The West

Macmahon chairman set to stay on
Macmahon chairman set to stay on

The chairman of embattled contractor Macmahon Holdings is likely to hold on to his position at a shareholder meeting this week after proxy advisers threw their support behind him.

While the Australian Shareholders Association has recommended a vote against the re-election of chairman Ken Scott-Mackenzie and fellow director Barry Ford, the influential advisers to institutions and other investors have gone the other way.

The board and management at Macmahon have been under pressure since revealing in September an estimated $40 million blowout on a Pilbara rail construction project.

Nick Bowen quit as managing director and investors cut Macmahon's share price in half.

The expected write-down on Rio Tinto's Hope Downs 4 project was the second rail contract disaster under the leadership of Mr Bowen and Mr Scott-Mackenzie. Macmahon suffered a loss of nearly $50 million on a job for BHP Billiton in 2010-11.

In arguing for a vote against the two directors, the ASA said the board's reviews of risk management strategy and key risk parameters had been ineffective.

But ISS Proxy Advisory Services in a report to clients said a vote for the pair was warranted because no corporate governance concerns had been identified.

"We're not going to take anything for granted but we hope that we do get the support of our shareholders," Mr Scott-Mackenzie told _WestBusiness _ yesterday. "We think we can add significant value to the board going forward."

In a letter to shareholders, the chairman said the board was closely monitoring Hope Downs 4 until its expected completion by Christmas. Along with reviews of the company's spending, business mix and risk profile, he acknowledged further action was required to restore shareholder value.

There is a risk of Macmahon suffering a "first strike" protest vote on Friday against executive pay after proxy adviser Ownership Matters joined the ASA in recommending shareholders reject the remuneration report. Despite some misgivings, ISS backed the document.

Macmahon yesterday released details of new managing director Ross Carroll's contract, which included a 10 per cent salary reduction this financial year in line with other executive pay cuts.

Mr Carroll will be paid a fixed salary of $990,000 this year. The contractual figure is $1.1 million.

He is also eligible for a cash bonus of up to 125 per cent of his fixed pay.

Mr Bowen's total package last year was $2.8 million.

We hope that we do get the support of our shareholders.

"Macmahon chairman Ken Scott-Mackenzie

The West Australian

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