Past scandals haunt directors as Lendlease cops strike vote

Lendlease’s shareholders have harshly rejected its pay practices with a 47 per cent vote against its remuneration report, giving the company a first strike.

Lendlease has copped a first strike vote from shareholders.

Global development and building giant Lendlease’s shareholders have harshly rejected its pay practices, with a 47 per cent vote against its remuneration report, giving the company a first strike, at its annual meeting on Friday.

But the global developer and builder will avoid a board spill motion as it has not had a strike since 2012, when it copped a 26 per cent protest vote against its pay report.

Lendlease chairman Michael Ullmer said the board had carefully canvassed investors and wanted to ensure fairness for both executives and shareholders for the longer period beyond COVID-19.

He pointed to the 40 per cent rise in the development pipeline, new partnerships globally and new strategy — which has driven a share price move — and the need to keep top staff.

Mr Ullmer also noted the influence of proxy houses ISS and Ownership Matters (which advise about half of the company’s investors), which had recommended against the pay structure, making a protest vote almost inevitable.

The re-election of former Westpac deputy chief executive Philip Coffey also drew a substantial protest vote of about 30.32 per cent, and about 19.97 per cent of proxies were against the re-election of Jane Hemstritch.

ISS had recommended a vote against both directors and said there were “substantial deficiencies” in remuneration practices and disclosure for this year, and singled out the directors for their previous roles.

“Shareholders may have concerns with Coffey’s prior executive roles at Westpac and Hemstritch’s prior non-executive roles at Commonwealth Bank, Tabcorp and Telstra where corporate governance concerns have been identified,” ISS said.

Lendlease director Philip Coffee. Picture: James Croucher

Jane Hemstritch. Picture: Hollie Adams

Mr Coffey was deputy CEO of Westpac during the period in which governance, risk and reputation failures were identified in the banking royal commission and allegations by Austrac resulted in a civil penalty of $1.3bn.

Glass Lewis also recommended a vote against Mr Coffey but for the remuneration report.

Lendlease warned about the ongoing impact of COVID-19 as many of the global cities in which it operates deal with coronavirus outbreaks. The developer has major projects in London, Milan and New York, as well as California, which have been hit by new waves of the pandemic.

“While we are making good progress on our strategy, earnings in the first half of fiscal 2021 are expected to be subdued. We are focused on converting a number of investment partnerships in the second half which are expected to contribute to earnings,” Lendlease chief executive Steve McCann said.

But Mr McCann said the company was confident the “significant growth” in its secured pipeline of more than $100bn, and expected appetite from investment partners, laid the foundation for the company to accelerate developments to a target of more than $8bn annually.

“Although we are dealing with an uncertain COVID-19 environment, we already have work in progress with an end value of approximately $8.5bn as at June 30 and are looking to put more than $10bn into delivery over the coming 18 months,” he said.

The company’s investment partnership with Mitsubshi Estate is poised to deliver the first residential tower at One Sydney Harbour at Barangaroo, which will contribute about $140m to earnings this financial year.

“We continue to receive strong demand for our luxury apartments at One Sydney Harbour and are taking expressions of interest for apartments for the second Tower ahead of an expected launch this financial year,” he said.

At the TRX project in Kuala Lumpur the company has sold out apartments in one tower and has strong interest in the second tower. The company said it remained on track to launch sales at Ardor Gardens, its retirement living project in Shanghai in 2020.

Mr McCann flagged work on a range of office projects and said the most promising was at the company’s Milan Innovation District project, where both tenant and capital partner interest is strong.

Lendlease shares closed down 2.7 per cent on Friday, at $14.49.