Protests as BHP Billiton bars key vote
INVESTORS in BHP Billiton are to be told that they cannot vote on the newly merged mining group’s report and accounts at the company’s annual
meeting next month.
The decision – believed to be unprecedented for a FTSE 100 company – puts the group in breach of corporate governance codes and is likely provoke
opposition from City shareholders. Manifest Voting Agency, which alerts institutions collapse in corporate governance is suggesting that clients consider showing their anger by voting
against a notion that would allow deputy chief executive Brian Gilbertson to participate in share-incentive schemes. Institutions with fund of £1,000bn, including Goldman Sachs, JP Morgan Chase and CGNU, will receive Manifest’s comments and other shareholders are
expected to be alerted by their own governance advisers. The £6bn mining company, formed in June by the merger of Australia’s BHP with Britain’s Billiton, has an Anglo-Australian dual-listing structure.
Directors blame this for not seeking the customary shareholder approval of the accounts, saying “This would create a number of difficulties both
regulatory and in terms of distribution of large amounts of material to shareholders.” Investors will nevertheless be asked to vote on 14 resolutions at the 19 October annual meeting, covering re-election of directors and auditors, the
purchase of shares, the incentive schemes and a new company constitution. Although a vote to approve the annual report is standard at company meetings, Manifest’s Iain Tessier said: “There is no Companies Act requirement to
do it, but it is a very brave company that would not lay its report and accounts before shareholders. It’s the only way they can hold directors to
account.” BHP Billiton directors say they hope to find a more satisfactory arrangement in future, but Manifest’s 20-page report on the group also raises
concerns about the remuneration policy and Tessier has thus written to City fund managers suggesting the consider rising the Cilbertson motion to
voice their opposition. His conclusions to the report states: “Some investors may wish to use this resolution as a portal for expressing their views on the remuneration and
share-incentive arrangements in place for the executive directors, as there is no opportunity to approve either the report of the remuneration
committee or the report and accounts directly.” Manifest suggests that the composition of the board – 14 non-executives but just three executive directors – may be though “unwieldy” and says that
two members of the four-man remuneration committee are not independent, as the City’s combined corporate governance code requires. The voting agency highlights a service contract that would give one director up to 2.5 times his pay if it is terminated before 2005, and incentive
awards for five directors worth a combined £10.6m.
Richard Northedge, Sunday Business
23 September, 2001
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