Brickworks escapes pay censure

Building products group Brickworks avoided a first strike against its remuneration report by less than a percentage point on Tuesday.

Chairman Rob Millner said the company was reviewing aspects of its remuneration practices, such as incentive schemes and associated performance hurdles, after criticism from some shareholders.

"We will also be reviewing the structure of the company's incentive schemes, including the size of any grants, vesting periods and performance hurdles attached."

The size of the short-term incentive - $570,000 - paid to managing director Lindsay Partridge came in for criticism during Tuesday's annual meeting, due to the poor earnings of the company in recent years. Mr Millner defended the payment, saying net profit rose to $104.5 million from $30.4 million a year earlier.

Brickworks told shareholders the cross-holding with Soul Pattinson had helped sustain profits through the worst downturn in the building industry since World War II.

Additionally, the uptick in building activity would flow through to a fatter bottom line this financial year, barring the cost of the push by dissident shareholders Perpetual and Carnegie & Co to unpick the Soul Pattinson cross-shareholding, which has already topped $2 million.

The crowded annual meeting was also told the company intended to appoint another independent director to the board, amid criticism that it had only two independent directors on a board of six.

Former stockbroker Howard Vains told the meeting how the company sought to place shares with companies such as CSR and then with Howard Smith in 1969, but was knocked back, before agreement was reached with Jim Millner, who was then running Soul Pattinson, to establish a cross-holding.

Mr Millner "had the gumption and the foresight" to agree to the proposal, said Mr Vains, who went on to describe the proposal to unpick the cross-shareholding as "convoluted [and] complicated".

Mr Vains said the cross-holding had enabled Brickworks to continue to post profits and pay dividends during the cyclical downturns in the building industry, such as that seen over recent years.

In October, institutional investor Perpetual and adviser Carnegie & Co put forward proposals aimed at unlocking the cross-shareholding.

A shareholder meeting is to be held on February 28 to consider the proposal, with advice being sought from the Tax Office and also independent adviser Grant Samuel.

Additionally, the Australian Securities Exchange is to advise whether it considers Soul Pattinson should be able to vote its holding in Brickworks, with this decision expected to determine the outcome.