Shareholders in agribusiness Wellard have strongly rejected four resolutions at the company's annual meeting, though their anger over the company's poor performance was not enough for the nominee of a dissident shareholder to get elected to the board.
Shareholders in agribusiness Wellard have strongly rejected four resolutions at the company's annual meeting, though their anger over the company's poor performance was not enough for the nominee of a dissident shareholder to get elected to the board.
The company's remuneration report was opposed by more than 56 per cent of votes cast, an unusually high number for a protest vote.
A similar percentage also voted against the granting of executive share options to chief executive and major shareholder Mauro Balzarini, and against approval of the company's executive share option plan.
In addition, a 10 per cent placement capacity (which is common for listed companies) was not approved after 31 per cent of votes were cast against this proposal.
An attempt by 14 per cent shareholder Butt Nominees to have nominee Tyrone Dennison elected to the board was not successful after attracting 26 per cent of votes cast.
Butt Nominees is controlled by Pakistani meat producer and Wellard competitor Tariq Butt.
Mr Dennison's election was opposed by the company's board, which said it wanted to see more independent directors.
Resolutions to confirm the appointment of chairman David Griffiths and director Philip Clausius, and the appointment of former Hancock Prospecting chief development officer John Klepec as a new director, were overwhelmingly supported.
Non-executive director (and former chief financial officer) Greg Wheeler was also re-elected, although 22 per cent of votes were opposed.
The defeat of the remuneration report opens up the possibility of a board spill if the report fails again at next year’s AGM.
If that happens, a special meeting would be required where directors would stand for their positions again.
A representative of the Australian Shareholders Association spoke at the AGM and was critical of the report, raising concerns that the remuneration committee had only met once and selected a simplistic compensation package not aligned with the interests of shareholders.
Covenant breach
Mr Griffiths said the company was currently in breach of one of its loan covenants.
That would require a sell down of working capital in February, he said, while a further breached covenant had been waived.
There was still a risk it might breach covenants in the December half yearly report, Mr Griffiths said, adding that the banks had worked with the company in a positive way.
Wellard has a working capital facility with Commonwealth Bank of Australia, which was worth between $10 million and $15 million, and a larger asset financing deal for its ships.
“The tough trading environment has placed pressure on our current earnings and working capital,” Mr Griffiths said.
“In the annual report, Wellard referred to certain breaches of undertakings with the working capital facility and the likely breach of certain financial covenants measured at 30 September 2016.
“We are advanced in dealing with our bank to amend or waive these breaches however the continuation of subdued trading conditions will mean that Wellard is likely to breach certain financial covenants at the half year to December 31 2016.
“We are in constructive dialogue with our banks and believe that we will be able work through any issues arising from the half year result.”
Wellard closed at 19.5 cents per share, down 0.1 per cent.
