Rebel Whitehaven shareholders deliver major backlash on company pay

The miner’s shareholders have delivered a shock strike to the company’s pay report after a vigorous campaign by activist shareholder Bell Rock.

Whitehaven Coal shareholders have delivered a shock strike to the mining company’s pay report after a vigorous campaign by activist shareholder Bell Rock, with more than 40 per cent of shares cast against its remuneration report.

While Bell Rock said on the weekend it believed it was closing on enough support to deliver the 25 per cent vote threshold needed to cause a so-called first strike vote against Whitehaven’s remuneration report, the final result is well ahead of expectations.

Whitehaven on Wednesday failed in its application for Takeover’s Panel intervention ahead of the vote, with the panel refusing a request to disregard Bell Rock-controlled shares voted at the meeting, after Whitehaven accused the UK investment fund of understating its actual shareholding in the Australian coal miner.

Managing director Paul Flynn also saw a significant shareholder rebellion against the issue of about 534,000 shares, part of the company’s new executive incentive plan.

Bell Rock Capital said the shock vote against Whitehaven Coal’s pay report should send a clear message to the company, after more than 40 per cent of shares were voted against the company’s remuneration report on Thursday.

Bell Rock chief investment officer Mike O’Mara said both retail and institutional shareholders voted against the pay report, and the company should take heed of the message that had been sent.

The group has been campaigning for Whitehaven to return its $2.65bn cash pile to shareholders rather than close a $US3.2bn coal mine acquisition from BHP, and has pushed shareholders to vote against the company’s remuneration report to make the point, arguing changes made last year to the scheme incentivised risky acquisitions rather than shareholder returns.

“To restore some faith, the board needs to immediately reinstate Total Shareholder Return in the performance scorecard for management, just like BHP, Rio Tinto, New Hope and Stanmore do.”

Mr O’Mara said it was unacceptable for the Company to persist with the status quo, particularly given this was the second strike in three years, with Whitehaven Coal now on notice for the next 12 months.

While Bell Rock did not detail its next steps at Whitehaven, Mr O’Mara delivered a clear indication the activist group intended to keep the pressure on the company’s chairman and managing director.

“Paul Flynn and Mark Vaile have both been on the Board for 11 years each and, as the recent Qantas issues have shown, renewal is vital to protect both the Company and the interests of shareholders,” he said.

Speaking at Thursday’s annual shareholder meeting, Whitehaven chairman Mark Vaile defended the company’s approach to shareholder returns and changes to its pay structure in the face of Bell Rock’s campaign, telling shareholders Whitehaven had delivered among the best returns to its owners on the market last year.

“Whitehaven generated $6.1bn in revenue to record a net profit after tax of $2.7bn. We returned $1.6bn to shareholders in the form of fully franked dividends and through our share buyback program. We paid an interim dividend of 32c and declared a final dividend of 42c,” he said.

“We finished the year delivering a Total Shareholder Return of 52 per cent as a result of share price appreciation and dividends paid, which placed us as the ninth-highest returning stock in the ASX100 and follows our first place in FY22.”

Mr Vaile said Whitehaven had a strong track record of returning cash to shareholders amid the recent surge in coal prices, and the company’s decision to spend $US3.2bn on BHP’s Daunia and Blackwater coal mines in Queensland was in line with its growth strategy.

“Whitehaven’s remuneration framework does not incentivise acquisitions, either explicitly or implicitly. In the event of M&A, such as the Daunia and Blackwater acquisition, our board assesses outcomes pre and post M&A against the company’s forward plan, meaning there is no incentive to “buy” production or EBITDA, or acquire a company with a lower cost structure to achieve cost targets, as these would not be included in a like-for-like assessment,” he said.

Its shares closed flat at $7.77 on Thursday.

Originally published as Rebel Whitehaven shareholders deliver major backlash on company pay