Brambles will overhaul pay for its senior executives in the face of an investor backlash that almost delivered the company a first strike vote against its remuneration report.
Following a year that saw the global pallet giant ditch profit targets in the face of strong competition and changing dynamics for its important customers, Brambles copped strong protest votes from investors at its annual general meeting.
The final vote tally was 76.77 per cent in favour with 23.23 per cent against, so the company avoided the 25 per cent no vote threshold for a first strike.
Shareholders also voted strongly against the re-election of long-serving chairman Stephen Johns with proxy votes lodged ahead of the meeting recording a 24.77 per cent vote against his continuing on the board.
The re-appointment of director Brian Long also attracted a hefty 18.2 per cent vote in opposition from shareholders ahead of the meeting.
The shareholder angst came as Maurice Blackburn also announced on Wednesday it was seeking to build a class action against Brambles after it downgraded its earnings guidance earlier this year.
The changes to executive pay will see Brambles able to clawback long and short term bonus awards of shares which had been awarded to executives but that had not yet vested.
“I would like to acknowledge shareholders’ disappointment with the company’s performance [in the 2017 year],” Mr Johns told the meeting in Sydney on Wednesday.
“This disappointment is reflected in the lower level of shareholder support for some of this year’s resolutions to be considered at today’s meeting.
“I want you to understand that the board also shares your disappointment and is united in overseeing the effective management of the company on behalf of you, our shareholders.”
Mr Johns told shareholders that he expected there would not be a repeat of the poorer 2017 result pointing to the company’s previous record of growth.
“We hope and expect to return to those [returns] in future years, we are looking for a return to very, very good figures and very good performance,” he said.
The board had opted not to pay any short-term bonus for the 2017 financial year to former chief executive Tom Gorman, who left Brambles earlier this year.
Director Tony Froggatt said the company had reviewed its payment structure leading to a recasting of executive remuneration.
Key changes included a shift towards using underlying profit as the key measure for the determination of bonuses, delivering greater powers to the board to clawback bonuses and restrict the trading in shares by the chief executive.
Mr Froggatt said the changes would better align the interests of executives and shareholders.
n Shareholders’ Association representative Mary Curran raised concerns that new chief executive Graham Chipchase had retained his position as a director of AstraZeneca which was worth about $1 million a year and could be a distraction given it has faced its own challenges.
“I think we need his full attention because [total shareholder return] is dismal, in fact we have had a palletful of poor returns,” Ms Curran said.
Mr Johns said Mr Chipchase gained valuable experience from his board position but that he had agreed to relinquish it if it interfered with his Brambles’ responsibilities.
One investor who indicated he would vote against Mr Johns’ re-election said the chairman was in an “awkward” position.
“Last year he told us all was well with the company. Obviously he didn’t know what the reality was or didn’t reveal it,” he said.