrawal of Resolution 2 does not affect the validity of proxy or direct votes already submitted in respect of the remaining items of business which will be put to security holders today. Accordingly, I formally call a poll on all resolutions to be put to the meeting and declare the polls open so that you can now start to lodge your votes. This year we took the opportunity to pressure test the strategy, refining it to align with our strengths and market conditions. Our purpose Unlock potential, Create Tomorrow reflects our unique ability to create value for our people, customers, investors and communities over the long term. Our vision is to be globally recognized.
As Australia's leading real asset manager, we aspire to be known for our deep local expertise, sector expertise, our active approach to management and most importantly as a trusted partner. Investing alongside our clients, our people, our focus on sustainability and governance and our culture that promotes constant evolution and improvement are central to how we unlock potential in this business. These elements will enable us to deliver superior risk-adjusted returns over the long term. Dexus today stands out as a unique and diversified real asset platform. We have significant scale and critical mass in each of our sectors, geographically focused in Australia and New Zealand with access to diverse pools of capital. Our AUD 14.8 billion balance sheet portfolio is largely invested in high-quality office and industrial real estate alongside third-party clients.
Additionally, our nearly AUD 40 billion third party funds management business has a well established presence in office, industrial and retail real estate and an emerging presence in the growth markets of healthcare, infrastructure and alternative investments. The recent addition of infrastructure to our platform presents a tremendous opportunity for growth underpinned by macro tailwinds. We are actively exploring how we leverage expertise from other sectors to generate more value from infrastructure assets. The business is well positioned given the current phase of the investment cycle with future returns expected to be driven through the fundamentals of asset selection, creation and asset management. This combination of balance sheet scale, multi sector expertise, tight geographical focus and access to broad and deep pools of third party capital is what makes Dexus unique. Despite a challenging environment.
We delivered on our guidance and maintained high occupancy across both our office and industrial portfolios, ensuring strong cash flows with AFFO adjusted funds from operations of AUD 516 million. Our distribution of AUD 0.48 per security for FY24 was delivered in line with guidance below the FY23 distribution, largely as a result of lower trading profits. We continued our capital recycling strategy with AUD 1.7 billion of Dexus divestments. Our balance sheet remains strong with gearing at the low end of our range notwithstanding soft valuations which drove the statutory loss for the year and are an indirect outcome of the rapid increase in interest rates that began just over two years ago in our funds business. Core funds such as DWPF and DSCF outperformed their benchmarks. We raised new equity in growth markets including more than AUD 300 million for the second fund in our opportunistic series.
Additionally, we sold AUD 2.9 billion of fund assets during the year to facilitate redemption requests and manage the capital position of the funds. We successfully completed the full integration of the AMP Capital business and delivered on the priorities that Ross announced to the market and in May this year. This included refining our strategy, implementing a sector aligned operating model and refreshing our capital allocation framework. These achievements have positioned Dexus well for the next stage of the investment cycle. For many years we have taken an active approach to capital recycling to enhance the quality of the portfolio and to strengthen balance sheet. Despite a subdued transactions market, we have successfully divested assets selling AUD 7.4 billion from the balance sheet over the past five years. We will continue to recycle capital with a further AUD 2 billion of assets earmarked for divestment over the next three years.
These actions, along with the completion of committed developments will further enhance the quality of our portfolio while maintaining a prudent level of gearing. We continue to be globally recognized for our leadership in sustainability. However, we are increasingly focused on initiatives that make both financial sense and have a positive impact on our customers, the environment and our communities. The Board and I recently visited our Waterfront Brisbane development where we saw a prime example of innovation coming to life. This development is underpinned by circular economy principles with the goal of minimizing waste. Remarkably, 98% of the materials cleared from the site have been recycled or reused. This has been a significant achievement and the Board and I are excited to see how the team amplify key learnings across the Dexus platform.
At last year's AGM, Dexus received a first strike against the 2023 remuneration report with one proxy adviser recommending a vote against. Following the strike, the Board has engaged extensively with key investors and proxy advisers to better understand their concerns. We have undertaken benchmarking and again reviewed our framework. While no substantial remuneration framework changes have taken place in FY24 following substantial changes in FY23, we've been particularly mindful of the feedback received following the 2023 AGM in our disclosures this year and in considering the appropriateness of incentive outcomes, we set our distribution guidance at the start of each year. Acknowledging that guidance for FY24 was below the previous year, the Board reduced the vesting associated with achieving guidance from 75% to 50% and we set the level of target vesting materially above guidance, meaning that there was significant challenge to achieve that level.
In contrast, in FY22, vesting at threshold was 75% and the gap between threshold and target was much smaller. Against the backdrop of a continued challenging economic environment with higher interest rates, softening office market valuations and a challenged transaction market, the FY24 outcomes reflected solid achievements such as delivering on guidance said at the start of the year, maintaining high portfolio occupancy, divesting AUD 4.6 billion of assets across the platform, raising equity for a new fund and completing the complex integration of the AMP Capital platform. The FY24 STI outcomes were lower than FY23 and substantially lower than the previous two years. In fact, this was the lowest variable pay outcome for the CEO in more than a decade.
We revised the LTI Plan Long Term Incentive Plan during the year and had proposed to commence a new plan for FY25 to grant more market priced options instead of performance rights subject to a shareholder return performance gateway. While the plan was intended to better align LTI outcomes with the experience of our security holders, it became clear during our meetings with proxy advisers and investors that while many were supportive of an options based plan, there were concerns about aspects of the plan design. It was not possible to amend the plan design in the time available. Given those concerns, the Board will consider the feedback received from investors in determining an appropriate approach to long term incentive moving forward. In the years since the COVID pandemic we have experienced growing inflation and interest rates for real assets. This has resulted in challenging conditions.
The market has seen low levels of liquidity and for many borrowers, restricted access to capital. The interest rate outlook today is more certain. Direct investors are gaining greater confidence in deploying new capital as part of our strategy refresh. Our distribution policy from FY25 has changed to pay out between 80%-100% of our AFFO, which seeks to achieve a balance of providing appropriate distributions to security holders and investing for growth, and Ross will speak more about this decision and its long-term benefits shortly. Barring unforeseen circumstances, for the 12-month ending June 2025 we expect AFFO of between AUD 0.445 and AUD 0.455 per security and distributions of AUD 0.37 per security. We have solid foundations and a differentiated funds platform, strong client relationships and a diverse product offering.
Our investment portfolio is high quality and positioned to benefit as liquidity returns to the office market. Before passing to Ross, I would like to thank my fellow directors and the Dexus team for their commitment and contribution over the past 12 months and to you, our investors, for your continued support. Thank you.
Thank you Warwick and good afternoon everyone. I feel privileged and excited and a little bit tired to be leading Dexus as Group CEO at an important inflection point in its history. In my time at Dexus over 12 years now, we have continually evolved and the first six months of my leadership has seen a continuation of that with some important changes made to the operating model, our approach to capital allocation, which I'll talk to in a moment, and key personnel. On the people front, we recently welcomed two new important hires to the Executive Committee, Marje Musgrave and Nik Kemp . Marje is our Chief People Officer, responsible for building diverse teams to drive leadership and ensuring high quality people experiences and an equitable and inclusive workplace.
Nick is our new Executive General Manager for Growth Markets, responsible for supporting sectors in which Dexus is actively building capability and scale, and these include Dexus AUD 11 billion infrastructure business, alternative investments and the healthcare sectors. Nick will oversee the strategy, the investment decisions and the performance of a diverse portfolio of investments across the real assets spectrum. We are known for our assets, but it is our people that create the value and that manage the risks. I am focused at ensuring we have a high calibre team to make most of the opportunities that we have and to create new ones, and I look forward to providing further updates as we add to the senior leadership team in the coming months. Despite a challenging operating environment, we continue to see positive momentum across the platform.
Our strong balance sheet continues to focus and a continued focus on capital recycling. A disciplined approach to capital allocation and our sector-aligned operating model has set us up to drive investment performance for our security holders and clients in this next phase of the investment cycle. On the balance sheet, our office and industrial portfolios have maintained high levels of occupancy with rent collections remaining strong at 99.5%. We continue to progress asset recycling program including completing the sale of 130 George Street in Parramatta, providing capacity to recycle capital into our development pipeline and further enhance the portfolio quality. Positive momentum continues across our funds platform with flagship funds, the Dexus Wholesale Property Fund, the Dexus Wholesale Shopping Centre Fund and the Dexus Diversified Infrastructure Fund continuing to outperform their benchmarks.
Our Opportunity Funds have partnered with a local developer to repurpose a B grade office building in Brisbane CBD into a modern purpose built student accommodation facility providing 1200 beds and with an estimated completion value of close to AUD 500 million. This transaction demonstrates our ability to leverage a broad set of capabilities across our platform to create value for our clients and our investors. We have strong capabilities in the areas of special situations investing, office development and refurbishment along with the infrastructure team's deep expertise within the Australian student accommodation sector. This deal would not have been possible in the world before AMP for Dexus. As a result of the investment, DREP1 is now fully deployed and on track to deliver its investment objective of a target return of circa 15% net equity IRR.
The success of DREP1 has enabled us to launch DREP2 already having raised AUD 300 million of commitments and it's on track to be a much larger fund than DREP1. In developments we are progressing the construction at our city-shaping developments at Waterfront Brisbane and Atlassian Central. Here in Sydney in our industrial portfolio we continue construction across more than 174,000 square meters including key industrial estates in Ravenhall and in Jandakot over in Perth. In sustainability, as Warwick mentioned, we continue to be recognized as a global leader in the Global Real Estate Sustainability Benchmark or GRESB with 11 funds and investments across the real estate and infrastructure achieving 5-star GRESB ratings.
Our unlisted fund, the Dexus Diversified Infrastructure Trust achieved a high score of 97 out of 100 ranking it 7th out of 116 participants globally and Powerco, the New Zealand asset that we manage, received a perfect score of 100 out of 100 for the second year in a row. We've done a lot of work over the last few years to enhance the quality of the office portfolio including divesting low quality assets and this all plays to the resilience of the portfolio. We see this in the key metrics of occupancy incentives and downtime. Pleasingly, incentive levels reduced again this quarter to 26.3% reflecting a higher proportion of leasing with smaller customers at premium assets.
Pleasingly, in this quarter to 30th September, our office portfolio occupancy remained high at 93.5%, reducing slightly from the prior quarter based on an anticipated expiry at 80 Collins Street in Melbourne, a high-quality asset in the eastern core of Melbourne CBD. Our industrial portfolio occupancy of 96.2% was supported by leasing success at a Sydney outer Western asset. The industrial sector remains resilient with take-up rates in key markets holding up well and vacancy rates generally below pre-COVID levels, albeit they are rising. Developments have made a significant contribution to our platform with large-scale high-quality precincts accounting for about half of our portfolio.
One of the keys to our success in the industrial development business is the direct relationship that we hold with high value customers who have growth aspirations which creates the opportunity for repeat business as we've done with groups like HelloFresh, Amazon and DHL. Our AUD 40 billion funds management business is diversified across sectors and investor types and we have a proven track record of delivering performance for our clients which underpins the deep relationships that we have with more than 130 institutional investors both here in Australia and also overseas. We want to be invested alongside our clients and funds and more than 70% of the balance sheet is now co-invested with our funds or clients enabling us to align with investors and support the growth in the funds management business.
The chart on the right hand side shows how both the proportion of capital we have invested alongside clients and the efficiency of that capital have increased over time and we expect this will continue as we execute on our strategy. One of my immediate priority areas when I commenced as CEO was revising our capital allocation strategy and our targets and settings and actions are outlined on this slide. The target gearing range remains unchanged and over time we expect any single sector to represent less than 50% of the portfolio. This is more a function of the opportunity set that we have than a view on the office market. We continue to invest in office via the development pipeline and believe the Sydney office vacancy will peak in FY25.
I believe we have the best office team in the country, ably led by Andy Collins and we have the highest quality portfolio in Australia. We have earmarked circa AUD 2 billion of divestments over the next three years which together with the completion of the committed developments will further enhance the quality of the portfolio while maintaining a prudent level of gearing. Consistent with our strategy from FY25, our distribution policy has been updated to pay out 80%-100% of AFFO, providing a sustainable source of capital to invest in growth opportunities alongside our clients. The new policy range seeks to achieve a balance of providing an appropriate distribution to security holders and investing for growth.
As we approach the bottom of the cycle we are seeing attractive investment opportunities and in the near term expect retained earnings to be invested in alongside capital partners in high returning strategies in infrastructure, industrial and the alternative sectors which continue to benefit from strong tailwinds and provide the opportunity to leverage our capabilities to enhance returns. Warwick has already spoken to our guidance and outlook so I thought I'd share with you some clear medium term goals we've set to ensure we deliver on our strategic priorities. First is to transition the balance sheet and we're going to do this by increasing co investments alongside our fund clients, upgrading the office portfolio via divestments and development completions and continuing capital recycling with circa AUD 2 billion of divestments earmarked over the next three years. The second is to maximize the contribution of the funds business.
We can do this by providing liquidity and delivering performance to our fund clients by completing the final close of DREP2 and launching new funds and products to match investor demand and by modernizing the legacy AMP Capital platform funds. And finally, it's to unlock the deep sector expertise by embedding our sector oriented operating model across the platform, maintaining high customer satisfaction and positioning the infrastructure business for growth. To conclude, we are well positioned with a new sector aligned operating model to unlock opportunities across real assets. Despite near term headwinds, the initiatives that I have discussed today are focused on driving sustainable growth for security holders over the long term.
Before passing back to Warwick, I'd like to thank my fellow directors and the Dexus team for their continued commitment and support and acknowledge Darren Steinberg, the outgoing CEO, in supporting my transition into the new role. Thank you.
Thanks, Ross. I'd like to pause here and ask if anyone has a question they'd like to ask regarding what we've touched on so far before going to the formal business of the meeting. Remind you that you will also have an opportunity to ask a question on each of the resolutions, if necessary. I also have questions that have been sent into the registry. I'm happy to start with one of those while you think of your question. Sir, please.
I was just wondering, is the board and the CEO aware that it's policy to remove disabled and blind people from shopping centers that are under management by Dexus?
Thank you for the question and thank you for coming. You did ask the same question last year and there is no policy to remove people in that way. And we're actually happy to sit down and talk with you after the meeting, discuss it for. It's not policy.
I will. Could I ask the auditor to verify?
If you would like to, that's fine. And I think you're talking about a shopping center. Retail. Retail center,
that is one b ut it could also be to all your other retail and industrial premises.
Look, we're happy to talk to you and verify anything you'd like and address your question meaningfully.
It's a categorical no?
we do not have that policy.
It's not policy.
No, it's not.
Why would it occur?
Occur? Does it occur? You did ask the question last year and we did address it last year.
No, it was not addressed. You said you would take it offline.
Last year, and the Chief Executive last year did speak to you about it.
I'd like it answered in public. For the shareholders to know publicly that they've been misled in their ESG report. That hasn't been addressed in the ESG report.
We may have a difference of opinion on this issue and I am happy to talk to you after the meeting to clarify anything.
Sure.
Thank you. Okay. I might now turn to a question from the registry and allow you the opportunity to think about other questions, and perhaps this is one of the questions that is the elephant in the room. Dexus has underperformed in terms of compound annual total return against the ASX 200 property index over one, three and five years. Why should shareholders continue to invest in this business, and what are the forecasts for future returns? Markets move in cycles and conditions currently are challenging. Broader business sentiment continues to be impacted by prolonged economic uncertainty and for us, the impact of higher interest rates, inflation and geopolitical risks. These factors all affect Dexus performance as a long term investor.
We do have the confidence in the value of our quality office portfolio through the cycle. There is ongoing demand to occupy well located high quality buildings as seen in our office portfolio occupancy. Our industrial portfolio continues to benefit from sustained market rent growth across key markets with low land supply supported by the strong customer preference to be in well connected logistics hubs. Dexus total security holder return was negative in FY24. We acknowledge that as office assets in that period saw the highest valuation declines in the Australian real estate market during that year. Valuations in other real estate sectors such as retail appear to have stabilized and commenced turning positive. Our view is that we are approaching the bottom for office valuations.
With transaction markets beginning to improve and the expectation that the next interest rate move will be down, our operating performance has been more resilient than our security price. Our office portfolio occupancy, as Ross showed, has consistently outperformed the wider market with 94.8% occupancy at June this year against the market average of 86%. Our assets do get impacted by interest rates, but we are approaching the bottom of the cycle. Are there any more questions otherwise? I do have a number of questions from the registry and I'll continue to move through those unless someone puts their hand up. Okay. Would the Chairman? I've just answered that question. It was the same question as the previous question. At present, Dexus employs PwC as the external auditor. Does Dexus intend to continue using PwC as its external auditor?
I'm not sure if this question noticed Resolution three and we will come to that in the course of the meeting. But if Resolution three is not passed or ASIC does not grant its consent to PwC resigning as Dexus current auditor, then PwC will continue to hold office as Dexus auditor after the AGM. I hope that answered the question that the person investor was asking. An investor asked if Dexus intends to introduce a dividend reinvestment plan for its shareholders in the immediate or distant future. We are constantly evaluating our capital management options and again Ross described that as well. We'll ensure that we let security holders know if we consider reactivating the DRP and in the future considering whether to activate our DRP.
We would take into account the security trading price gearing levels and the ability to invest capital at greater returns presented than that would be offered for cancelling shares. An investor asked us to expand on the Annual Report 2024 statement on page 73 which said in FY25 we will explore the potential to measure the social impact generated by our social infrastructure assets. So they're asking us to expand on that. Examples of social infrastructure assets include hospitals, airports, student accommodation. Most of these assets are either new into our platform or managed by third party operators. As an investor, sometimes we only have limited visibility into the social impact of these assets. Since the FY24 annual report, we've set a priority area of healthy hearts and minds, meaning we will focus our efforts on enhancing the physical and mental health of our communities in and around our assets.
The next step for us will be establishing formal goals to measure our contribution against these things. To date, we have measured our community contributions as dollars donated to community partners, for example Black Dog. We'd like to go beyond merely measuring the dollars spent and better understand those dollars, where they're going and what impact they're having. So that's really the intent behind the statement. In the Annual Report, an investor also asked if we could label the photos. Yes, we will label photos in future and have done so in the AGM presentation. And so from next year you will see the photos labeled as well. Are there any other questions before I move to the formal business? And again you have an opportunity to ask questions on the formal items. Okay, I'll now turn to the formal business of the meeting.
Today's meeting has been convened in accordance with the Constitution of each Trust and the Corporations Act and I've been informed by the Registry Link Market Services that a quorum is present to enable the formal resolutions the subject of the meeting to be considered and passed. I would also like to table the 2024 annual report which includes the Director's Report, Financial Report and Independent Auditor's Report for the financial year ended 30 June 2024 in accordance with the Notice of Meeting and Voting Form. For instances where I as Chair have been appointed as a proxy but not directed how to vote, I intend to vote undirected proxies in favor of Resolutions one through four and against Resolution five.
The way we will run the meeting is that we will go to a poll on resolutions one through four and look at each of these resolutions and the proxies received individually, at which time you will have the opportunity to ask questions or make comments about each of these resolutions. Resolution 5 will only be put to the meeting if at least 25% of the votes validly cast on Resolution one are cast against the adoption of the remuneration report. As I mentioned earlier, we have withdrawn Resolution two. Accordingly, I formally call for a poll on resolutions being put to the meeting and declare the polls open. You can vote on these resolutions and for our attendees at Dexus Place, you can hand your yellow voting card to the representative from Link who will collect them at the conclusion of this part of the meeting.
For security holders joining us on our online meeting platform, you can access your voting card and complete your voting as we proceed through the resolutions. You would have received the Notice of Meeting which sets out the resolutions and the accompanying explanatory memorandum which provides security holders with information to assess the merits of the resolutions. Let's turn to Resolution 1. Resolution 1 is an ordinary resolution and concerns the adoption of the remuneration report for the year ended 30 June 2024. Under the Corporations Act, the listed company is required at its AGM to put to its shareholders a resolution to approve its remuneration report consistent with our corporate governance framework. The Board has determined that Dexus will be subject to this obligation even though it is a listed stapled group comprising real estate investment trusts.
The vote on resolution is advisory only and does not bind the directors or Dexus Funds Management Ltd. The proxies received are detailed on the screen and represent around 76% of issued capital. One proxy adviser's recommendation has contributed to the elevated vote against the REM report this year and last year. Same adviser where we were able to engage directly with investors to explain our approach to remuneration. The vast majority of those investors accepted our explanation and voted in support of the REM report. More than 74% of our investors share our view that the FY24 outcomes achieve a balance of appropriately incentivizing and rewarding executives for driving performance while aligning with the experience of our security holders in a continued difficult macro environment. In FY24 the CEO's variable pay was the lowest in over a decade.
Let me now turn to questions in relation to Resolution 1. I have a question over here.
Thank you, Chair. My name is Fiona Balzer and I'm representing the Australian Shareholders' Association with proxies from 89 security holders and almost 98,000 securities. Firstly, I'd like to thank you for holding a hybrid meeting, but on the topic that we're on, I'd like to make a comment on the remuneration report. ASA finds it difficult to support the leverage in options based LTIs, especially at this point in the property cycle. So had you not withdrawn the next resolution, we would have voted against the remuneration report and I'd just like to say that we are voting in favor of it this year because of the commitment to engaging and reviewing it for the next year.
Great, thanks.
Thank you, Fiona. And your feedback as well as the feedback of a whole range of shareholders contributed to withdrawing the resolution. And we'll come back to shareholders with whatever we decide in terms of long term incentive.
Are you able to go further on what the concerns were as the announcement withdrawing the resolution suggested that it wasn't the intrinsic element of the options, it was something more?
Were you able to summarize it? It was broadly speaking plan design, because I did, along with Elana who chairs the Remuneration Committee. We engaged with shareholders earlier this year and there was no specific objection to options per se. There were concerns about the strike price, the exercise price, the way they vesting terms. If it was one thing, if it was one piece of criticism, we would have amended that to address those criticisms because it was a number of things. We felt that the best thing to do was to withdraw the resolution and come back with something that investors fully support.
Thank you.
Are there other questions on the resolution for the remuneration report? I will now turn to resolution three. I think we all know now that resolution two is not there. Resolution three is an ordinary resolution and seeks subject to ASIC consent to the current external auditor, PwC resigning and the approval at the AGM to appoint KPMG as external auditor with effect from the latter of one the date of receipt of ASIC's consent to the resignation or two the date fixed by ASIC and three the date of the AGM. The proxies received are detailed on the screen and represent 77% of issued capital. Are there any questions in relation to this resolution? Before we move on? It's reasonably obvious from the way the votes are cast.
I would like to say that PwC has done a stellar job for this company over a long period of time and the moving on was a result of time and in the effort of good governance. We do change auditors from time to time but would like to thank PwC for the efforts that you've made and the value that you've created for us over a very long time. Thank you. I'll now turn to Resolution 4 and Resolution 4.1. 4.1 is an ordinary resolution and seeks the initial appointment of Independent Director Piyush Gupta. The proxies received are detailed on the screen and represent 76% of issued capital. Before we turn to questions relating to this resolution, I will ask you to present to the meeting.
Thank you Warwick and good afternoon, fellow security holders. I present myself for election to the Board of Dexus. I first joined the Board in April this year and currently serve on the Board's audit and sustainability committees. I bring to the role over 40 years experience in the financial services sector, including over 12 years of board experience in the listed real estate sector. I've been a successful entrepreneur, having co-founded and grown a wealth management firm and I've also worked as a senior executive in a global multinational firm to whom we sold our business. My executive life was spent in the stewardship of other people's money, a role requiring trust. My governance experience is extensive across the corporate, government and not-for-profit sectors on boards both large and small.
My experience also includes serving or chairing subcommittees of boards such as Audit, Risk, Remuneration, Investment and Technology. My current directorships in ASX listed companies include as chair of Liberty Financial Group, a mutual bank, Great Southern Bank, the Institute of Chartered Accountants, and in technology on QuintessenceLabs in the area of quantum cryptography. These experiences, together with my prior board experiences across a range of industries, equipped me to bring broad perspective, sound oversight, counsel and judgment to matters for which the Dexus board is responsible. As you know, Dexus is currently in a period of transition, having to manage current industry headwinds in the office sector in particular, as well as now implementing a renewed strategy under our new CEO Ross. I believe my experience will allow me to add value, to work with, support and constructively challenge Dexus's management team to deliver our strategy.
I'd like to thank my board colleagues for their unanimous support for my appointment and I confirm to you my capacity, desire and capability to represent you. I'd be honored to serve as one of your directors and proud to be part of the Dexus team. Thank you.
Thanks Piyush. Are there any questions in relation to resolution 4.1 to me or to Piyush? David?
Thanks, Chair Piyush. You've got an excellent CV, so great credentials to be on the board. Just interested though. Charter Hall obviously is a property developer or more an investor, but also a funds manager. Are there any areas where there are conflicts of interest? Piyush, given both directorships? Thank you.
Thanks, David. No, that's a good question. No, I think in order to take up the Dexus's board position, I resigned from both of my two Charter Hall directorships of the Long WALE REIT and also their unlisted platform. So there are no current conflicts.
Was there a question over here, sir?
A question to Piyush. How are you going to improve c ompany c ulture with your tenure here? And welcome aboard.
Thank you for the question. Now there's a saying that sounds a bit trite, but I actually do believe is right. And it's something along the lines of culture eats strategy for breakfast. In other words, the culture of a firm is very important towards the long-term success of any enterprise. Success in the short term is relatively easy to get, but success for the long term is actually much harder to get. And you can see that in the company data. You know, very few companies survive beyond 50-odd years, so culture is important. And I think all boards, including the Dexus board, have a range of metrics that you explicitly monitor, as well as contact with and engagement with staff and so on to try and keep a pulse on those sorts of issues.
My personal framework for culture is something like get your strategy right, then go to your values and ensure that the values that the firm stands for are subordinate to strategy. In other words, they support the strategy. Then embed those values, looking for the behaviors that you want, reward them, recognize them, celebrate them, and have metrics such as engagement scores, exit interviews, turnover rates, stress, leave all markers in one way or the other of giving you some insight into culture. I mean, it's early days for me on the board and I wouldn't say that I have, you know, it takes about a full year to go through a full board cycle to get your head and hands around all elements of a company.
But I mean, I would say that the Dexus team strikes me as being as they should be, rightfully proud of having created what is, I think, one of the preeminent institutions in this country, given its size and so on. It is engaged, it is thoughtful and I think, experienced and capable. So that's a long-winded answer, other than to agree with you, to say that I do believe culture and values are important and as part of my normal duties, I'm sure I will work with management to ensure that we continue to build out a great culture. Thank you.
Thanks, Piyush. If there are no more questions, then I will now move to resolution 4.2. As resolution 4.2 concerns my own continued appointment as an Independent Director, I'll ask Mark Ford as Chair of the Audit Committee, to talk through the resolution.
Thanks, Warwick, and good afternoon, ladies and gentlemen, security holders. Resolution 2 is an ordinary resolution and seeks the continued appointment of Independent Director Warwick Negus. The proxies received are detailed on the screen and represent around 76% of the issued capital. Before we turn to questions relating to this resolution, I will pass the baton back to Warwick and ask him to present.
This is going to be a bit of up, down, up, down for a few minutes. Thanks, Mark. I've been on the Dexus board since January 21st and I was appointed chair in October 2022. I'm also chair of the Nominations committee and a member of the Audit Committee, the People and Remuneration Committee, the Risk and Compliance Committee and the Sustainability Committee. I personally believe the Chair needs to be a member of all the committees. While a member of the Board, I have participated actively in all of the strategic initiatives undertaken. Acquisitions of AMP Capital, the commencement of developments at Atlassian Central and at Waterfront Brisbane in Brisbane. Since I was appointed Chair of the Board, we've welcomed a new CEO.
We've refined our strategy, refreshed our capital allocation framework and shifted to a sector aligned operating model to drive out performance in the next phase of the investment cycle. I feel like I have contributed to helping to prepare the company for what will be a much better part of the cycle for this company. My executive career was largely focused over nearly 40 years in funds management and investment banking both in Australia and overseas. I've been responsible for large multi asset global businesses and small entrepreneurial domestic businesses. I was previously the Chief Executive of Colonial First State Global Asset Management which at the time was Australia's largest fund manager and was a significant player in the real estate market and an emerging player in infrastructure. I also spent a considerable part of my executive career with Goldman Sachs and Bankers Trust in different parts of the world.
I'm currently the Chair of the Bank of Queensland and a Non-Executive Director of Virgin Australia, Terrace Tower, the New South Wales Rugby Union and Tantallon Capital Advisors. I'm also the Deputy Chancellor and a member of the Council of the University of New South Wales. Being the Chair of Dexus is a privilege that I don't take lightly. I have the great benefit of an experienced and highly committed board and I believe that I have the depth of experience and familiarity with Dexus to make a considerable contribution in the years ahead. I look forward to continuing to work with a highly talented management team and an effective board to help make the decisions expected by you, our security holders. Thank you.
Thanks, Warwick. And now we'll ask for any questions relating to this resolution. No. In that case, I'll hand back to Warwick.
Sit down. Get ready to stand up. I will now move to resolution 4.3. It's an ordinary resolution and seeks the continued appointment of Independent Director Mark Ford. The proxies received are detailed on the screen and represent circa 76% of issued capital. Before we turn to questions relating to this resolution, I will ask Mark to present to the meeting.
Here I am again. Thanks, Warwick. I've been on the Dexus Board. I'm the longest serving director at the moment. Coming up eight years in this time we've seen a lot of change to Dexus. We've had a change of strategy that's led to significant growth, particularly in the funds management area, and has further diversified into new asset classes and income streams. The Dexus portfolio consists of high quality, well located assets. As you've heard a couple of times today, we have a strong management team and a diverse and inquisitive board. There's no shy people sitting around the board table. There's lots of robust discussions. I'm proud to be part of this team and I would love to continue.
I'm Chair of the Audit Committee, a member of the Nominations and Governance Committee and the Risk and Compliance Committee and I also sit on the Board of the Dexus Wholesale Property Fund, our flagship funds management activity. I think my background as a Chartered Accountant, together with over 30 years working in property funds management, banking and superannuation sectors, provides me with the tools to make an effective contribution to these committees and to the Board. I also have over 30 years experience across various board and chair roles for both public and private organizations both in Australia and overseas. I look forward to continuing to serve as the Director of such a dynamic and agile organization and I think we're well placed, as both Ross and Warwick have said, for future success.
Finally, and I'm going to repeat something that Warwick said earlier, but as Chair of the Audit Committee, I would also like to pass my thanks on to PricewaterhouseCoopers for over 20 years of excellent service, and at the same time I'd like to welcome KPMG as our new Group Auditor. Thank you.
Thanks, Mark. Are there any questions in relation to Resolution 4.3? Okay, we'll now move to Resolution 5. I've been informed by Link that given the proxy result on Resolution 1 and the number of security holders voting in person, 25% or more of the votes validly cast on Resolution will be cast against the adoption of the remuneration report, even if it's 25 point. Accordingly, Resolution 5 will now be put to the meeting. I formally call for a poll on Resolution 5 and declare the polls open. As you can see, Resolution 5 has 96% against, so is unlikely to pass. But we're compelled to put this to the meeting.
It's a spill resolution and if it were passed today, then a meeting of security holders would be held within 90 days of this AGM, and at that meeting, all current members of the board, with the exception of the CEO, would vacate offices and resolutions will be voted on to elect individuals to the vacated offices. Resolution 5 is to consider and if thought fit, to pass the ordinary resolution displayed on the screen. If you do not want the spill meeting to take place, you should vote against resolution four. If you want a spill meeting to take place, you should vote for Resolution 5. Are there any questions on this resolution? Okay. As indicated on the proxy form, I will vote any undirected votes that I hold against the resolution.
Before we end the formal part of the meeting, I'd like to invite discussions on any of the resolutions put forward today. Are there any further questions? No further questions. I will call on the representatives from Link Market Services to circulate the ballot boxes and to collect your completed voting cards for our security holders online. I ask that you complete your voting now, if you haven't done so already, and I remind you that the voting system will close five minutes after I formally close the meeting. Okay, ladies and gentlemen, that ends the formal part of today's meeting. I'd like to thank you, our security holders, for your continued support and for attending the meeting today.
For those of you attending in person, I invite you to join me and my fellow directors, as well as members of senior management for some refreshment, and I formally close the meeting. Thank you.