QR NATIONAL has suffered a significant protest vote against its controversial executive-pay report but avoided a so-called "first strike".
Australia's largest rail company also received a backlash against the granting of equity to the chief executive, Lance Hockridge, at its annual meeting in Brisbane on Wednesday.
The final tally revealed that just over 17 per cent of votes were cast against the executive-pay report. Excluding the Queensland government's large stake in support, the no-vote amounted to about 23 per cent.
A so-called strike is recorded if 25 per cent or more of votes are made against the remuneration report. Two strikes in as many years would automatically trigger a spill of QR National's board.
Influential proxy adviser Ownership Matters and the Australian Shareholders' Association had urged a vote against the executive pay card because they believed QR National had used accounting changes to boost the bonuses for its senior executives.
The association's spokesman, Stephen Mayne, told the meeting it was a "complete outrage" the state government would vote in support of the board. "You deserved the ignominy of a strike," he told the board.
The state government, QR National's biggest shareholder, was not able to vote those shares that were due to be bought back by the company.
Ownership Matters had also urged a vote against the granting of performance rights to the CEO because it believed the hurdles he has to meet are too low. After the government again lent its support, the final tally against that resolution was 17 per cent.
Almost 8 per cent of votes were also cast against the re-election of Graeme John, who sits on the remuneration committee. Ownership Matters had recommended a vote against his return to the board.
Earlier, QR National's chairman, John Prescott, told shareholders the changes made to the executives' pay were not "merely accounting adjustments that give our executives a free kick".
"These are not simply end-of-year adjustments. Quite frankly, they're what we expect management to do to enhance shareholder value," he said.
The CEO received a total package of $4.56 million for the year to June.
QR National also said coal tonnages this financial year would be at the lower end of its guidance range of between 195 million and 205 million tonnes, compared with 186 million tonnes in 2011-12. Mr Hockridge said it would be difficult to give certainty on the amount of coal hauled due to "variable railings over the first four months and the wet season approaching".
Frequently Asked Questions about this Article…
What happened at QR National’s annual meeting regarding the executive pay (remuneration) report?
At QR National’s annual meeting shareholders registered a significant protest vote against the company’s executive-pay (remuneration) report: just over 17% of votes were cast against it. Influential groups including proxy adviser Ownership Matters and the Australian Shareholders’ Association had urged a vote against the report.
How close was QR National to receiving a formal ‘first strike’ over executive pay?
QR National avoided a formal ‘first strike’ because the no-vote fell short of the 25% threshold required to record a strike. Excluding the Queensland government’s large supporting stake, the no-vote rose to about 23%, still below the 25% strike level.
Why did proxy adviser Ownership Matters and the Australian Shareholders’ Association recommend voting against QR National’s pay report?
Ownership Matters and the Australian Shareholders’ Association argued QR National had used accounting changes to boost senior executive bonuses and that some executive incentives had low performance hurdles. Those concerns formed the basis for their recommendation to vote against the remuneration-related resolutions.
How did the Queensland government’s shareholding affect the voting outcome at the meeting?
The Queensland government, QR National’s biggest shareholder, supported the board, which reduced the overall level of protest votes. The government was not able to vote shares that were due to be bought back by the company, but its remaining stake materially lowered the apparent level of dissent.
What happened with the vote on granting performance rights to CEO Lance Hockridge?
Shareholders voted against the grant of performance rights to CEO Lance Hockridge at a meaningful level: the final tally against that resolution was 17% after the Queensland government supported the board. Ownership Matters had recommended voting against the grant because it believed the hurdles for the rights were too low.
Did any board members attract significant opposition at the AGM?
Yes. Almost 8% of votes were cast against the re-election of Graeme John, who sits on QR National’s remuneration committee. Ownership Matters had recommended a vote against his return to the board.
What is CEO Lance Hockridge’s reported total pay package for the year to June?
The article reports that CEO Lance Hockridge received a total package of $4.56 million for the year to June.
What guidance did QR National give about coal tonnages and what might that mean for investors?
QR National said coal tonnages for the financial year were expected to be at the lower end of its guidance range of 195–205 million tonnes, compared with 186 million tonnes in 2011–12. CEO Lance Hockridge warned it was difficult to be certain due to variable railings over the first four months and the approaching wet season—factors investors should watch because they can affect revenue and operational performance.
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