Shareholders deliver second strike over Elders’ remuneration report but board spill avoided

Elders received a second strike against its remuneration report on Thursday, but avoided a spill of the company’s board ahead of a leadership shake-up next year.

Elders managing director Mark Allison had previously indicated a desire to step down at the end of 2023, recently said he would be willing to stay on until the end of 2026.

Rural services group Elders received a second strike against its remuneration report on Thursday, but avoided a spill of the company’s board, which will be shaken up next year with the departure of chairman Ian Wilton.

Mr Wilton and his fellow directors have faced heavy criticism since deciding in 2023 to reappoint managing director Mark Allison on a boosted pay packet after a failed search for a replacement.

Mr Allison was paid a $1.5m base salary in 2023-24, plus $1.2m in retention payments to keep him at the company.

After a first strike last year, shareholders again rejected the company’s retention package, which will deliver Mr Allison another $500,000 cash payment and a cash equivalent of 90,000 Elders shares if he stays on until June 2025.

More than 67 per cent of votes cast at Thursday’s meeting rejected the remuneration report, but Elders avoided a spill of the company’s board, with more than 86 per cent of votes rejecting a separate spill resolution.

Mr Wilton, who confirmed he would be stepping down from the board in 2025, defended Mr Allison’s remuneration package, telling shareholders it was “fair and suitable, given the company’s circumstances, Mr Allison’s performance and value to the company”.

“The board firmly believes his retention arrangements are in the best interests of the company and shareholders,” he said.

“Throughout the year, the board dedicated significant time to engaging with proxy advisers and major shareholders. Their feedback indicated that the vote against the remuneration report stemmed from concerns about the overall level of Mr Allison’s remuneration, as well as concerns around succession planning before his planned retirement from Elders.

“The board acknowledges the concerns raised by shareholders, which were largely due to one-off decisions made to address CEO succession matters under extraordinary circumstances.

“The board does not view this as a precedent for future remuneration decisions, and I reiterate that no further retention payments will be made beyond the commitments already in place for June 2025.”

Mr Allison, who had previously indicated a desire to step down at the end of 2023, recently said he would be willing to stay on until the end of 2026.

And it appears an internal candidate is likely to succeed the long-serving managing director, with Mr Wilton telling shareholders the board had “evaluated the potential of senior executives and have identified development needs to equip them to be candidates for further advancement”.

Mr Wilton has been chairman since 2019 after joining the company as a director in 2014 – the same year Mr Allison transitioned from executive chairman to managing director.

Mr Allison has been credited for turning around the fortunes of Elders during his reign, and ­received a round of applause from supportive shareholders at ­Thursday’s meeting in recognition of his diversification of the business, which has made it more resilient to seasonal and market fluctuations.

Earlier this week the competition watchdog commenced a review of the company’s proposed $475m acquisition of rural products and services group Delta Agribusiness – described as the third-largest agricultural supplier in the country.

The ACCC’s investigation is focused on the potential impact on competition in the retail and wholesale supply of rural merchandise such as fertiliser, crop protection products, seed and animal health products, the supply of agronomic advice and the supply of agency services, including for livestock, real estate and finance.

Delta sells rural products and services through a network of 68 sites across NSW, Queensland, Victoria, Western Australia and South Australia and via 40 independent wholesale customers.

Mr Allison, who has previously conceded the company may be required to sell off branches in order to win over the ACCC, said the deal would deliver geographic diversification in regions including NSW, northwest Victoria, South Australia and Western Australia.

“Elders has a strong track record of successful light-touch integration acquisitions,” he told shareholders at Thursday’s meeting.

“With this in mind, we will maintain the Delta brand and support its ongoing success without any changes to staff or branches.

“Through this approach, Elders will preserve the well-respected brand, culture and people of Delta who have driven its success to now.”

Elders expects the deal to be completed in the first half of 2025, subject to ACCC approval.

Submissions to the ACCC review close on January 10, and a provisional date for its findings has been set for March 13.