Penfolds owner Treasury Wine Estates hit with first strike as shareholders revolt
Shareholders voice unhappiness at Penfolds and Wolf Blass owner’s decision to award its CEO Tim Ford $2m in shares despite a profit slump.
Shareholders have revolted against Treasury Wine Estates, after nearly half voted to reject its remuneration report after the board allowed long-term share incentives for chief executive Tim Ford to vest despite impacts stemming from Chinese wine tariffs.
The owner of Penfolds, Wolf Blass and Wynns brands, received a first strike after 46.1 per cent of investors voted against the adoption of the remuneration report — the first strike in the company’s history.
A second strike — a vote of 25 per cent or more — at the next annual meeting in 2024 – will force the board to consider a spill motion.
Strong protest votes were also lobbed at the re-election of director Antonia Korsanos – 22.37 per cent no votes because of her connection to US casino group SciPlay – and the grant of performance rights to chief executive Tim Ford – 17.3 per cent votes against.
Outgoing chairman Paul Rayner defended the decision to shareholders, saying that no one could have predicted the heavy profit drop from China’s wine tariffs on Australian winemakers.
Three of the proxy advisers recommended against the remuneration report in relation to the discretion applied to the vesting of $2.26m in shares linked to the long-term incentive plan for the 2020-21 financial year,
“The board strongly feels its decision in relation to the long-term incentive plan was appropriate given the circumstance in the tariffs imposed by China,” Mr Rayner said at the annual meeting.
My Rayner continued to stand by his decision when pressed by one shareholder whether he felt it was okay to go against half of all shareholders in the one of the biggest protest votes against an ASX company in recent times.
“We put all directors up for re-election every year and if (shareholders) are not happy they can vote them out,” said Mr Rayner, who finished up following the conclusion of Monday’s meeting,
“The business today is far stronger as a result of the decision by China to impose tariffs — we are far more diverse and can source wine from other countries into China, including from the country itself.”
The winemaker reported a 3.3 per cent fall in annual net profit to $254.5m as revenue fell 1.7 per cent to $2.49bn for the past fiscal year. Earnings rose 11.4 per cent to $583.5m, in-line with earnings guidance provided in May of earnings of between $580m and $590m, as the winemaker also issued a profit warning due to deteriorating trading conditions.
Shareholders also expressed concern about the makeup of the board with a number of non-executive directors without experience in the beverage and wine industry, or that have been around for more than a decade, with Garry Hounsell and Ed Chan named.
“We continue to provide ongoing education for all directors in winemaking and the wine industry,” Mr Rayner said.
“A good board is a blend of young and experience. We are going through a process of succession planning on the board … so you will gradually see the longer-serving directors retire.”
Treasury Wine forecasts continued demand for luxury wine and resilient category dynamics for Premium wine, globally, after Mr Ford said that first quarter trading conditions were “consistent” with expectations.
“As a result, we remain well positioned to deliver growth in line with our long-term ambition, and EBITS margin expansion towards the 25 per cent group target,” he said at the meeting.
“This growth will be supported by the strength of our global brand portfolio, our diversified business model and the benefits of key asset base and cost optimisation initiatives delivered in FY23.”
The winemaker expected group EBITS for the current fiscal year to be second half weighed, reflecting a planned and measured approach to phasing of Penfolds shipments, particularly for the Icon and Bin portfolio, across the year to retain flexibility in global distribution and pricing models.
“This is a specific strategy in light of the potential for a future review of tariffs on Australian wine in China,” Mr Ford said.
Shares in Treasury Wine closed 1.3 per cent higher at $11.59 on Monday.
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