Brambles dodges first strike, but chairman Johns hit by big protest vote

Chairman Stephen Johns received an unprecedented vote against his re-election at today’s AGM.

One institutional investor described it as “a Pyrrhic victory” for Brambles. Photographer: Luis Enrique Ascui/Bloomberg

Brambles has narrowly avoided a first strike against its remuneration report but chairman Stephen Johns received an unprecedented vote against his re-election as chairman after a horror year for the pallets-maker when its scrapped its longer term sales and profits targets.

Proxy votes lodged for yesterday’s annual general meeting showed the company’s remuneration report attracted a 23.1 per cent vote against, just below the 25 per cent threshold representing a first strike.

One institutional investor described it as “a Pyrrhic victory” for the board.

Mr Johns — who has announced plans to retire from the board at the end of his new three-year term — attracted a 25 per cent “against” vote, according to proxies, while director Brian Long received an 18 per cent vote against his re-election.

At the end of his current term Mr Johns will have served on the Brambles board for 16 years.

Investors have been angered about Brambles’ shock decision in February to scrap its 2019 targets of high-single-digit sales and stronger underlying profit growth.

The decision came after Mr Johns reaffirmed the targets at last year’s annual general meeting and after former chief executive Tom Gorman sold all of his 652,000 ­ordinary shares in the company after its August profit result.

Influential proxy advisory firm Ownership Matters was a key player in recommending institutional investors vote against the key resolutions at yesterday’s AGM. However, surprisingly, it is believed other proxy advisers supported the resolutions.

There is speculation one institutional investor abstained from voting on the remuneration report, which allowed the company to avoid a first strike.

15 per cent of investors voted against long term incentives for new chief executive Graham Chipchase and new chief financial officer Ness Sullivan.

It comes amid speculation the company is set to receive a class action from Maurice Blackburn over February’s decision to scrap its growth targets.

Its latest quarterly report released yesterday revealed first-quarter sales were up six per cent, helped by a strong performance in the European pallets business and continued expansion of its IFCO business.

Importantly revenue growth returned to its troubled US business, where sales rose 4 per cent. Brambles shares closed 7 cents higher at $9.33.

Brambles revealed in August that it had cut the short term incentive payments for Mr Gorman after the company failed to meet its own and the market’s expectations for sales and profit growth last year.

Brambles also paid no short term incentive payments to the former President of the troubled CHEP Pallets business and reduced the cash payments to former chief financial officer CFO Zlatko Todorcevski.