The advisory vote on the remuneration report at AGM of OZ Minerals on 11 June is expected to see a very significant protest vote following the AU$10m severance payment received by former Oxiana CEO, Owen Hegarty, during the year. The payment was made despite a majority of proxies lodged being voted against a resolution to approve the payment at an EGM in July 2008. The EGM resolution was withdrawn after the proxy deadline.
The proposals made at the July 2008 EGM included compensation for options which were due to granted in April 2009 – a highly unusual proposal.
The Company made the payments anyway (slightly modified), falling back on a loophole in the Corporations Act, in a move which suggests the Remuneration Committee at the Company are disconnected from reality and demonstrates contempt for shareholders.
The payment comprised:
- Six months’ total fixed remuneration (AU$750,000)
- Annual leave and long service leave entitlements (AU$955,610)
- Ex-gratia payment (AU$8,350,000).
- TOTAL: AU$10,055,610
All of Hegarty’s unvested options under the Company’s long term incentive plan (4,000,000) and retention shares (500,000) lapsed.
The originally proposed termination payment comprised:
- Salary (from 20 June 2008 to 31 December 2009): AU$2,291,100
- Short Term Incentive Payment (from 20 June 2008 to 31 December 2009): AU$1,500,000
- Retention/Transition Payment: AU$160,000
- 250,000 Retention shares, allowed to best 5 months early: AU$765,000
- 250,000 Retention shares, allowed to best 17 months early: AU$752,200
- 2,000,000 unvested options, allowed to vest 23 months early: AU$1,558,000
- 2,000,000 unvested options, allowed to vest 35 months early: AU$1,710,000
- 2,000,000 options due to be granted in April 2009: AU$1,930,000
- TOTAL: AU$10,666,600
Since this scandalous episode, the Australian Government has reportedly announced it intends to curb golden handshakes, calling certain such payments ‘obscene’. It is expected that shareholder approval will now be required for a termination payment exceeding one year’s base pay (rather than the current level of seven times’ salary).
The Australian Shareholders Association stated that, “shareholders can have little faith in a board that ignores their wishes and simply finds another way to thwart their clearly expressed intentions”.
Also at the AGM, Australian corporate governance campaigner, Stephen Mayne, is standing for election to the Board. Mayne, the founder of Crikey and The Mayne Report, who has made over 30 Board ’tilts’ at various Australian companies since 2000, has said he is standing as “a catalyst for change. There needs to be more boardroom accountability for the company’s precarious financial position and the decision last year to ignore an overwhelming shareholder vote and award an $8.3 million separation payment to former Oxiana Resources managing director Owen Hegarty”.