Kagara Mining has taken the unusual step of writing to the ASX to explain why it did not obtain shareholder approval for shares and options issued to new managing director Geoff Day.
Its letter to the ASX followed a protest vote at the company’s annual meeting last week, when 17.6 per cent of proxy votes opposed the adoption of its remuneration report.
There was an even larger protest vote (19.6 per cent) against the re-election of finance director Flavio Garofalo.
It also comes at a time of mounting sensitivity over remuneration practices.
Shareholders can force a spill of a company’s board if there is a 25 per cent ‘no’ vote at two successive annual meetings.
In its letter to the ASX, Kagara said “a question has been raised as to why shareholder approval was not sought for the sign-on shares and options” issued to Mr Day.
These comprised 500,000 fully-paid shares and nine million options, with exercise prices between $1.40 and $2.20; the details were announced on 7 January.
Kagara said the sign-on securities were issued on the same terms and condition as the company’s executive share options scheme (ESOP), but not under the company’s ESOP.
“To this extent, we would like to correct the 7 January release,” the company said.
It added that company’s giving financial benefit to a related party do not require shareholder approval, if the benefit consists of reasonable remuneration to that party as an officer or employee of the company.
“The company is of the view, after obtaining advice from an independent remuneration consultant, that the remuneration package required to attract Mr Day to the company did constitute reasonable remuneration having regard to the prevailing market conditions in the mining industry,” its statement said.
Mr Day’s package also included fixed salary of $900,000 (including superannuation) and a short term incentive of up to 50 per cent of salary.
