Shareholders vote down director remuneration

The secretary of Western Areas has told MINING DAILY that the company’s shareholders were not justified in last week voting against a remuneration package for the non-executive directors.

The shareholders of Western Australian nickel producer and explorer Western Areas have voted against a remuneration package for its non-executive directors at the company’s annual general meeting last week.

According to the results from the meeting, issued yesterday, 52.5% of proxy votes were cast against the resolution, while 40.6% voted for the motion.

The remuneration report was one of 12 non-binding resolutions on the agenda at the meeting.

The proposed remuneration report offered options for non-executive directors only.

Western Areas secretary Joseph Belladonna told MINING DAILY 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,” he said.

“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.”

According to Belladonna, although corporate governance principles do not recommend non-executive director options, the company would rather conserve its cash for operational costs.

“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.”

Belladonna said the options had been issued at a premium in excess of 50% of the share price, meaning they were not simply a handout.

“We are now going to reassess the way we reward our non-executive directors so we don’t have these issues again,” he said.

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