UPDATE: 1.55pm Macmahon chairman Ken Scott-Mackenzie has warned shareholders against opposing the contractor's remuneration report at the upcoming annual general meeting, warning it would disrupt the company's recovery initiatives.
Macmahon faces a board spill vote at the meeting if more than 25 per cent of shareholders vote against the company's remuneration report, as they did at last year's meeting, under the so-called two strikes rule.
In a letter to shareholders, Mr Scott-Mackenzie said he believed a second consecutive strike against the company's remuneration report was unwarranted and contrary to the best interests of shareholders.
He argued the company had made significant changes to its executive remuneration structure including decreasing the total remuneration paid to chief executive Ross Carroll compared to the previous chief executive Nick Bowen.
"Other remuneration highlights include a voluntary pay cut for the board, the chief executive and members of the company's executive team from November 2012 until June 2013, a permanent reduction in fees paid to board members, a deferral of the annual pay review for most staff and improvements to the incentives programs in line with current good practice," he said.
Mr Scott-Mackenzie also said the company was in a transition process as it moved to a mining-only business model and was implementing the new strategy and rolling out a number of initiatives to deliver more consistent and sustainable returns for shareholders.
"A vote against the company's remuneration report, especially if it is followed by a further general meeting to spill non-executive directors, will simply detract from this focus and risk destabilising the business," he said.
Mr Scott-Mackenzie also insisted the company had already begun a process of board renewal with Giles Everist and Jim Walker joining the board and Barry Ford and David Smith resigning.
"Further board changes are expected in the near future once suitably qualified and experienced individuals are identified to replace existing directors," he said.
"A spill meeting will disrupt this well planned and carefully considered process."
He urged shareholders to support the appointment of Mr Everist and Mr Walker, and for the grant of performance rights to "incentivize" Mr Carroll.
He said the performance rights carried challenging hurdles that improved alignment with the interests of shareholders.
"The board acknowledges that the company must deliver improved results over a prolonged period in order to increase the current share price," Mr Scott-Mackenzie said.
"At the AGM we will discuss further our strategies to manage current market conditions and improve business performance."
In August, Macmahon reported an annual loss even bigger than forecast of $29.5 million. Losses from construction blew out to $148 million before tax and the proceeds of selling projects to Leighton Holdings.
The defunct division suffered a net loss of $73 million. Profit from its continuing mining operations was up 19 per cent to $44 million.
The mining division's result was marred by about $20 million in disputed claims, doubtful debts and fixed-asset impairments.Macmahon shares were up half a cent, or 3.7 per cent, to 14 cents at the close.