Beston receives a huge protest vote while shareholders are kept guessing
Beston shareholders received a lesson in corporate governance today, as a huge vote against the company’s remuneration report was kept secret until after the meeting.
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Beston Global Food Company’s remuneration report was overwhelmingly rejected by shareholders who voted at the company’s annual meeting - not that shareholders who attended would have known.
The company took the unusual move of not revealing votes cast for and against the three motions being considered at the meeting, with chairman Roger Sexton, who is also the local head of the Australian Institute of Company Directors, that it was now considered “best practice” not to divulge voting during the meeting.
He told the meeting this was because shareholders could be influenced by votes cast. Shareholders were not even shown the pre-meeting votes cast after voting on all three resolutions.
Australian Shareholders Association representative Bob Ritchie, asked whether the votes would be shown and was told by Mr Sexton it was “common practice” not to show voting outcomes.
“My experience in public companies is exactly the opposite of what you have just said,’’ Mr Ritchie said.
The company’s remuneration report received a 64.9 per cent “no” vote, well above the 25 per cent mark which constitutes a first strike under Australian corporate law.
Should the company receive a second strike next year, it will trigger a vote to spill the board.
The other two motions were also not well supported.
The re-election of founding director Stephen Gerlach received 65 per cent support and the re-election of Ian McPhee gained just 55.2 per cent support. Shareholders will not be able to address these outcomes in a public hearing until next year’s annual meeting.
Another ASA representative approached Mr Sexton after the meeting and pointed out that companies such as BHP and the major banks all reported proxy votes before votes were cast at meetings.
Adelaide companies Beach Energy, Adelaide Brighton and Santos all also divulge and discuss votes during their meetings.
Mr Sexton said the company had received legal advice that their practice was the best way to do it.
Beston has struggled since listing in 2015, and last financial year posted its worst loss of $26.97 million. Stripping out one off items the underlying loss was $5.2 million.
Revenue has been growing strongly however at the company, which now has two main divisions - the cheese division and the smaller meat division.
Mr Sexton told the meeting that while the company did not provide guidance they were “budgeting for a modest profit’’.
Mr Sexton defended the $2.4 million management fee paid to the company’s asset manager, BPAM, owned by himself and Mr Gerlach, saying the cost of running the manager was more than they were paid, to the tune of $30,000-$100,000 a month, and it paid all of the salaries of the senior executives.
Mr Sexton said the $199 million valuation the fee was paid on was accurate and based on independent valuations, despite it being well above the market capitalisation of the company, which is about $40 million.
BPAM would also take a reduction in its fee this financial year due to the drought, Mr Sexton told the meeting.
Beston shares were up 23.5 per cent to 10.5c by early afternoon.