By Scott Murdoch
SYDNEY (Reuters) -Fibre cement maker James Hardie faces an unprecedented purge of its board after the chair and two directors were dumped by investors angered by this year’s $8.8-billion takeover of U.S. building products group AZEK.
The AZEK acquisition caused uproar among Australian-based investors as James Hardie received a waiver from the Australian Securities Exchange (ASX) that freed it from holding a shareholders’ vote on the deal.
Chair Anne Lloyd and directors Rada Rodriguez and Peter-John Davis will leave the board after a majority of investors voted against their re-election, proxy votes published ahead of Wednesday’s annual meeting show.
“We recognize that we have more work to do to deliver on our promise to shareholders. The board is committed to holding both itself and the management team accountable as we execute our plans to drive outperformance over the long-term,” a James Hardie spokesperson said.
The vote against Lloyd stood at 67.3% while the other two directors fell short of majority support from investors.
Roughly two-thirds of proxy votes went against adoption of the annual remuneration report. Investors voted down a pay rise for non-executive directors.
The removal of a chair and directors in Australia by such an overwhelming margin is unprecedented in recent times, as institutional investors are typically hesitant to vote against incumbent chairs.
James Hardie will hold its annual general meeting in Dublin later on Wednesday at 2000 GMT.
The directors’ removal was not addressed by chief executive Aaron Erter in a speech he is set to deliver at the meeting and released to the Australian Securities Exchange (ASX).
James Hardie shareholders, however, voted to elect directors Howard Heckes, Gary Hendrickson and Jesse Singh to continue serving on the board.
Founded in Australia and considered one of the nation’s oldest businesses, the company is now domiciled in Dublin and listed on the Australian and U.S. exchanges.
There was also significant investor backlash on execution of the AZEK transaction, which was partly funded by a major share issuance amid volatility in the U.S. housing market.
The ASX is reviving its rules after sustained pressure from investors.
James Hardie’s Sydney-listed shares ended down 0.8% at A$33.87 each and are down 32.25% this year.
(Reporting by Scott Murdochin Sydney; Additional reporting John Biju and pritam Biswas in Bengaluru; Editing by Sonia Cheema and Clarence Fernandez)
