Australian Clinical Labs has copped a huge protest vote against its remuneration report

Australian Clinical Labs’ remuneration report has drawn a stern rebuke from shareholders, despite modifications to the chief executive’s pay structure announced in recent weeks.

Melinda McGrath, chief executive officer of Australian Clinical Labs.

Australian Clinical Labs has been hammered with a huge protest vote against its remuneration report, in a stinging blow for the company, which is majority-owned by institutions.

The company’s chairman Michael Alscher also copped a significant vote opposed to his re-election as a director, with 22.6 per cent of the votes cast falling against him.

The lion’s share of the ire was slung towards the remuneration report however, with 45.3 per cent of the votes cast going against its adoption, with a 25 per cent protest vote constituting a first strike under Australian corporations law.

Should a company receive two consecutive strikes, a vote on whether to call for a spill motion against the board is triggered.

Despite proxy votes cast before the meeting coming in at almost exactly the registered protest vote, the issue of remuneration was not canvassed by either Mr Alscher or chief executive and executive director Melinda McGrath in their addresses to the meeting, lodged with the ASX.

The company had already altered part of Ms McGrath’s proposed remuneration package, making an announcement to the ASX on October 14 that it had amended it such that a vote on Ms McGrath receiving $1.2m in performance rights in relation to her long term variable remuneration for FY25 would not be necessary.

Under Ms McGrath’s new contract terms, announced on October 14, the options disappeared, however Ms McGrath is eligible to earn $2m in cash “subject to the satisfaction of service-based payment criteria determined by the board’’.

Her base remuneration is set at $1.5m per year, plus a short-term incentive of 100 per cent of that “at target” and “up to 150 per cent … for performance over target’’.

She is also eligible for eight weeks of annual leave per year.

Proxy adviser Ownership Matters is understood to have recommended against the cancelled options grant and raised concerns with the broader remuneration report itself.

The institutions that own more than 60 power cent of the share register appear to have taken this suggestion on board, given the large protest vote at Friday’s meeting.

Ms McGrath earned $1.6m last financial year, including $314,967 in cash incentives – 35 per cent of the maximum possible award – and $353,934 in long-term incentives.

Mr Alscher on Friday described the company as having delivered “some outstanding results” last year, despite ACL delivering flat revenue of $696.4m and an underlying profit which was 13.4 per cent lower at $31.2m.

“With the fallout and disruption of 20 years of pathology growth due to the global pandemic starting to ease, ACL has successfully weathered the storm and emerges in a position of resilience and strength,’’ Mr Alscher told the meeting.

“We have a strong balance sheet, a diverse customer base, and are poised to capitalise on a return to stronger growth levels.’’

The company reiterated its outlook for underlying earnings before interest and tax of $65m-$73m, compared with last year’s result of $62.6m.

Australian Clinical Labs was contacted for comment.

The company’s shares closed steady at $3.63.

Originally published as Australian Clinical Labs has copped a huge protest vote against its remuneration report