Your vote counts: why BHP shareholders are told to reject green plan

1st October 2021 08:30

by Graeme Evans from interactive investor

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What do you think about mining companies that claim green credentials? Shareholders get their say very soon. We also bring you the hot votes in the weeks ahead.

BHP Group (LSE:BHP) shareholders are being asked to provide feedback on the mining giant's climate change strategy when the plans are put to an advisory vote at its AGM later this month.

The Anglo-Australian company is aiming to cut the carbon footprint of its operations by 30% by 2030, as well as achieve a 2050 goal of net zero on the Scope 3 emissions that stem from activities linked to its business, such as steelmaking.

Shareholder advisory firm Glass Lewis has recommended voting against the plan, however, as it wants greater clarity over BHP's use of science-based targets and on the plans for working with customers and suppliers to achieve the Scope 3 goal.

In other AGM news, the meeting of diagnostics firm Novacyt (LSE:NCYT) was cancelled on the morning of the event on Wednesday. It is now taking place on 18 October as a video conference.

Frasers Group (LSE:FRAS), meanwhile, secured approval for a bonus scheme that will pay its new chief executive £100 million if shares reach £15, although there was a significant revolt among the retailer's independent shareholders.

Foxtons has also agreed to review its remuneration policy, having been rebuked by shareholders at this year's AGM over the payment of bonuses to directors when the estate agency business benefited from government support.

BHP Group

When: 9am, Thursday 14 October

Where: QEII Centre, Westminster, London, SW1P 3EE

How to participate: Attendees are required to show a negative lateral flow test or proof of double vaccination. There will be no opportunity for shareholders to meet BHP directors and refreshments will not be served. Shareholders can view a live webcast at bhp.com but will still need to submit their proxy votes by 9am on Tuesday, 12 October. As a dual-listed company, the AGM results won't be known until after the Australian entity meets on 11 November.

Who is in the chair? Travel restrictions mean nine of the Anglo-Australian company's 12-strong board won't be there in person, including chairman Ken MacKenzie and chief executive Mike Henry. Arrangements are in place for them to contribute to the meeting.

Isn't BHP scrapping its dual listing? Not yet. Shareholders won't vote on the plan to unify behind a primary listing in Australia until the first half of next year.

How much is the boss paid? Mike Henry's base salary is unchanged for 2022 at $1.7 million (£1.3 million), the same as when he was appointed in early 2020. His total of $14.5 million (£10.75 million) for the most recent financial year included a bonus of $4.7 million (£3.5 million) paid two-thirds in deferred shares, with $7.9 million (£5.85 million) from a long-term incentive scheme dating back to 2016. Glass Lewis has recommended shareholders vote in favour of the remuneration report.

What else are shareholders voting on? BHP is holding an advisory vote on its climate transition action plan, something it intends to do every three years. It hopes that by doing so it will provide a forum for shareholders to discuss and provide feedback on its progress.

What's in BHP's climate transition action plan? In the 2021 financial year, BHP's greenhouse gas emissions inventory was 418.7 million tonnes (Mt) of carbon dioxide equivalent, based on 16Mt CO2 from its operated assets and 402.5Mt CO2 from the value chain, known as Scope 3. Most of this latter figure is from steelmaking through the processing of iron ore and metallurgical coal. In a net zero future, however, steel is set to play an essential role in supporting urban growth and the deployment of electric transport.

The Scope 3 emissions are outside of BHP's direct control, which means it is working in partnership on carbon neutral solutions. This includes spending $65 million in 2021 on projects focused on steel decarbonisation. As well as being net zero in its own operations by 2050, BHP's target for 2030 anticipates a reduction of at least 30% on 2020 levels.

What's the view of voting agencies? Glass Lewis says the climate transition action plan provides a relatively clear picture on the steps the company is taking, including a view on its capital expenditure in relation to Paris goals. However, the agency is still unsure whether the targets are science-based, adding that the goals for achieving net zero in Scope 3 emissions could also do with more specifics. Believing that further engagement with shareholders is required, Glass Lewis has recommended voting against the proposal.

Barratt Developments

When: 12 noon, Wednesday 13 October

Where: Ironmongers' Hall, off Shaftesbury Place, Aldersgate Street, Barbican, London EC2Y 8AA

How to participate:Barratt Developments (LSE:BDEV) has published a guide for shareholders wishing to access the meeting electronically. Proxy votes must be received by 12 noon on Monday 11 October.

Who is in the chair? John Allan, who also leads the board of Tesco.

How did the year to 30 June go? Completions rose by 37.3% to 16,517 homes, not far off the pre-pandemic level of 17,111 seen in 2019. Adjusted profits of £919 million compared with £507.3 million in 2020 and £904.3 million in 2019 at a margin of 19.1%. A final dividend of 21.9p is due to be paid to shareholders on 9 November.

How much is the chief executive paid? The salary of David Thomas increased to £780,000 in July, in line with the 3% rise seen by other employees. His total package, when including a bonus of £1.1 million, was £3.9 million for the last financial year, the most since his predecessor Mark Clare got £4.3 million in 2013. However, the total figure compares with £1.25 million the previous year when no bonus was paid.

What's the view of voting agencies? Glass Lewis recommends shareholders back all resolutions, including the advisory vote on the remuneration report. It notes the £480,000 base salary of new chief financial officer Mike Scott is 13.7% higher than his predecessor, but concerns are offset by his relevant experience in the same role at Countryside Properties.

How is the company doing on diversity? Women held 16% of senior manager roles on 30 June, up from 14% the year before. Seven per cent of employees were from ethnic minority backgrounds, accounting for 1.5% of senior leadership. The board meets the requirements of the Parker review in respect of ethnic diversity and has 44% female representation.

How did last year's AGM go? The revised remuneration policy was approved with over 98% of votes cast in favour. A similar level supported the annual remuneration report.

Clipper Logistics

When: 11am, Tuesday 12 October

Where: The offices of Squire Patton Boggs, 6 Wellington Place, Leeds, LS1 4AP

How to participate: Valid proxy votes are required by 11am on Friday, 8 October. Those wishing to attend the meeting should email co-sec@clippergroup.co.uk by 6pm on Monday 11 October.

Who is in the chair? Steve Parkin, who set up the business in 1992.

How did the year to 30 April go? About 70% of Clipper Logistics' (LSE:CLG) value-added logistics business now comes from e-commerce, which is being driven by a structural shift in shopping habits. Overall revenues grew by 39.1% to £696.2 million and earnings per share rose a similar level to 21.3p. The dividend of 7.1p a share, up from 6.2p last time, is due to be paid on 15 October.

How much is the boss paid? Parkin, who became executive chairman after the IPO in June 2014, received a salary of £513,000 and chief executive Tony Mannix got £289,000 but there was no annual bonus despite performance targets being met. This reflected government support through rates relief and the coronavirus job retention scheme, as well as the desire to ensure bonuses for the wider workforce were paid in full.

What's the view of voting agencies? Glass Lewis is in favour of all resolutions, including the advisory vote on the remuneration report.

What about diversity? The board endorses the Davies Review of women on boards and the Parker review on ethnic diversity, but is not currently committing to any specific diversity targets. The percentage of women among senior management is 17%.

How did last year's AGM go? The annual remuneration report and triennial directors' remuneration policy were each approved by 99% of shareholders votes.

Other AGMs taking place in the next fortnight include Rank Group (LSE:RNK) and Ashmore Group (LSE:ASHM). We will have more details of these events next week.

Rank Group

When: 11am, Thursday 14 October

Where: TOR, Saint-Cloud Way, Maidenhead SL6 8BN.

How to participate: Proxy votes are required by 11am, Tuesday 12 October. Questions should be submitted to 2021AGM@rank.com by Wednesday 6 October, with answers available on the company website within two days to help shareholders before casting their votes.

Ashmore Group

When: 12 noon, Friday 15 October

Where: De Vere Grand Connaught Rooms, 61-65 Great Queen St, London WC2B 5DA

How to participate: Details still to be released.#

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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