The nickel producer and explorer, Western Areas, saw its remuneration report defeated at its AGM on 6 November, as Australia’s stormy AGM season continues.The voting saw 52.5% vote against with a further 2.3% in abstentions. Four other remuneration-related resolutions were withdrawn in light of overwhelming opposition (by more than 2 to 1) from those voting by proxy ahead of the meeting.
The Company Secretary was critical of the voting outcome, stating that most of the votes against came from institutional shareholders via proxy advisory companies.
“These advisers do not really give any consideration to the style of company or the market capital. They apply the same standards to smaller miners and explorers companies as would to Wesfarmers, Woodside or BHP Billiton. We do not think the reasons behind the vote are justified as the board had actually recommended the report for approval.”
In Mining Daily, the Company Secretary explained that although corporate governance principles do not recommend non-executive director options, the company would rather conserve its cash for operational costs. The options would have been issued at a premium in excess of 50% of the share price.
“We would prefer to spend our money on drilling and exploration rather than higher fees for non-executive directors,” he said.
“So we reward them with things like options, because it aligns them with the shareholders. The shareholders want to see their capital grow and if that happens, the directors can be rewarded. We planned to use the options as a longer-term incentive to retain the directors on the board.”
Western Areas were not the only company to be upset with proxy advisory services, as the chairman of gold producer Kingsgate Consolidated criticised institutional investors for blindly following recommendations of voting advisory services. Kingsgate saw its remuneration report scrape through as the board used 6.3 million discretionary votes to turn around the voting outcome (otherwise 20.99m for, 23.03m against).
Chairman Ross Smyth-Kirk told the AGM that, ”unfortunately”, RiskMetrics had ”seen fit to recommend to its institutional clients that they vote against” acceptance of the remuneration report.
‘Whilst this is consistent with its recommendations for most companies, its analysis of your company is particularly flawed. That this tick-a-box mentality is so unquestioningly accepted by some institutions is even more disappointing and evokes emotional responses which open the issue to abuse.’
After AGM, Mr Smyth-Kirk told BusinessDay’s reporter that he was not surprised by the seemingly blind acceptance of voting advice. ”It’s like all of their decisions,” he said. ”Everything relies on consultants. The institutions are getting further and further away from making decisions themselves.”
Mining Daily – Western Area story – Shareholders vote down director remuneration
BusinessDay – Kingsgate boss criticises pay vote