Good afternoon, ladies and gentlemen. My name is Stephen Johns, your Chairman. It's my pleasure to welcome you today and to declare the 2019 Brambles AGM open. There are copies of the notice of meeting and of the minutes of our last AGM in the registration area. With your agreement, I propose to take the notice of meeting as read. Thank you. I'd now like to introduce your Directors and Senior Executives. On my far left is Elizabeth Fagan, George El-Zoghbi, Brian Long, the Chairman of our Audit Committee, our Chief Financial Officer, Nessa O'Sullivan, and our Chief Executive Officer, Graham Chipchase. From my far right is Jim Miller, Scott Perkins, Tahira Hassan, David Gosnell, Tony Froggatt, the Chairman of our Remuneration Committee, and Robert Gerrard, our Company Secretary. David is retiring at the conclusion of today's meeting after serving for more than 10 years on the board.
I'll make comments on David's retirement in my formal address, but I'll note now that David has made a significant contribution to the board during his period of office, and we will really miss him. Jim was appointed during the year and stands for election today. George and Tony stand for re-election, each of whom has the unanimous support of their fellow directors. Long sitting with us in the front row here, Sue Horlin and Eliza Penny from our external auditors, PwC. Welcome. We'll be holding a poll on all the resolutions before this meeting, and I'll now open the poll. Any shareholders leaving early may place their completed voting cards in the ballot boxes by the exit doors. I'll explain the voting procedure when we reach the formal part of the meeting. I'll shortly deliver my chairman's address.
After I've spoken, I'll hand over to Graham Chipchase to provide his CEO address. Tony Froggatt will then review our remuneration policy. After Tony's report, I'll respond to the most frequently asked questions from shareholders, which we received before today's meeting. I will then take any questions from the floor before we move on to the formal items of business. We are webcasting this meeting for the benefit of shareholders who could not attend in person, and we'll publish the webcast on our website. Turning to my address. Brambles, as you know, is the global leader in platform pooling solutions, serving customers in approximately 60 countries with around 330 million pallets, crates, and containers, and supported by a network of over 750 service centers.
In FY 2019, we achieved strong revenue growth and an increase in earnings, despite cost inflation in our global businesses and some broader cost challenges during the year. In constant currency terms, our sales revenue was $4.6 billion, up 7% on the previous year, and underlying profit increased 2% to $803.7 million. The board declared total dividends for the year of AUD 0.29 per share in line with FY 2018. The interim dividend was 65% franked, and the final dividend, which will be paid today, is 30% franked. In May this year, following a comprehensive strategic review and the successful sale process, we completed the sale of our IFCO RPC business to Triton and a subsidiary of the Abu Dhabi Investment Authority for $2.5 billion.
With the sale complete, Brambles is now one streamlined business with a real opportunity to leverage its industry leadership to become more responsive to customers' needs and global supply chain challenges. It is within this context that the board and management team are taking active steps to reshape Brambles for success in the 2020s, into the 2020s, and beyond. We are focused on becoming more customer-centric and deploying new physical and digital technologies to transform our service offerings and how we operate. We intend to return US$1.95 billion of the sale proceeds to you, our shareholders, through two mechanisms. The first is non-market share buyback for up to US$1.65 billion, which actually commenced on the fourth of June 2019. We expect to implement this in an orderly fashion through to FY 2021. The second is a pro-rata cash return of AUD 0.29 per share, equivalent to approximately US$300 million.
The cash return is in addition to your normal dividend and has two components: a capital return of AUD 0.12 per share, which is subject to shareholders' approval at today's AGM, and a special dividend of AUD 0.17 per share, which will be paid to shareholders on the 22nd of October 2019. The remaining proceeds we utilize to reduce debt to maintain our strong balance sheet and investment-grade credit rating. The board has also undertaken a review of our dividend policy and capital structure. We have decided to move to a payout-based dividend policy commencing with the 2020 interim dividend.
This policy will target a payout ratio of 45%-60% of underlying profit after finance costs and tax, subject to the company's cash requirements, and will be declared in USD currency and converted and paid in AUD currency. The board believes this dividend policy, while potentially creating increased volatility in AUD terms, is appropriate to support future growth opportunities, align shareholder payments with movement in our earnings, which are reported in USD, and maintain Brambles' strong investment-grade credit profile. I'll now turn to board composition and renewal. In light of my intention to step down as chairman at the end of my current term, a subcommittee of the board, chaired by Tony Froggatt, was formed to conduct the succession process for the board. This process remains on track to appoint a successor in advance of my retirement in 2020.
As part of the ongoing board renewal process, changes to the composition of the board during FY 2019 saw the retirement of Carolyn Kay at the conclusion of the 2018 AGM, and the appointment of Jim Miller as a non-executive director in March 2019. With a career spanning senior executive roles at companies such as Amazon, Google, IBM, and Cisco, Jim has extensive experience and detailed knowledge of digital technology and data analytics, and the values these can add to supply chain. Jim stands for election at today's AGM. Additionally, one of our longstanding non-executive directors, David Gosnell, has decided not to stand for election and will retire at today's AGM. On behalf of the board, I'd like to welcome Jim and thank both David and Carolyn for their valuable contributions.
Tony Froggatt, here on my right, who has been on the board for 13 years, has agreed to stand for re-election at today's AGM to facilitate a smooth transition for the new chair and provide continuity and stability for the board. If re-elected, Tony has indicated that he will retire within his three-year term. Non-executive director, George El-Zoghbi, who's on my left here, who joined the board in 2016, also stands for re-election at today's AGM. We as a board were conscious that replacing Carolyn Kay with Jim Miller meant that the female representation on our board reduced from four members to three, representing 27%. While our aim is always to recruit the best candidate, we're also mindful of the importance of gender diversity in achieving our 30% target representation at board level.
This will be an important factor in our future recruitment process as we seek replacements for David Gosnell and Tony Froggatt. To conclude, I'd like to thank our management team and all our employees for their efforts and ongoing commitment during the year, and you, our shareholders, for your attendance at this year's AGM, and for your ongoing support for Brambles. I'll now hand over to our CEO, Graham Chipchase. Thank you very much.
Thanks, Stephen. Good afternoon, ladies and gentlemen. At Brambles, our purpose is to connect people with life's essentials every day. Through our share and reuse model, we move more goods to more people in more places than any other organization. That's something we're very proud of, as it allows us to make a real contribution to shaping a smarter, more sustainable future. In keeping with this theme, in fiscal 2019, we launched Zero Waste World, a new working collaboration for leading companies committed to creating smarter and more sustainable supply chains. With our network capabilities and the power of our logistics platform, we are working with our customers to find new ways to address three critical industry challenges. Eliminating waste, eradicating empty transport miles, and cutting out inefficiency in the supply chain. Sharing these global challenges, we have a unique opportunity to accelerate simple and sustainable solutions.
Similarly, we have worked on the fundamentals of our business to make sure they remain robust and sustainable. We continue to explore new ways to deliver higher levels of efficiency in our service center network, and continued our path towards a digital supply chain to deliver benefits to customers and Brambles. We continue to invest in first and last mile solutions, particularly in Europe, and accelerated our efforts in material science and innovation platforms. We successfully rolled out best-in-class automation and procurement initiatives in the U.S., and facilitated best practice and expertise sharing across the group. We are passionate about bringing more value to our customers and delivering innovative service offerings that meet more of their supply chain needs, and transforming the customer experience of doing business with Brambles.
Before addressing our results for fiscal 2019 and the first quarter trading update for fiscal 2020, I'd like to take a moment to outline the operating conditions we faced during fiscal 2019 and the first three months of fiscal 2020. The operating environment in fiscal 2019 was characterized by macroeconomic uncertainty and continuing inflationary pressures. Ongoing uncertainty surrounding Brexit and how it would be implemented impacted inventory levels across the retail supply chain in the U.K. We also experienced slower organic growth, particularly in Western Europe and within the automotive industry. In the U.S. and Europe, input cost inflation remained high by historical standards, although the rate of transport and lumber inflation started to moderate during the year.
Competition in all markets was strong but rational, while our customer base continued to adapt to changes in the retail landscape, including omni-channel proliferation, the ongoing growth of e-commerce, and increasing automation in the supply chain. Now looking at our financial performance. In fiscal 2019, we delivered constant currency sales revenue growth of 7%, reflecting ongoing customer conversions in all markets and increased price realization in response to the high inflation environment. Underlying profit growth of 2% was modest as ongoing cost pressures in CHEP Americas were only partly offset by price and supply chain initiatives in the region. We continue to make good progress with our U.S. margin improvement initiatives and other initiatives in the Americas regions, and remain confident these actions will deliver over the medium term.
Turning to our trading update for the first quarter of the 2020 financial year, we delivered constant currency sales revenue growth of 5%, primarily driven by strong net new business growth and improved price realization across the group. This is in line with our expectation for sales revenue growth in fiscal 2020 to be at the lower end of our mid-single digit objective on a constant currency basis. As mentioned earlier, we are experiencing moderating input cost inflation and other cost pressures in our major markets and are seeing a broader slowdown in global underlying economies. Given the macroeconomic environment, underlying profit in fiscal 2020 is expected to be in line with or slightly above sales revenue growth on a constant currency basis, including the impact of the new leasing standard AASB 16.
Our global automation and procurement programs remain on track and are expected to deliver margin benefits through financial year 2020. We remain confident that the heightened focus on asset control and efficiency across the group will deliver cash flow benefits over the medium term and deliver superior shareholder returns over the longer term. Moving on to our investor value proposition. Many of you will be familiar with our virtuous circle value proposition. We're able to achieve superior operational efficiencies thanks to our network advantage of scale, density, and unrivaled expertise. These operational efficiencies generate cash flow, which we either reinvest in the business to fund growth, innovation, and the development of our people, or we return to you, our shareholders. Our aim is to deliver sustainable growth and returns well in excess of the cost of capital.
This includes delivering through the cycle, sales revenue growth in the mid-single digits, underlying profit growth in excess of sales revenue growth, strong return on capital invested, and free cash flow sufficient to fully fund capital expenditure and dividends. Turning to sustainability. Sustainability is integral to what we do and to the value we offer supply chains around the world. Our circular business model defines not just how we do things, but who we are. It also provides our customers with proven circular foundation as they adapt to changing consumer expectations around the provision of more sustainable products that reduce both their costs and environmental footprint. During the year, we continued to make good progress towards our 2020 sustainability goals and have once again delivered year-on-year improvements in sustainable lumber procurement and the adoption of more renewable energy takes us closer to our 2020 carbon emissions goals.
I'm pleased to announce that in fiscal 2019, we committed to responding to the recommendations of the task force on climate-related financial disclosure. In doing so, we seek to enable our shareholders to have a clear understanding of how Brambles will manage the financial risks and opportunities of climate change and provide confidence that as a business, we will continue to prosper over the longer term. We're very proud to be globally recognized as a leader in third-party environmental, social, and governance programs. This recognition includes being a leader in the top 1% of companies analyzed by Sustainalytics, and the second most sustainable international company in the world by Barron's, a leading U.S. financial magazine. In addition, we've reduced by 18% our carbon emissions per pallet since 2015, and in the last year, we have stopped 1.4 million tons of physical waste from going to landfill. Turning to safety.
Our people are our greatest asset, and their safety is our most important responsibility. It's with very great sadness that I advise you of a fatality at our Bellpuig facility in Spain in July 2019. This loss has impacted us greatly. We're doing everything we can to avoid a terrible accident like this happening in the future. A thorough investigation was undertaken. Key learnings have been communicated throughout the group. Brambles is committed to zero harm for our people and those we work with, for our customers and the communities we serve, and for the environment upon which we all depend. During the year, we launched the next phase of our Zero Harm strategy, Safety Differently. This initiative seeks to address the residual risk present in our operations. In conclusion, Brambles is a resilient and inherently sustainable business.
With our circular business model, superior network advantage, and industry expertise, we are in a strong position to continue to create long-term value and sustainable shareholder returns. I'm proud to lead Brambles' high-performance team, as it's their vision, expertise, and commitment that makes Brambles the global leader it is today. Thank you. I'll now hand back to Stephen.
Thank you, Graham. I'll now hand over to Tony Froggatt, Chairman of our Remuneration Committee, to discuss our remuneration policy in some more detail. Thanks, Tony.
Will you take questions?
The questions are coming soon, after remuneration report.
Okay. On your
Yes, on everything.
Thank you.
Yeah.
Good afternoon, ladies and gentlemen. Today, I'll cover four topics: how Brambles' executive remuneration is structured, the outcomes for fiscal 2019, including share vesting, the proposed changes to the remuneration structure we are putting to shareholders during this meeting, and lastly, I'll provide an update on our employee share plan, MyShare. Before outlining the executive remuneration structure, I believe it's important to reiterate the key objectives of our executive remuneration policy. These are to attract and retain the right talent, to reinforce business strategy, and to pay out for performance and results in the creation of shareholder value. In keeping with these objectives, the chairman and I met with proxy advisors and investors recently to seek feedback on Brambles' remuneration policy and the proposed changes to that policy, which I'll be outlining shortly.
The feedback we received was that all our current policy was appropriate and aligned to our business strategy, and that the proposed changes were consistent with those objectives. Turning to how executive pay at Brambles is structured. There are two categories of remuneration: fixed and at risk. As you can see, more than 75% of executive remuneration is at risk, meaning it is only delivered if stretch targets are achieved. The pie chart shows how remuneration would break down in a year where maximum targets were met. Fixed salary and benefits represent 24% of potential remuneration, whilst at-risk short-term incentives, or STIs, which are determined by a combination of financial results and the achievement of personal objectives, represent 44% of potential remuneration. Half of the at-risk STI is given in cash, while the other half converts to shares, which are deferred for two years.
At-risk long-term incentives, or LTIs, represent 32% of potential remuneration and comprise an award of performance shares with payout conditional on meeting stretch results over three years. As you can see from the slide, a large proportion of remuneration is at risk. I'll now run you through the remuneration outcomes for fiscal 2019. In 2019, executive directors received an average base salary increase of 2.5%, with our company-wide average for employees being 3%. Short-term incentives for the senior executives reflected the performance of the company and applicable business units and ranged from between 32% and 66% of the maximum achievable. Neither the sale revenue, ROCE matrix, nor the TSR components of the long-term incentives awarded in 2016 vested as the conditions to which they were subject were not achieved.
Looking forward, the board has set stretch targets for the 2020 STI and the fiscal year 2020 to 2022 LTI sales revenue to ROCE targets, which is set out in the Remuneration report. These have been set to challenge executives while ensuring that the targets do not in any way compromise investment in the future of the business. For the third year in a row, there was no increase in the Chairman's or non-executive directors' fees. There was, however, an increase in the fee supplement payable to members of the Audit and Remuneration Committees. These fees, which have not changed since they were first introduced in 2013, were increased to AUD 25,000 per annum from the 1st of July 2019 to align with the market and do not apply to the chairman.
Each year, the Remuneration Committee carries out a review of Brambles' remuneration policy and structure to determine whether they continue to align with the company's strategic and business objectives and the creation of shareholder value. As a result of this year's review, two changes to the remuneration structure are being proposed. It should be noted that while these changes do not strictly need shareholder approval, your board felt that in the interest of transparency, it is appropriate that shareholders are able to voice their opinion. These will be put to shareholders during item six of the notice later in the meeting. As I mentioned earlier, the Chairman and I discussed these changes when we met with investors and proxy advisors recently, and they were supportive of them. The first change applies to the long-term share awards. We are proposing to implement a one-year holding lock on any vested LTI awards.
These awards will continue to be subject to the performance conditions over a three-year performance period, which I outlined earlier in my address. If LTI share awards vest, they will become available for executives to exercise and receive dividends. Executives will not be able to sell the underlying shares until one year after vesting, other than to pay any tax which is levied due to LTI share awards vesting or being exercised. The practical effect of the introduction of the one-year holding lock is that executives will not receive the full benefit of their LTI share awards for a period of up to four years, which brings the LTI plan in line with general practices in the U.K. and some major Australian companies. The second change relates to short-term incentive share awards.
As I mentioned previously, half of an executive short-term incentives are received by way of deferred STI share awards. These awards vest two years from the date of grant. One of the effects of receiving deferred awards is that executives do not receive dividends during the two-year deferral period, even though they have in effect earned those shares. We are proposing to provide, at the end of the two-year vesting period, the equivalent value of the dividends which would have accrued during that period on the underlying shares, subject of course to the awards vesting. Further details of these changes are in section 2.2 of the Remuneration Report and in the explanatory notes of the notice of meeting. Turning now to our employee share plan, MyShare. MyShare is a global employee share purchase program which encourages employees to purchase shares in their own company.
Under the plan, employees are able to make a maximum annual post-tax contribution of AUD 5,000, which will be increased to AUD 6,000 from FY 2020 to purchase Brambles shares. If these acquired shares are held by the employee for two years, they are matched one to one by Brambles. Through MyShare, our employees now own 3.9 million Brambles shares. In conclusion, Brambles' remuneration strategy continues to support the business strategy and is designed to reward executives for the creation of shareholder value. The changes we are proposing at this meeting support that strategy. Thank you. I'll now hand back to Stephen.
Thank you, Tony, for a very comprehensive report. Ladies and gentlemen, before moving to the formal part of the meeting, I will now answer questions from shareholders. First, I would like to respond to the main topics in the questions raised by shareholders using the form provided with the notice of meeting. I'll get to the actual questions very shortly, Mr. Barker. We received a number of questions on our remuneration policy and remuneration outcomes. I believe Tony has addressed the issues raised by those questions during his report. We also received a number of questions on our financial performance, which Graham and I addressed in our speeches. We received a question about board gender diversity, which I also covered during my address. Finally, we received a question about our carbon emissions and our sustainability goals, which Graham addressed in his speech.
Further details of our sustainability goals, which include goals for both carbon emissions and acquiring energy from renewable sources, and our performance against those goals, is available on our website and in our 2019 sustainability review, copies of which are available in the foyer. As I mentioned earlier, Sue Horlin and Eliza Penny, sitting here in the front row, from our external auditors, PwC, are in the audience and are available if any shareholder wishes to ask them any questions about the conduct of PwC's audit, their audit report, the company's accounting policies, or the auditor's independence. Ladies and gentlemen, I'll shortly take questions from the floor, but I remind you that only shareholders or their proxies or company representatives are entitled to speak at the meeting.
If you'd like to ask a question, please approach the microphone, show your pink voting card or blue non-voting shareholder card, and give the attendant your name. If you're unable to get to a microphone, please raise your hand and an attendant will bring a microphone to you. To maximize the opportunity for all shareholders, I do request that you ask only one question at a time. Questions from the floor.
Mr. Chairman, introduce to you Mr. Peter Barker, proxy holder for the Australian Shareholders' Association.
Welcome, Mr. Barker.
Thank you for the opportunity to speak, Mr. Chairman. Not only am I here representing the Australian Shareholders, which represents retail investors, I'm also here holding a small shareholding in Brambles in my own name.
When I'm speaking today, it'll be on behalf of the ASA, except where I clearly state that it is my personal view.
Thank you.
Okay. In your introductory talk, you mentioned, and again, just briefly ago, talked about the need in the board for gender diversity.
I think that that should be a case of general diversity across all aspects, gender being an important one. We need to have a lot of skills in the board. I think that the board is in such a situation now, and I understand that there's changes to be made which will make it even more diverse by perhaps reducing the amount of financial experience on the Board for more technical, and that is indeed happening with the appointment of Mr. Jim Miller.
The other aspect is. If you give me a moment, Mr. Chairman, to talk about the buyback of shares. I know from meetings of the ASA, there's a lot of retail investors don't quite understand the impact on shareholders of reduction in shares. Because those shares are bought back by the company, and in effect, written off the books, that means there are less shares.
Which means each individual share, which is currently being held by a shareholder, is worth that much more, both in terms of the percentage of profits that those shares will attract and also the value of assets in the company. The other matter is the dividend policy. I understand the reasons for the policy being such that you'll tie those more to a percentage of the profits rather than a fixed amount. I see that as a very eminent policy, and that it's something that might though, for some retail investors who rely very heavily on the income, mean that they're going to have flexible incomes. So t here is a downside to it.
One final thing, Mr. Chairman. I'd like to commend the Board on its capital management in terms of the proceeds from IFCO, of applying them in a way which is a sensible way. It would be so easy, as many other companies have done, to embark on grandiose acquisitions, which have turned out in a lot of cases to have burnt a lot of shareholder equity. So again, I commend you and your fellow Board members for the approach that you've taken.
Well, Mr. Barker, thank you very much. You raised a number of very good points. Mainly observations, actually, rather than questions, but I'd certainly like to respond to them in order that you raised them, not necessarily in order of importance, but certainly the way you've raised them. I agree 100% with you about diversity on the Board. Gender diversity, female representation is only one aspect. I think we have achieved that diversity over a period of time in an extremely well-thought-out way. We're an international company, as said before, and as I think shareholders know, we're in 60 countries around the world. We're in basically all the continents, and I think we need to reflect that on our Board. Our two major markets are North America, from a profit point of view, North America and Europe, which is continental Europe and the U.K.
We have two directors, including David Gosnell, who's, as you know, is retiring, but we have two representatives from the U.K. We have three representatives from North America. We have four non-executive directors from Australia. Of course, our two executive directors, Graham and Nessa, reside in the U.K. From a geographic diversity point of view, I think we're very well represented. From the diversity in terms of skill sets on the board, I think we're also well represented. I've noted your comment about finance guys. I'm a finance guy, so I don't think it's such a good idea to have less finance people, generally, but I think it is actually on our board. We used to have, when Carolyn Kay was here, four finance people on the Board. We now have three.
I think that's a good balance, given the needs of the audit committee and financial matters which the Board considers on a regular basis. We have tremendous expertise in relation to the businesses that we serve. Our customers in the FMCG business, retail business, and the like, and you've no doubt read the bios of our various directors. I think we have excellent diversity in terms of the skill sets on the board. Gender diversity, I'm very much in favor of that as only one of the aspects, but it is very important to us. We now have three female directors out of 11. That, if you do the math, is 27%, which I tend to round things up and say it's 30%, where our objective was. When Carolyn was on the board, we had 40%.
We now have two positions that we will be recruiting for over the next year. Whilst we will always seek, as we did in the case of Jim Miller, to get the absolute best candidate we can. Certainly, the opportunities for increased gender participation on the board are there for us to undertake and to achieve. Going back to 40% isn't necessarily a goal either. I think the best candidates, but if we can find more excellent female directors and we go beyond the 40% number, I personally would be delighted, and I'm sure the rest of the board would be as well. I think I agree with you, and I think we also think that we're in a very good place. You described the share buyback and the way shareholders benefit from it very well.
I don't think there's anything I can really add to that. Thank you for that. The dividend policy is something we've been considering for a long time because we do understand that retail shareholders, in particular, are looking for no surprises. They like not to have surprises, have continuity in income stream. We have had in the past years a policy whereby we either maintain the dividend level or increase it, depending on the financial performance of the group and the financial requirements of the group. The difficulty is, and the point I think we all have to realize is, that we as shareholders here today are not investing in just purely Australian company. We do have the CEO of our Australian and Asia Pacific business here, and it is a very important business for us.
It is the springboard for Brambles becoming what it is today, but it represents about 7% or 8% of our revenue and about the same of our profit. The majority of our profits come from other currencies, particularly U.S. dollar, euro, and sterling. The U.S. is our major market. In profit terms, the U.S. is our major currency. The U.S. is what we actually report in. Everything that Graham and I talked about today was U.S. dollars, $1.65 billion, U.S. $300 million, et cetera. We are looking at a U.S. dollar company, and I think this is a benefit, not a negative for shareholders to appreciate that we have diversity, not just on the Board, but we have diversity in the currencies and in the geographies in which we operate.
It just is a logical thing over time, and I can't tell you whether it's going to be good or bad in Australian dollar terms. If we continue to support and to perform satisfactorily, and we report in U.S. dollars, our dividends therefore with any profit growth, should be growing in U.S. dollars. Capital management acquisitions, yes. I think that Graham just made the point, which we've as a company made before, that we're intending to achieve sufficient cash flow out of our business to cover CapEx, which funds future growth, as well as to cover our dividends. I've made the point once or twice in my address that we have a very good investment-grade credit rating. We're seeking to maintain that profile, and we're very disciplined in the allocation of capital. We want to be as disciplined as we can be.
I think that's a major plus. The proceeds which we receive from the IFCO sale are, if you like, surplus to our operating requirements and should be used appropriately for the benefit of shareholders. That has been properly articulated and you in fact repeated that, and I appreciate the fact that you did. Thank you for your observations. I'm sure you'll have some questions when we get around to remuneration, but I do appreciate it. Thank you. Are there any other questions of a general nature? When we get to the actual items of business, you'll be able to ask questions on those specific items. Yes.
Mr. Chairman, I present to you Mr. Edward Warden, a shareholder.
Good afternoon.
Thank you, Mr. Chairman. I was listening and I heard the mention of Brexit. I hear that's a bloody mess, and I hear what's going on between China and the USA, and that's a bloody mess. Can perhaps you and Mr. Chipchase give us some sort of indication of what's going on from a Brambles point of view, so we keep it to Brambles, and what we're doing to try and overcome any problems that we see may arise from both of those instances. Thank you very much. I'll come back for another question later.
Thank you. Well, I won't sort of add to your political view of where Brexit and the China-U.S. trade talks are going. Graham did mention Brexit in his CEO address. We as a board have been very interested and concerned about where Brexit is going as it affects us as a company. Clearly, we have a major operation, as I said, in Europe and the U.K. It's very hard to anticipate exactly what the financial consequences will be till we know what the results of a deal or no deal will be. However, and Graham may wish to comment, I actually invite him to comment on that our management team have been making progress on plan Bs and plan Cs as to what we're going to do.
We have committed to various capital expenditures in order to put ourselves in a position which would, and I won't bore you with some of the details of how it might affect the supply chain activities, but it will affect those and we're taking precautionary steps in order to cope with that. If there is a deal, some of those steps may prove to be unnecessary. Nevertheless, they're very important. Graham, would you like to?
Sure
add a bit more detail to that?
A couple of things I guess. Number one, when we look at Brexit, it's important to recognize that only 10% of the flows in Europe are going from the U.K. to the rest of Europe. It's an irritation getting a lot of airtime, as you know. In terms of the overall European business, it's not a big issue. What we've done so far, number one, is talk to a lot of our customers because clearly they're facing the same sort of issues. From a practical term, we've had to put some more capital expenditure into the business because what's happening is each time a deadline comes up, which is becoming increasingly regular as you know, then people are stocking up because people are afraid of shortages of products.
We have to put more capital in to support the inventory build. Of course it unwinds. It's a temporary thing. The more permanent thing we've had to think ahead on is, for some reason, when the U.K. comes out of Brexit, out of the EU, the bugs we have in the U.K. all of a sudden become very bad, as opposed to being okay when we're in the EU. A pallet that goes from the U.K. into Europe has to be heat treated when we're out of the EU, whereas when we stayed in the EU, it didn't matter. What we've had to do is invest under AUD 10 million of capital just to have heat treatment in some of our U.K. plants. That's something we thought ahead on and have started effecting.
The bigger issues which we can't really predict are, what's going to happen around tariffs? Longer term, I think we can manage all of those. For example, if a lot of our pallets were coming into the U.K. today from outside because they're being manufactured and purchased from outside the U.K., and they had tariffs put on them, if that became uneconomic, we'd have to develop timber sources in the U.K. and make the pallets in the U.K. It's manageable, but it's not something we think we have to do just yet. The broader impacts could be a no-deal Brexit could affect the GDP in the U.K., which again could affect our business. Now, this is a similar point to the China-U.S. trade war potential. If that were to happen, I think some good points and bad points for Brambles.
We don't ship on our pallets much product going between continents. To the extent that the U.S. wants to have a fight with China, it wouldn't affect us so much just purely in terms of cross-continental trade. However, something like that and something like Brexit could affect the GDPs and the economic growth in all those countries. Australia would clearly be affected if the Chinese economy was affected. That obviously could affect our business. The good news, though, for Brambles is if you think about what goes on our pallets, it tends to be food, drink, and consumables. By and large, people will eat and drink in good times and bad. They may trade up or down in terms of brands, but they'll still be eating and drinking.
Therefore, the volume on our pallets tends to be, it goes down a bit, but it doesn't go down as much as if we were shipping lots of luxury goods on the pallets. We are protected a little bit from global downturns. That's kind of our view. Clearly, if I knew what the result of Brexit would be, I'd be not here. I'd be in some casino in Las Vegas making a lot more money. Impossible to tell, but we planned, I think, as best we can.
Thank you, Graham. There's a question here. Thank you.
Mr. Chairman, I introduce to you Yvonne Chan, shareholder.
Welcome.
Thank you. Good afternoon, Mr. Chairman.
Good afternoon.
Good afternoon, board. Yes, I have one and a half question, if I may, please.
One and a half questions?
Yes.
Okay. Could you start with the half first and then.
Yes, I would. When you mentioned the investment grade, that's.
Yes
Well, I don't know what that is. Is that the triple B?
We're Triple B Plus.
Okay. Thank you.
Okay.
My next question is, and I've been a shareholder for quite a few years, and when Brambles started off from the CHEP pallets and then diverse to other businesses, and now back to CHEP. Yes, it's a good idea that we stick to our meetings. Next thing is, I wonder, when we streamline the business like so, do we also streamline the Board? Do we need the board this size? That's my question.
Well, thank you very much. Just going back in the history a little bit. Brambles, well before my time, and well before the time of most people here, was a conglomerate with many businesses, and CHEP was one of them. CHEP was bought in the 19 Brambles goes back to 1875, but anyhow, that's not relevant today. In the 1950s, the company bought the business from the Commonwealth Government. CHEP stands for the Commonwealth Handling Equipment Pool. The Commonwealth Government privatized it, sold it to us, and it was one of many businesses in the company, and was by no means the major business. Over the years, when Brambles has developed CHEP into what it is today and taken it internationally into the Northern Hemisphere and so on, it has become the dominant business over time.
Indeed, when I joined the board, we still had Cleanaway and we had Recall and we had Brambles Industrial Services, all of which were sold and the proceeds did go back to shareholder. Most of the proceeds went back to shareholders back in 2005 and 2006 or 2007. Recall, IFCO, shall I say, was bought some six or seven years ago and was an important part of the business. It was only about 15% of our revenue, that's relevant and that's material, but CHEP is 85%. Let me say that in streamlining the business, focusing on the advantages of being able to really concentrate on what is important, CHEP has higher margins than IFCO. CHEP has a higher return on capital than IFCO.
CHEP probably, in the long term, has better growth potential and better growth opportunities, even though I have to say, and that's why we got a good price for IFCO. It, in its own right, may be inferior to CHEP, but certainly is a very viable and attractive business, and that's why we got a good price for it. We are administering as a Board, and Graham and his team, Nessa and the team, executive team, are administering a very big business in over 60 countries-I think we have about 14,000 employees. We have all these 750 service centers around the world. It's a major business, and I think that the Board is an appropriate size for doing that. As I said before to Mr. Barker's observation, that we have diversity in geographic sense as well.
We want to have representatives who live and breathe and work in the Northern Hemisphere, in Europe, in the U.S., Canada, and so on. I think the Board composition is fine. I think the skill sets we have are fine, and I think the size is pretty good as well.
Thank you.
Are there any other questions? Yes. Thank you.
Mr. Chairman, I introduce to you Mr. Eric Chen, shareholder.
Mr. Chen, welcome.
Hello. Good afternoon. May I ask, since you raised the history of Brambles. I am one of the long-term shareholder. I remember Brambles had a deal listed with U.K.
Yes.
That was a disaster time where we lost millions and millions of pallets. Are you aware of that?
I certainly am.
Okay.
Fortunately, I wasn't on the Board when those pallets were lost. Yes. I think the history I'm sorry? We need to find them. We need to find them.
That's true. Did you manage to find them? First, one question.
That's your question.
No, I still follow up, but a good question raised.
Right.
Did you manage to find them?
Well, let me address the question properly. We have a business, which is the share and reuse model. Our pallets go out into the economies and the jurisdictions where we're operating, and we do have very active programs to get our pallets back. There are a whole range of activities in which we do that. We certainly do lose pallets in the ordinary course of business. In some jurisdictions, like in Australia, we get 100% compensation for people if they lose their pallets. In some of the other markets, we get partial compensation. Where we don't get partial compensation, obviously therefore, we have a loss in our profit and loss account. We make a provision every year. It's called IPAP, which is a provision for equipment, which is pallets and other containers that we feel may not be recovered over time. It's reflected in our profit results.
We need to have appropriate pricing mechanisms and incentives for our customers to return the pallets to us or to tell us where we can go and collect them. This is a very active program, quite a complex program, and it's different in all the different markets as to how we go about collecting our pallets.
Yeah. That comes to the point where I believe a few years ago, there was a company that built a pallet in this other company, and they claim that the pallet is theirs. I think it's something like finders keepers or something like that. They keep the pallet, and there was a huge number of pallets ended up with them, and there was a court case. I didn't follow the details and how was it. Also, by the way, can you just outline what's the acceptable number of pallets that are lost today compared to those years gone by, which is obviously not acceptable?
Firstly, it's important that wherever we operate, we make sure that we determine that we have appropriate title and ownership of our pallets. There are often, I think, fair to say, litigation, which people undertake in order to try and do exactly what you say, finders keepers, and then want us to pay them to get our pallets back. In all the major markets we're in, we have established the ownership credentials that we have. Overall, I can assure you and the shareholders here that the ownership issue is not a major problem, but it's something we're well aware of. Continue to remain vigilant and look after our interests. Certainly, when we go into a new market, into a new country, we take important measures and steps to assert our right of ownership. That is important.
I think the other issue is that in many markets, for example, the U.S., there are people who go around called recyclers who go and find our pallets and return them to us for a fee. There's often an argument about what that fee should be. Nevertheless, that's something which we've dealt with and managed for over a long, long period of time.
Can you tell us what are the number of pallets that are lost today?
9%.
About, Graham says nine. I was going to say 8%. About 9% of the pallets are lost a day, and half of those, by and large, we get compensations for, and the other half we have to provide for out of our profits.
You consider that as a acceptable figure?
As a which figure?
Acceptable.
Acceptable figure. We'd always like it to be less, and we take a lot of actions in order to reduce it. That's the cost of doing business.
Yeah. Okay. Thanks.
Thank you. Are there any other questions from the floor at this time?
Mr. Chairman, a further question from Mr. Peter Barker, shareholder and proxy holder.
Right. Thanks, Mr. Barker.
Could I briefly refer to the class action against Brambles?
Yes.
We've spoken about this previously, but could you tell us, apart from the court-ordered combination of the two separate suits into one, has there been any further developments? I know from our previous discussions that you said that Brambles was very confident in the result of that being favorable to Brambles. In the event that it was not favorable, has there been provision made for that?
Mr. Barker, thank you. There's nothing further I can report at this stage. As far as litigation goes, I think it's fair to say we're in the discovery phase or towards the end of the discovery phase. We have an insurance policy. The insurers have acknowledged the appropriateness of it for this matter, there's really nothing more I can say at this stage. I think there's another question over here.
Mr. Chairman, a further question from Mr. Edward Warden.
We'll get to number two over here in a second.
Oh, sorry.
No, no. No, no.
Mr. Chairman, I was around in those days, and I used to work for one of your competitors, and basically, one of Nessa's predecessors informed me that in Australia we have a higher system, and overseas it's a pay a service fee and it's our responsibility to collect the pallet. That was a big problem where we had a chairman, a predecessor chairman to yourself, who didn't quite understand all those things. I'll leave that as at that point. If somebody wants to ask me more questions, I actually worked against you and in most of the areas, actually in the Cleanaway area, not so much in the Recall and in the pallets, but we weren't that big in those areas. Anyway, my area of questioning generally is safety.
I note that we've got a new sort of measure for safety this year, but our safety record has actually failed to some degree. We've gone backwards. We've gone from five to 5.9, and I take the point that we are measuring somewhat differently, but what went wrong? We have a death, and I hope that you might ask Mr. Froggatt, in terms of our remunerations, I know that safety is a very much a thing on one of the personal targets of people. I hope that we have, and Mr. Froggatt might like to answer this through you, Mr. Chairman, have our employees that were responsible for these failures been, for want of a better word, penalized in terms of their short-term and long-term incentives being cut back? Thank you, Mr. Chairman.
Well, thank you. I just want to reiterate, and I'm sure I'll get Graham to say some more on this subject, because safety is extremely important to us. We're devastated by the fatality. It's a shocking event. We're doing a lot in Spain to support the family, and that's ongoing. Of course, there is our own investigation, also a police investigation underway at this stage. Safety is extremely important. The BIFR, which is the Brambles Injury Frequency Rate, which we use, which includes near misses as well as injuries, is important. It's already at a low level, the bar is very high, if you like, to achieve that. I don't think we're ever satisfied. What we've actually said, what will satisfy us is zero harm. That is the objective.
We will never get to zero harm. That is the aspiration and that is the intention, and that is exceptionally important for us. Before I ask Graham just to do that, and I will answer for Mr. Froggatt on that, is that the safety metric is in the short-term plan, STI plan and incentive plan. Even though it happened after the financial year, happened in July, the senior executives and the executives involved were penalized, including Graham Chipchase himself. That was him. Graham, would you like to make some more comments on safety measures?
Yeah. If you look at the incident frequency rate, it has come down a lot over the last few years, and I think there was an element of us thinking that we were good. I don't think we can say that. I mean, clearly we can't because of what happened in July. I think for me, coming from a different industry before here, the big step, because I think we've done a lot in terms of giving people protective clothing and guarding some of the equipment, but it's now about changing behaviors. Again, you obviously know a lot about safety in terms of the Dow and DuPont type of process to improve behavior so that people are not just thinking about safety when they come and start operating a machine.
They are thinking about safety when they get out of bed in the mornings, when they start doing things at home, when they get into their car, when they come to work. They're not just thinking about safety as it affects them as individuals. They're thinking about safety as it affects the people around them, both at home and at work. We've got to change that culture to get the step change in performance. That is where we've now launched a Safety Differently program. I think it's gonna take quite a lot to make that really part of the culture of the company. It takes a while. I think what has happened in the last few months has, I think, given everybody a wake-up call because that plant in Spain had an excellent safety record.
The employee who unfortunately was killed was interviewed five or six years ago saying what a great safe plant it was, and we showed that to the rest of the company, and that is a real punch in the gut. I think it's brought it home to people that however safe you think you are, there is still a lot of risk out there, and we've got to try and not just stop accidents, you've got to prevent the risk happening in the first place. That's what we're trying to work on.
Great. Thank you for that. Microphone two.
Mr. Chairman, I am Robert Abel, a retail shareholder.
Welcome.
Bit small. Thank you very much, Mr. Chairman, for a very interesting and informative meeting. I have one observation and a question. I think having the meeting at two o'clock in the afternoon is a great idea. It gives perhaps people from outside Sydney a chance to get up here. I came from Canberra on the train today. I shall go back to Canberra on the train today. I've enjoyed every minute of being in Sydney and having this meeting at 2:00 P.M. I'm a long-term shareholder in Brambles. It's the first time I've been able to come up to Sydney and come to a meeting like this. Two o'clock in the afternoon is a very good time. Many companies have their meetings at 10:00 o'clock, people like us can't get up here unless we take a six o'clock plane from Canberra.
My question is, we've heard a lot about the pallet industry today. Do you have any competitors? If you do, how do you rate against them, and what percentage are you in terms of the pallet industry? Are you 50%, 60%, 20%? Could you tell us something about your competitors, please?
Thank you.
Question.
First of all, thank you for your observation, and welcome. We're delighted that you could make it here this afternoon. Yes, of course, we have competitors. We have to have competitors, otherwise we're a monopoly. Otherwise, we wouldn't be held to account. Otherwise, we wouldn't be as good as we are today. I think our competitors are all good. In almost every market we're in, none of them are anywhere near as big as us nor as well-represented, don't have the network advantage that we have. Graham, if you heard or remember parts of Graham's speech, a part of Graham's speech, he talked about the fact that our competitors have been good, but they've also been rational. That's something which makes it, I think, better for all the users of our supply chains, that there are rational competitors around.
In Australia, I think Phillip Austin here runs our Australian business. I think we're probably at over 80% of the market, close to 80% of the market. That's pretty big. We have one major competitor here called LOSCAM. I don't know, is that LOSCAM who you work for? LOSCAM have been our competitors under different ownership guises for forever, as far as I can remember. In the U.S., we have a number of competitors. None as big as us, none of them have the same network advantage and spread of service centers around the country. The biggest of our competitors is PECO. It's a well-run company, been there for years now. Has got to in the last three or four years is under different ownership, who are very effective and actually have quite deep pockets and got a strong balance sheet. They are a formidable competitor.
We are by far the biggest operator there. In Europe, we have a number of competitors, but we are the biggest. I'm not sure U.K., what part of the market would we have, Graham?
75.
It's about 70% of the U.K. market. If that gives you a flavor for our very large position in all these markets. Actually fascinating to me and hopefully for shareholders generally, that an Australian company going international and then becoming truly global is by far the major player in almost every market that we operate in. That's really quite an achievement for a company like us coming out of Australia. I think the only area where we are not the major player is in Southeast Asia and in Asia more generally. We've been in China now for 12, 14 years. LOSCAM is there, which is now owned under this ownership and by one of the state-owned enterprises there.
Neither of us are very big there because the market really hasn't taken off for sophisticated supply chain activities such as ours, which require pallets, and the sort of services we provide to the supply chain. We are in some of the Southeast Asian countries where we are not the biggest player, but that's a relatively small market. Are there any other questions before I can move on? Thank you very much, and I appreciate the questions, the interest, both questions and observations. We'll now turn to the items of business. Before doing that, I'll just go through the voting. All voting items on the agenda will be proposed as ordinary resolutions, and I'll now explain the voting procedure. If you're entitled to vote, you'll have been given a pink voting card.
As stated in the notice of meeting and on the shareholder voting form, I'll be casting any discretionary proxy votes that I have been given in favor of each of the items of business. The proxy and direct vote position for each resolution will be shown on the screen. At the conclusion of the meeting, please place your completed voting cards in one of the ballot boxes that are located back there by the exit doors. We'll announce the poll results to the ASX later today and also post them on our website. Stacy Spence of Boardroom has been appointed Returning Officer. Now, the first item of business is to consider and receive the financial report, Directors' Report, and auditors' report for Brambles and the group for the year ended 30th of June 2019. Are there any questions on this item? If not, I'll move to item two.
Item two asks shareholders to adopt the remuneration report for Brambles for the year ended 30th of June 2019, which is contained in the annual report. You've heard from Tony Froggatt on our remuneration policy, and this included the principal issues raised by shareholders on this topic in advance of the AGM. Are there any other questions on the remuneration report?
Mr. Chairman, a question from Peter Barker. Thank you.
Welcome back, Mr. Barker.
Yes, Mr. Chairman. The Australian shareholders will be voting any open proxies against this resolution on three aspects. First of all, in relation to the lengths of time taken before shares vest, our policy is that that be a minimum of four years for long-term incentives. The three years and lower is seen too short a time to compare the performance of the company over that time and also to encourage short-term vision.
Achievement of results just in the short term rather than looking at the longer term. That's one thing. The fact that the short-term and long-term incentives are held for a further 12 months, the benefit still flows through to the recipient, whether it be by dividends paid at the time or deferred. Nevertheless, it flows through. The only risk is the share performance in that time. The second point is in relation to the CEO, who, it's explained in the annual report, holds a directorship in another company, an English company, and in fact is a member of the Audit Committee. Our view is that.
No, he's actually Chair of the Remuneration Committee.
Sorry. Yes, Remuneration Committee.
Yeah.
Thank you for that. I had got that wrong, obviously. Our view is that the role of a CEO is a full-time one, that his attention or her attention should be fully 100% focused on the performance of the company in which they're in charge of, and that any external significant activity, such as a director and in fact a chairman of a subcommittee, is taking away from the ability to perform as CEO. Okay, that's that point. The other one was that the incentives, at least the part based on total shareholder return, is a measure against the comparator group, both within the ASX and also a world index. To start receiving short-term incentives, the performance has to be such that it only be equal to what the median level is.
In other words, if Brambles does better than half the companies, then short-term incentives are being awarded from that point, up to a maximum of 75%. It could be a case that the total shareholder return is negative, and there will still be short-term incentives awarded. Those are the three points, Mr. Chairman.
Well, thank you, Mr. Barker. I appreciate the comments, and they're well put, and they're not a surprise because they're consistent with the ASA over a number of years, and we're well aware of them. First of all, before answering specifically, we think that our remuneration structure, and Tony might want to embellish my answer here and add to it, but we believe our remuneration structure is fit for purpose. Actually, more than that, it's industry leading, really, in Australia. We've taken a whole lot of, over the years, initiatives to make sure that the remuneration policy serves the purpose of shareholders as well as being fair to our executives. We undertake a major review annually of the structures of our remuneration. We do this with our external consultant. If we believe that we're out of line with general industry practice here, we would change.
Indeed, the two changes which we'll be voting on later in this meeting came out of our annual review this year. They weren't actually things which we thought or which we're told by our investors were essential, but we felt that they were initiatives that would further enhance the structure of our remuneration and make it absolute best practice. With the first point about long-term incentives. Where the ASA position is for four years, vesting in ours is for three years. We've now added a year for it as a holding period, but not as a vesting period, which I know you appreciate, and you made that point. More than 80% of the companies in Australia use a three-year or follow a three-year vesting period. We're not out of line with general market practice here. We think it's appropriate when we do our long-term strategic planning.
We look into the future beyond three years, but the actual financial projections that we make, which we think are relevant at a Board level and relevant at a management level, are three years. A one-year budget plus two years of financial projections beyond that. We think that's the right period of time. We continue to consider that's the right period of time. I respect the ASA's position. As I said before, you've been very consistent in that regard. We've been consistent in saying that we just unfortunately have to agree to disagree on that point. As regards Graham's involvement with AstraZeneca, some things which people think are a negative, others think are an advantage. I personally think it's a great advantage having Graham being the senior independent director as well as the chair of the Rem committee in AstraZeneca.
It's a major global company domiciled in the U.K., and the insights which he gets from this public company and from seeing what goes on there are very important. I think it's relevant to make a more general observation that when you have a senior manager, a CEO, a general manager of a business unit, even with a very large P&L, large profit and loss, it's a very different situation than actually running a public company. A public company is the next stage up. If we can actually have our senior executive with that exposure, and just to be clear, Graham was a director of AstraZeneca before he joined us, and we had a clear understanding that we would like him to continue, and he wanted to continue in AstraZeneca, subject to it not impacting on his ability to perform effectively as a CEO of Brambles.
That continues to be the case, but it's a major advantage for us that he has the exposure of another public company and then can bring that wisdom and that experience to the management of Brambles as a public company, as distinct from operating the individual business units of the company. I understand the position. There are some people who say, no, you can only be 100% in the company that you're employed by. I think, and I say this respectfully to the ASA, to have a broader vision as to what it is to manage a global company in 60 countries with 14,000 people and going beyond that in being able to deal with investors, deal with authorities, deal with all the different stakeholders, and have the corporate wisdom to be able to run a public company.
Which I think I believe personally and my fellow directors believe we get the benefit of Graham's exposure to AstraZeneca. As regards, I think the final point of total shareholder return, the TSR, where as you correctly point out, it's 50% of the LTIs, 25% is the local comparator group, and the other 25% is the international group. There's always a debate about whether it should be relative TSR or absolute TSR. The absolute TSR is I think is where you're heading, that if it's a bad year and it's negative, why would executives get any benefits out of that? Do you, Graham?
No.
I just want to make the point that it is a matter for discussion. Some people believe relative is the appropriate one, which we do. Other people, such as the ASA, believe that absolute.
Could I just-
Yes.
Could I just add something? Sorry. Thank you for your comments. As always, we listen very intently to the ASA. I must say, I was personally disappointed with your view on the three-year plus the holding lock because we had you in mind, particularly in terms of your concerns. As Stephen rightly pointed out, the majority of ASX 100 companies still work on a three-year program. We mustn't forget that the three-year is a rolling situation. It's not something that is static. You're constantly looking at three-year terms that go along. Always very difficult to look beyond three years in terms of where we're going, in terms of responsibility and accountability.
We put in the holding lock based on what we saw in the U.K. and starting to come in here, because one of the ASA's concerns, which we understand, my understanding was you wanted to see management having skin in the game as much as investors. We understand that, and that's why we put it in. I think it's important to note that whilst the performance period is the three years, we have that as a holding lock in order, as much as anything else, to make sure that management do ride with the way the share price is going. Also, there is a clawback potential. I think to me, it answered all your questions. I was a little bemused, I have to say, when I heard that you were opposed to it.
I hope going forward next year you may have a different view on that. I think the other point I wanted to make also, just to add to what Stephen said on TSR, which was what you were talking about, the relative shareholder return. I think it's worth noting that you were, I think, talking about short-term incentives, although short-term incentives move towards helping with shareholder return, TSR is a three-year. This is the long term. It might be a little bit confusing there, but certainly it has nothing really specifically to do with the short-term incentive. It is a long-term incentive program. I hope that helps.
Thank you, Tony.
Mr. Chairman, I don't want to debate the matter now. It's not the appropriate forum. If you'll just let me make one comment in response.
Mm-hmm. Of course
To the 80% figure, I believe you said that Australian companies use.
Certainly the majority.
We're using three years. That is a falling number. That it was much higher than that, and that I believe it's partly due to the ASA, its efforts, and also, I believe, the recognition of those other companies, that four years is a more appropriate period.
Thank you. Thanks, Mr. Barker. Are there any other questions on the remuneration report? No. Thank you. The resolution and the direct vote and proxy position are now on the screen. I would ask you to please now mark your voting card for item two. Have you had enough time to vote? Thank you. Item three is the election of Jim Miller as a director. Jim was appointed as a director on the 15th of March 2019, and as this is the first shareholders' meeting since his appointment, he now stands for election. Jim's biographical details are set out in both the notice of meeting and the annual report, and his election is unanimously supported by his fellow directors. I'd now invite Jim to speak briefly on his election. Thanks, Jim.
Thank you, Stephen, and good afternoon, everyone. I'm delighted and honored to stand to the election as director of Brambles. In addition to Brambles, I'm on the board of directors of Wayfair, a U.S.-based e-commerce company, where I'm also serving as the interim Chief Technology Officer. Additionally, I serve on the board of directors of The RealReal, a U.S.-based e-commerce company, and serve on the board of directors of two private equity-owned companies, ITRenew and Blume Global. Additionally, I'm a member of the MIT Corporation, the board of trustees of the Massachusetts Institute of Technology. I also advise a number of nonprofits, universities, technology companies, and senior executives. I was the Chief Technology Officer at a technology startup called Arrivo Corporation. Previously, I ran the worldwide operations for Google, where I had responsibility for procuring, building, deploying, and operating Google's worldwide cloud and technology infrastructure.
Additionally, I was the managing director of Google Energy LLC and had responsibility for sustainability and corporate social responsibility at Google, in addition to a number of other responsibilities. Additionally, I held executive roles at Cisco, Amazon.com, Intel, and International Business Machines in operations, supply chain, and general management. If elected, I look forward to putting my global experience gained in the Asia-Pacific, Europe, and the United States market in the areas of general management, strategy, supply chain management and operations, information technology, digital transformation, and analytics.
Jim, thanks very much. Are there any questions? Mr. Barker.
Not so much a question, Mr. Chairman, but just a brief comment that, as I alluded to earlier in this meeting, that the skills that Mr. Miller brings to the board, those technical skills and experience, we welcome him on the Board and think it will improve and strengthen the Board's capabilities.
Thank you very much indeed. I think there's another question here at number one.
Mr. Chairman, Mr. Edward Dalton.
Thank you, Mr. Chairman. I note Mr. Miller has very clearly admitted that he's working full-time as an information officer on a firm he's now a director of. Can you explain how you are getting around that problem? I note in the notes it says it's only going to be temporary and it might be three or four months, but I don't want somebody full-time somewhere else if he's going to be one of my part-time directors. Can you explain how you're overcoming that issue? I actually think Mr. Miller's CV is very good, and he's exactly the sort of person I think we want. I have a bit of a problem in understanding how we get around that situation.
Well, the answer will be very brief. First of all, his CV is phenomenal for a company like us, and we're very, very privileged and pleased to be able to have him. He was a non-executive director of Wayfair and is a very temporary position of a few months, and we don't have to overcome anything because it's a temporary position for a few months. It's actually a compliment to him that a very successful online company turned to him to fill a casual vacancy. Are there any other questions? If not, I'll revert to the voting part of this. The resolution and direct vote and proxy position are now on the screen. Please now mark your voting card for item three. Thank you very much. I think probably we can move on now. Item four is the re-election of George El- Zoghbi, he's on my left here.
His re-election as a director. His biographical details are set out in both the notice of meeting and the annual report. George has been subject to an assessment process by the board, and his re-election is unanimously supported by his fellow directors. I'll now invite George to speak briefly on his re-election.
Thank you, Stephen, and good afternoon, everyone. I'm delighted and honored today to stand for re-election as a director of Brambles. Beside Brambles, I serve on the Board of The Kraft Heinz Company. It's a global food and beverages organization based in Chicago and listed on Nasdaq in New York. I also serve within the company as an advisor to the CEO and the Board. I serve also on the advisory board of Altimetrik. It's data analytics and digital transformation organization based also in the U.S., where I'm located. Prior to Kraft Heinz, I was the Chief Operating Officer of Kraft Foods, Kraft Foods Group based in the U.S. I also worked for the company in Australia, New Zealand, where I was the Managing Director of Kraft Foods before moving to the U.S.
Also, in Australia and New Zealand, I worked with the Fonterra Group in global and general management capacity of the Australian retail business. If re-elected, I look forward to continuing to put my experience, which is based on global markets, including Asia Pacific, the United States, Australia, New Zealand, as well as areas like general management, strategy, operations, sales, marketing, to further the interest of shareholders of Brambles. Thank you very much.
George, thank you very much. Are there any questions? Mr. Barker?
Again, a short comment to indicate our support for Mr. Zoghbi's re-election. He obviously has the experience and skills involved with the consumer area, one of the significant parts of Brambles' business, and so we think he brings considerable value to the Board.
Thank you very much. Are there any other observations or questions? Okay. If not, the resolution and the direct vote and proxy position are now on the screen. I'd ask you now to mark your voting card for item number four. Right. Now, moving to item five. Item five of business is the re-election of Tony Froggatt as a Director. His biographical details are set out in both the notice of meeting and the annual report. Tony has been the subject of an assessment process by the Board, and his re-election is also unanimously supported by his fellow directors. I now invite Tony to speak briefly on his election or re-election.
Thank you, Stephen, and good afternoon again, ladies and gentlemen. I'm privileged to have been a member of the Board over a number of years, and over that time, I've experienced the challenges and the successes of being part of a truly impressive organization. I believe that my background and experience in working for leading edge global businesses, culminating as CEO of a multinational FTSE 100 company, has enabled me to make some small contribution to Brambles over the years of my involvement. I take real pleasure and enjoyment in working on the board of a company that is a global leader in its field, as well as being inherently Australian in its heritage.
Working with a Board of this caliber, with its multiplicity of skills, is a continual inspiration. If I'm fortunate enough to be re-elected to the Board, I will do all I can to work hard on your behalf and provide all assistance to the new Chair before I depart the Board during the current term. Thanks very much.
Tony, thank you very much. Are there any questions or observations? Mr. Barker?
Yes, briefly again. Yes, we support the re-election of Mr. Froggatt, again, for the skills, the corporate knowledge in particular that you referred to.
in positioning a new chairman in the board. Our consideration is that a director who has served four terms or equivalent to 12 years on a board is no longer independent, that they are too closely aligned with the operations of the company. Yes, we will support Mr. Froggatt's re-election as a Director, but as a dependent or non-independent director.
Right. Well, first of all, thank you for the observation about Mr. Froggatt's capabilities, which I fully endorse. Very pleased that you're supporting his re-election. Let me just say that I don't know anybody who's more independent than Tony. You can have a formula, you can go off 10 years, 20 years, 15 years, or whatever, Tony is independent in character, independent in mind.
We, as a Board, anybody, me included actually, who have been on the Board for more than 10 years, there's a process that the Board goes through to confirm and reconfirm and reaffirm that director's independence, and we did that with Tony, and that was a proper review and examination. I'll just make the other point that during Tony's time on the Board, there have been a number of CEOs and CFOs, and the current executive leadership team under Graham is very, very different to the one that was under Tom Gorman previously, very different to the almost completely different.
To have a formulaic position without looking at the reality of it, the individual, and the fact that it's impossible for Tony to be too close to the management because the management that he deals with is completely different from what it was only four or five years ago. I understand that a number of institutions, including the ASA, take a position on independence. I also appreciate the fact that you managed to go beyond just that mathematical calculation and see the benefits and the quality of someone like Tony Froggatt for the Brambles board. I appreciate that. Thank you. Are there any other questions or observations? Yes, Mrs. Chan. You might need to get the microphone a little lower.
Can we practice? Yes. My question is not related, not so much on Mr. Froggatt's re-election. My question is: Is it possible to actually, when showing the results, show the percentages along with the numerals?
Yes. I agree with you. I agree with you 100%.
At this technology age.
I think I'm looking to the right here because I think we talked about that last year. I apologize for that.
Thank you, sir.
No. Thank you. Any other questions or observations? Thank you for those which we did get. I'll move on. The resolution and the direct vote without the percentages and the proxy position are now on the screen. Please do vote now on item number five and mark your voting card accordingly. Thank you. Okay. Thank you. Item six seeks approval for amendments to the Brambles Limited Performance Share Plan as detailed in the notice of meeting and the issue of shares under that plan for all purposes, including for the purpose of Australian Securities Exchange, ASX, Listing Rule 7.2, exception nine. Tony Froggatt described the proposed changes and the reasons that they are being made, the reasons why they are being made. That information is also in the notice of meeting. Is there a question? Are there any questions on this matter? Mr. Barker. Welcome back.
Yes, Mr. Chairman. I did indicate I would be speaking briefly on, well, not so briefly on some questions, but briefly on every question.
Yeah.
Other than the ones I speak longer on. While the ASA is against the remuneration plan as set out, we do acknowledge the fact that the movement to the holding period to 12 months is a movement in the right direction, and consequently support the proposal.
Thank you very much, and I do appreciate that. Thank you. Any other questions? If not, I'll move on. The resolution, direct vote, and proxy position are now on the screen on this one. Please now mark your poll card for item number six. Item number seven, if I can move to that. This asks shareholders to approve the participation by Graham Chipchase until next year, till the 2020 AGM, his participation in the performance share plan, if approval of the amendments to the performance share plan under resolution is not obtained, as we've just got it, though. I think we'd say his participation in the amended performance share plan has just been approved under Resolution 6 for the purpose of ASX Listing Rule 10.14. Are there any questions?
Yes.
Yes, Mr. Barker.
Again, Mr. Chairman, briefly, my comments will also apply to the next agenda item. Can you take those as being read against that one?
Yes.
Because we are opposed to the remuneration plan, that we're also opposed to the issue of shares under that plan.
Thank you. Well, not exactly thank you, but I acknowledge your position. Are there any other questions or observations? If not, I'll move on and go to the resolution and the direct vote and proxy position, which are now shown on the screen. Please now mark your voting card for item seven. Item eight asks shareholders approve the same thing for Nessa O'Sullivan, so I won't go through all the words, but it's her participation in the Performance Share Plan as it's just been amended and approved under item number six. Are there any questions or observations on that matter, on this resolution? I acknowledge, Mr. Barker, that your comments from before also apply to Nessa O'Sullivan. Are there any other observations or questions? If not, I'll move on.
The resolution, the direct vote, and proxy position are now on the screen, and I'd ask you to mark your voting card for item number eight. Right. Thank you. Item nine, our shareholders to approve the participation by Graham Chipchase until the 10th of October 2022 in the Brambles Limited MyShare Plan for the purposes of ASX Listing Rule 10.14. Are there any questions? Mr. Barker?
Briefly, Mr. Chairman. There was some debate in my organization about this, that this was a relatively minor thing in relation to the overall package, so why should the CEO be included in this? On the other hand, the argument that did prevail was, why not? Yes, we support this.
Thank you very much. Thank you. Any other questions, observations? If not, thank you. The resolution and the direct vote and proxy position are now on the screen, and I'd ask you to mark your voting card for item number nine. Item 10, if I can move on to that. Are we ready? Yes, thank you. Item 10 of business, our shareholders to approve Brambles reducing its share capital by a total of approximately $120 million by way of an equal capital reduction to be effected by the company paying to shareholders AUD 0.12 per ordinary share held as at the record date of Tuesday the 15th of October 2019. When we announced the sale of our IFCO RPC business, we said we would return approximately $300 million of the proceeds of that sale to shareholders by way of a cash return.
That cash return has two components: a AUD 0.17 per share special dividend, which does not require shareholder approval, and the AUD 0.12 capital return, the subject of this resolution, which does require shareholders' approval. The special dividend will be paid on the 22nd of October, and if approved, the capital return will also be paid to shareholders on that date. Further details of the capital reduction are outlined in the explanatory notes to this resolution in the notice of meeting. Are there any questions on this matter? Mr. Barker?
Again, briefly, Mr. Chairman. I've already spoken, expressing our support for the capital management by the Board, and this is part of it. My comments now apply to the next item as well, that because we support the return of capital in this way, that we support this proposal and the next.
Thank you very much indeed. Much appreciated. Are there any other questions from the floor or observations? Thank you. The resolution and the direct vote and proxy position are now on the screen. I'd ask you to mark your voting card for item 10. Thank you. I think we can probably move on now. Thank you. Item 11, our shareholders to authorize and approve the on-market buyback of up to 240 million shares in the company in the 12-month period following the approval of this resolution. When we announced the sale of our IFCO RPC business, we also said that we'd return to shareholders approximately US $1.65 billion of the proceeds of that sale by way of an on-market buyback of shares.
Brambles has been conducting an on-market buyback program since the 4th of June 2019, 4th of June this year, under the provisions of the Corporations Act, which permit a company to buy back up to 10% of the lowest issued share capital during the previous 12 months. This resolution seeks shareholder approval to extend the on-market buyback to up to 15% of Brambles' issued share capital. To date, we have bought back 29.5 million shares for a total consideration of $239 million. If shareholders approve this resolution, Brambles will be authorized to undertake further on-market buybacks of up to 240 million shares, approximately 15% of our issued share capital, for the 12 months to the 10th of October 2020. Further details on this resolution are set out in the explanatory notes in the notice of meeting. Are there any questions?
I know, Mr. Barker, that you already addressed this issue. Thank you. Are there any other questions or observations? If not, I'll move on. Thank you. The resolution and the direct vote and proxy position are now on the screen. I'd ask you to mark your voting card for item 11. Right, thanks. Thank you very much. That's the end of the resolution. Do remember to place your voting cards in the boxes beside the exits. The poll will remain open for another 10 minutes. When the poll closes, you'll be notified on the screen behind me. As I said before, we will announce the results of the poll to the ASX later today. Ladies and gentlemen, thank you for your attendance today.
I remind you that copies of the sustainability review are available in the foyer. I'd really recommend that you have a good read of that. We're very proud of it. I'd invite you to join us outside for tea and coffee. Thank you very much, ladies and gentlemen.