Two strike policy puts Penrice board up for grabs

At the Penrice annual general meeting (AGM) held on 30 October, shareholders unhappy with the lack of perceived performance of the battling company forced a spill of directors.

The company now has 90 days to convene an extraordinary general meeting at which shareholders will vote on retaining its non-executive board members or replacing them.

Penrice?s chairman David Trebeck told Quarry that no date has yet been determined for the meeting and when there is one the company will inform the ASX.

Trebeck said that the date is likely to be “early in the new year”.

?We have 90 days to get this done from 30 October, that makes it earlier than about 28 January, which is a public holiday in lieu of Australia Day the previous Saturday. The rules about notice periods effectively preclude the meeting being held prior to Christmas,? Trebeck explained.

At the 2011 AGM, the resolution for the adoption of the remuneration report failed to achieve the 75 per cent support required by shareholders. This was the ?first strike? under the two strikes policy.

The same resolution again failed to achieve 75 per cent support at the AGM last week, hence strike two.

The two strikes policy was introduced in part to restrain what could be considered excessive remuneration arrangements but in this case Penrice executive salaries have been frozen for two years, and in the case of some executives for three years.

Penrice CEO and managing director Guy Roberts currently receives $520,000 a year, while Trebeck gets $126,700.

It?s a worrying use of the two-strike rule, according to Judith Fox, the director of policy at Chartered Secretaries Australia. She says there was a feeling going into AGM season that few, if any companies, would succumb to a second strike because the consequences are so severe.

It is easy in a situation like this to ?shoot the messenger?, Trebeck stated in the company?s annual report this year. He had said that shareholders could be tempted to express their frustration by voting against the adoption of the remuneration report, either because they disagree with the remuneration provided to executives or as a general lightning rod for disaffection.

Penrice has struggled this year, with its share price falling, hit by weak demand for its soda ash. The company lost $64 million in the year to June 2012, up from $26 million a year earlier, on revenue of $149 million

Shareholders also rejected the re-election of director John Hirst.

It is not clear yet whether the current directors will re-contest their positions, or if there will be new nominations for the board.

Sources: Penrice Soda Holdings, The Australian, The Age, Leading Company

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