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Fortescue shareholders reject executive pay proposal

by SuperiorInvest

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Shareholders have rejected the remuneration and bonus policy of Fortescue, the Australian company that transforms iron ore into green hydrogen, after an exodus of executives this year due to the group’s management.

Investors opposed one-off special payments to former Fortescue executives, with 52.4 per cent of shareholders voting against their remuneration proposal at the company’s annual meeting in Perth on Tuesday.

Although the vote is not binding, it does represent a setback for the mining and energy company. A second vote of more than 25 percent against its pay policy at next year’s annual meeting could trigger a shareholder vote to dissolve the board.

Fortescue’s so-called first strike is the second significant vote against a major Australian carrier’s pay proposal in recent weeks, after 83 per cent of investors in Qantas rejected the airline’s pay policy.

Penny Bingham-Hall, a Fortescue board member who chairs the remuneration committee, said shareholders had expressed “strong feelings” about the plan to give one-off bonus payments to some long-term executives, including the former chief metals Elizabeth Gaines, after they left the company.

Power aides had recommended voting against the pay policy, which came up for a vote against a backdrop of sudden departures of company executives that led to scrutiny of its “boiler room” culture.

However, the company’s share price has risen significantly in the run-up to the annual meeting. Chinese iron ore futures have risen more than 17 percent this year to 978 yuan ($138) a tonne on hopes of higher infrastructure spending in China.

The protest vote on wages overshadowed a celebratory tone at the meeting where billionaire Andrew Forrest, the company’s founder, spoke about the beginnings of a business he founded 20 years ago, when few believed it could compete with local players in iron ore BHP and Rio Tinto.

Fortescue, now valued at A$77.9 billion ($51 billion), cut its payout to A$1.75 ($1.12) per share in August, a 15 percent year-on-year decline, after profit net fell 23 percent to $4.8 billion in the year to June. Revenue fell 3 percent to $16.9 billion during the period.

Shareholders on Tuesday backed a change in the company’s name from Fortescue Metals Group to Fortescue Ltd to reflect the company’s growing focus on green energy, as Forrest called on shareholders to once again back its green hydrogen vision.

This week, the company approved three key green investment projects costing A$1.1 billion. Two hydrogen projects were approved: one in Phoenix, United States, and another in Gladstone, northern Australia, with the goal of producing 19,000 tons of hydrogen per year. It also approved a green steel project in Western Australia.

Forrest reiterated a stark warning about rising temperatures and their impact on humanity and the planet, warning that parts of Australia will become uninhabitable due to extreme heat.

He attacked the oil and gas sector, whom he described as “the big deceivers” about global warming. “The oil and gas sector simply doesn’t care enough about its future,” he said. Australia’s ExxonMobil and Woodside came under fire from the billionaire.

Additional reporting from Hudson Lockett in Hong Kong

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