It’s not quite as bad as the last HIH Insurance AGM, which started at 4pm in Redfern on the second last Friday before Christmas in 2001, but Oxiana Ltd will be hoping no-one notices what happens at the shareholder meeting which kicks off in Melbourne at 2.30pm this afternoon.

Big payouts for poor performance is something no-one likes, but that is precisely what Oxiana is proposing with a $10.7 million termination package for outgoing CEO Owen Hegarty as part of the $6.4 billion Zinifex merger.

Hegarty might have done a good job getting Oxiana off the ground, but the share price has more than halved in seven months and is back to a two year low of $2.

At one level, Oxiana is to be commended for at least putting the payout to a vote today, but trouble is looming with the powerful proxy advisers recommending against.

Two of those proxy advisers, Dean Paatsch and Martin Lawrence from Risk Metrics, have laid out the arguments on this issue for Business Spectator.

Their big problem is the looseness in the legislation, specifically s200E of the Corporations Act, requiring such payouts to receive shareholder approval.

The Howard Government certainly didn’t set the bar very high when it decided the payout had to be seven times a CEO’s total package over the previous three years before shareholder approval had to be sought. Surely this is something the Rudd Government will revisit.

The last time shareholders were asked about this question was when Toll Holdings spun off Asciano and Toll CEO Paul Little collected a big termination payout, including compensation for options which hadn’t even been issued yet.

Oxiana should take note of the protest against Little’s payout when there were 217.79 million proxies in favour and 128.39 million against.

Hegarty is getting an outrageous $5.4 million in cash to compensate him for 6 million unissued options. I’m predicting Hegarty’s payout will be defeated today, even though Oxiana has been spending shareholder funds on a proxy soliciting campaign, including arguments about Hegarty being a good bloke who deserves a big farewell.

Fairfax’s Michael West is the only mainstream journalist who has weighed in on the Hegarty scandal but the rest of the media should give it a good rev tomorrow, especially if history is made.

Listen to the webcast from 2.30pm because it should be quite a dramatic afternoon and check out this video summing up the arguments.

If Hegarty gets his loot, you’ll know that at least one of the three biggest shareholders, Axa, Barclays and Merrill Lynch, have failed their pension fund clients.

*Listen to the current CEO of Singapore Power and former President of Temasek Holdings explain   Singapore Inc’s love of Australia at yesterday’s SP Ausnet AGM.