Investors Give Boral Salaries The Boot
The Age
Saturday October 25, 2008
THE board of building materials company Boral has suffered the public embarrassment of recording the second-biggest "no vote" against its executive remuneration report for a top 100 company.
In a stunning victory for riled shareholders, Boral's directors copped a 58% rejection of the company's remuneration report to defeat the motion.Although non-binding, it gave Boral the silver medal when it came to a failed salary report at an annual meeting, second only to Telstra.It comes as shirty investors grow increasingly rebellious over fat pay deals for chief executives and business managers as corporate profits are sliding and dividends are threatened.At the PaperlinX annual meeting 43% of shares were voted against the remuneration report, while Asciano boss Mark Rowsthorn decided to forego $750,000 in short-term incentive payments to soothe investor anger over the plummeting share price and costly Brambles raid.But it was a bad day all round for Boral at its AGM yesterday. Managing director Rod Pearse told shareholders that slowing construction markets in the US and Australia would slash profit by as much as 18% this financial year.Boral shares fell the most in seven years, trading as low as $4.61 before ending the session down 45, or 8.9%, at $4.63. Mr Pearse said profit could dive to $200 million this financial year, down from $243 million in 2007-08.Boral revised down its forecast for US housing starts from 900,000 to about 750,000 for 2008-09 following a poor September quarter."We expect that building product profits for the full year will be significantly below the prior year," Mr Pearse said "Full-year US construction materials earnings are expected to be below the prior year."This did not sit well with investors, and they made clear their frustrations when it came to the non-binding vote on the remuneration report.Of the 310.3 million votes lodged, only 123.55 million voted in favour of the report while 174.21 million were against.The "no vote" campaign was partly led by corporate governance group RiskMetrics, which issued an advisory note urging its clients, which include institutional investors and superannuation funds, to dump the report.RiskMetrics' critique included the fact that Mr Pearse's remuneration was substantially above that of peer companies, and that the Boral board had decided to remunerate Mr Pearse at the upper half of the peer group it uses for CEO remuneration purposes - despite Boral being a relatively small company in this group.His bonuses and increases to incentives also came as profitability was declining.
© 2008 The Age