Earlier this week proxy Institutional Shareholder Services published a report suggesting Gallagher's remuneration, specifically a $6 million one-off payment to ensure he stayed at the company until 2025, was far too high and essentially valued him at twice what his peers receive.
The payment plan came after Peter Coleman announced his retirement from Woodside Petroleum amid speculation made its way into the press that the Scotsman was in the running for the job he'd previously been passed over for.
Over 25% of shareholders voted against Gallagher's pay, meaning a first strike against the company. Two strikes and shareholders can call to dissolve the board.
"The board is disappointed," Spence said today at the marathon AGM, which lasted over three and a half hours and was taken up largely by climate and Traditional Owner engagement questions.
Spence said Gallagher was "one of the best, if not the best, executives in Australia", had fulfilled objectives laid out to him, was not receiving the entire $6 million in one year, and that pay to keep good staff on board was important.
He said the ISS report was "materially flawed" and should have been retracted, or at least adjusted.
He said Gallagher had driven high financial performance and led in carbon capture and storage work. Santos has three projects at various stages of development. The Moomba CCS project in the Cooper Basin, which Santos shares with Beach Energy, was sanctioned in November.
"The benchmarking that was done was of a high standard," Spence said.
"In fact it is below the median in the peer group," he said, and explained the way ISS had calculated things was wrong as companies with market caps of just $1 billion were included in the proxy's benchmarking, when Snatos was worth around $14 billion when the payment was first suggested and over $20 billion now.
The Australian Shareholders Association representative at the meeting said the organisation supported the remuneration report. Spence said four out of the five proxies supported it.
