There was only a mild protest vote against the pay rise for James Hardie directors at the AGM in Holland yesterday but institutions largely accepted the valid argument that the board is underpaid relative to its peers and needs to offer a premium to attract new talent.
After all, who in their right mind would agree to have their reputation trashed by joining the James Hardie board for a piddling $US60,000 a year? The proposed increase to $US100,000 will still not be enough for the vast majority of credible Australian directors which is why the company is talking about sourcing new blood from the US.
The resolution proposing total non-executive board fees be lifted from $US650,000 to $US1.5 million received 187.6 million proxies in favour and 27.4 million against.
This primary no vote of 13% was still the highest in recent James Hardie history and it was also interesting that the turnout of just 222 million shares was the lowest in more than five years and well down on last year’s 315 million shares voted.
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While James Hardie deserves to be condemned for breaking its word not to seek a board pay rise before finalising its settlement with asbestos victims, a company just can’t function with an ever-diminishing board full of directors who want out.
For mine, what James Hardie attempted to do was a disgrace but then they begrudgingly agreed to fix the problem, only then to face the stupidity of the Tax Office and Peter Costello grasping at almost one third of the allocated monies on the way into the compensation fund.
Chairman Meredith Hellicar will see her pay rise from $238,000 to $398,000, which is about right for a $3.34 billion company with international operation. However, after 14 years on the board, including the last three horror years, she wants to quit but needs to be able to offer a decent whack to find a credible successor.
Whilst the pay rise was justifiable, I’m still amazed that Hellicar was re-elected to the AMP board in May with 98% of shares in favour. There’s something macabre about the chairman of our biggest industrial killer getting resoundingly endorsed as a director of our biggest life insurance company when she was one of the Hardie directors who tried to walk away from her compensation obligation just three short years ago.