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Fireworks likely at Leighton AGM

THE board of Leighton Holdings faces a backlash from shareholders tomorrow after three influential advisers urged votes against the executive pay report and termination payments of more than $7 million to David Stewart, its chief executive for just eight months.

THE board of Leighton Holdings faces a backlash from shareholders tomorrow after three influential advisers urged votes against the executive pay report and termination payments of more than $7 million to David Stewart, its chief executive for just eight months.

ISS Governance has also advised clients to vote against the election of Leighton's chief financial officer, Peter Gregg, as a director because it believes the board lacks a majority of independent directors.

After one of the most tumultuous years in Leighton's history, ISS and Ownership Matters have joined CGI Glass Lewis in recommending votes against Leighton's remuneration report and termination payments to Mr Stewart, who departed suddenly in August, a day after David Mortimer resigned as chairman.

The proxy advisers have taken exception to the report because of the largesse heaped upon Wal King, the former chief executive who will walk away with almost $29 million.

His package includes a retirement benefit of $12.6 million and almost $16 million in consultancy, non-compete and bonus payments.

The payments will take Mr King's earnings over the last eight years to almost $119 million, much of which has been made up of cash.

"The board's decision to award such substantial payments [this year] to King raises significant concerns," ISS said in its report. "No rationale has been provided."

The level of shareholder dissent means Leighton's board could receive a strike against its remuneration report at the annual meeting tomorrow despite German construction company Hochtief, now controlled by Spain's Grupo ACS, holding 54 per cent of the votes.

ISS said Mr Stewart's termination benefits would be made irrespective of Leighton's performance, and most of it was in cash. Further, the benefits included retention and service payments to an executive who will officially leave the company on November 19.

The proxy advisers highlighted that Mr Gregg received a retention payment of $750,000 this year despite the fact he is one of the county's highest paid chief financial officers.

Last year more than 11 per cent of the votes lodged were against Leighton's remuneration report. But excluding the votes of Hochtief, the resolution would have had more than half against.

Leighton shares have fallen by more than a third this year as the company suffered profit downgrades, cost blow outs on projects, a large capital raising and management and board upheaval.


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