Treasury Wine Amplifies FY25 Management Incentives Amid Demands

Treasury Wines Estate Board has bowed to institutional shareholder pressure to increase Management’s incentive plan targets for FY25. Shareholders considered the Board’s initial key performance targets were not sufficiently demanding on Management.

  • The FY25 earnings per share growth rate target has been increased to 15 percent, up from 10 percent.
  • The minimum return on capital employed has been increased from 13 percent to 14 percent.
  • Treasury Wines is facing a ‘second strike’ if more than 25 percent of shareholders vote down the 2024 Remuneration Report on 17 October.
  • The ASX ‘Two Strike’ rule requires all Directors to face re-election if the Remuneration Report is voted down in a consecutive 2-year period.
  • The upwardly revised performance thresholds will likely gain shareholder support and the 2024 Remuneration Report adopted.
  • The increased FY25 earnings per share performance incentive to 15 percent growth should support higher shareholder returns in the short term.
  • The luxury brand wine products focus should underwrite shareholder value accretion over the medium term.


Treasury Wine Estates Limited (ASX: TWE or Treasury Wines) is a global winemaking and distribution business selling wines in 70 countries under luxury and premium quality brands such as Penfolds, Beringer, Pepperjack, Seppelt, and Lindemans. TWE was formerly the wine division of Fosters Group before its demerger from Fosters in May 2011.

Upwardly revised Management incentive targets

In response to pressure from institutional shareholders the Board of Treasury Wines has increased Management’s incentive plan targets for FY25. Shareholders have challenged the Board’s initial Key Performance Indicators (KPIs) set out in the 2024 Remuneration Report as not being sufficiently demanding on Management.

Among the concerns raised was that Management would be rewarded for the ‘windfall gains’ that would ensue following the removal of Chinese tariffs on wine imports from Australia. Another concern expressed by institutional shareholders was that the earnings per share compound annual growth rate for FY25 at 10 percent was ‘unchallenging’.

Before receiving 100 percent of the proposed incentive remuneration entitlements Management must now deliver a 15 percent minimum increase in earnings per share and a minimum 14 percent return on capital employed in FY25. The previous thresholds were 10 percent and 13 percent respectively.

Interestingly, the Board admitted that the FY25 earnings per share target of 15 percent annual growth was below the internal target set for TWE’s Management team.

The increase in Management’s incentive plan targets, driven by institutional shareholder pressure, highlights the ASX ‘Two Strike’ Rule. This rule requires all Directors to face re-election if 25% of shareholders vote against the Remuneration Report for two consecutive years. Treasury Wines’ 2023 Remuneration Report was voted down, meaning that if the 2024 report, to be voted on at the 17 October AGM, also fails, a ‘spill resolution’ must be considered. If 50% or more support the spill, the entire Board will face re-election at a special shareholder meeting within 90 days.

The prospect of a ‘second strike’ has resulted in the TWE Board engaging constructively with institutional shareholders and higher incentive target thresholds being set for Management in FY25. It is now more likely the upwardly revised performance thresholds will be supported by shareholders and the 2024 Remuneration Report adopted.

The Board have undertaken to engage with institutional shareholders during FY25 and solicit input as to how the Group’s Management incentive plan can be made more effective in future years.

Wine ‘premiumisation’ trend

While the re-opening of the Chinese market to Australian wine is positive for Treasury Wines, rising middle classes in Thailand, Vietnam, and Indonesia also present a significant growth opportunity. Demand for premium and luxury products, including wine, is increasing as disposable incomes rise and consumers engage more with Western luxury brands. This modern-day ‘Silk Road’ is seen as a long-term, irreversible trend, echoing the ancient trade route that connected East and West, now emerging as a hub for luxury commerce.

Treasury Wines is also experiencing growth in demand for its luxury wine products in the US following its acquisition of Paso Robles luxury wine business in October 2023 for US$900 million (A$1.4 billion). This acquisition accelerates Treasury Wines’ luxury-led premiumisation focus in the US and establishes it as a leading US luxury wine business. The acquisition is expected to deliver mid to high single digit earnings per share growth in FY25.

The growth in luxury brand wine products produced by Treasury Wines should underwrite shareholder value accretion over the medium term. Meanwhile the higher FY25 earnings per share performance incentive threshold to 15 percent growth should support shareholder returns in the short term.

A Portrait photo of Michael Kodari, the guest author of this article. Michael Kodari is a globally recognised investor, philanthropist, and leading financial markets expert

Guest Author

Michael Kodari

Michael Kodari is a globally recognised investor, philanthropist, and leading financial markets expert, renowned for his exceptional performance. With a strong foundation in financial markets, Michael has advised leading financial institutions and governments.

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