Thank you. Good morning, ladies and gentlemen. I'm Peter Bush, Chairman of Inghams Group Limited, and on behalf of the board, I'd like to welcome all shareholders and guests to our 2020 annual general meeting. It's now 10:00 A.M., and there being a quorum present, I declare the 2020 annual general meeting of the Inghams Group Limited open.
Before I move on, I would like to extend my sincere sympathies to the Ingham family following the passing of Bob Ingham in September. While I did not know Bob personally, we are proud to continue to support the family's legacy and build on this great company that was conceived in 1918 and continues to go from strength to strength. Today's virtual meeting reflects our response to government restrictions on public gatherings and our ongoing commitment to keep our stakeholders safe throughout the COVID pandemic.
While we're not able to be together for the meeting today, we hope to make this AGM as interactive as possible for shareholders. You'll be able to listen in real-time, submit questions online in writing, and shareholders, proxy holders, and shareholder company representatives may vote online. Please note that eligible voters can submit questions at any time, beginning now, and we will do our best to answer them during the meeting. I'm joined in the room today by Non-Executive Director and Chair of the Finance and Audit Committee, Mike Ihlein, Non-Executive Director and Chair of the Risk and Sustainability Committee, Jackie McArthur, Non-Executive Director and Chair of People and Remuneration, Helen Nash, our Managing Director and Chief Executive Officer, Jim Leighton, our Chief Financial Officer, Gary Mallett, and Company Secretary, David Matthews.
Due to COVID restrictions, non-executive directors Rob Gordon, Linda Bardo Nicholls, and Andrew Reeves are joining us online. Also joining me in the room and representing our external audit officer is KPMG partner Julie Cleary. Today's meeting will include my address, the Managing Director and Chief Executive Officer's address, and the formal items of business and resolutions set out in the notice of meeting. A guide to the online virtual meeting was lodged with the ASX and was also made available on the Investor Center on our website. In brief, today's virtual meeting enables shareholders to listen to the AGM proceedings online and view the supporting presentation. The slide on the left-hand side of the screen will show a picture of the speaker, and you can follow the presentation slides on the right.
At the bottom of the shareholder screens, there are three interactive boxes that allow shareholders to get a voting card, ask questions, or download relevant AGM documents. Only those who have logged on to the meeting as shareholders will have the ability to vote and ask questions. All items of business will be voted on by a poll, which is now open.
You may vote at any time during the meeting, and voting will close five minutes after the normal items of business. A timer at the top of the online meeting platform will count down to the close of voting. Final voting results will be released to the market as soon as they are available after voting has closed. If you have a question, click on the Ask a Question box and follow the prompts. There is a character limit of 500 characters.
Ensure you have enough time to type and submit your questions. During the items of business, relevant questions will be read out to the meeting by our company secretary, David Matthews, and we will make every attempt to answer all questions. If time constraints prevent us from doing this, responses to unanswered questions will be posted on the Investor Center of the Inghams website after the meeting. I'd like to thank shareholders who took the opportunity to ask questions in advance of today's AGM. These questions have been reviewed and will be responded to either during the course of the presentations or when we address the relevant items of business. Any questions received from shareholders prior to the AGM or online today may also be aggregated where there are similar questions.
I, along with some of my board and management colleagues, met with Allan Goldin and Elizabeth Fish from the Australian Shareholders' Association a couple of weeks back, answering a large number of questions. We also received questions that raised similar relevant matters and so far as possible, have incorporated these into speeches today to avoid repetition. If shareholders experience technical difficulties using the online platform, please call 1800-990-363.
That's 1800-990-363. Should we experience technical difficulties in broadcasting the AGM to shareholders, we will pause in the meeting and recommence at the earliest opportunity. If these difficulties persist, we'll adjourn the meeting till 3:00 P.M. today and lodge the adjournment details with the ASX and publish them on our website Investor Center. Shareholders, proxy holders, and guests who have registered to join the meeting today will be notified of the adjournment by text message.
Link Market Services is the returning officer for this meeting. I'll now move to my address. Today, I'll cover some of the challenges of the unprecedented operating environment of the last 12 months and what the board and management have done to ensure business continuity. Jim will provide you with more detail of some of the actions taken over that time and provide us with a trading update. Financial year 2020 will no doubt go down for most of us as the most remarkable year on record. Paradoxically, many of the events of FY 2020 have faded into the distance and almost been forgotten in the face of COVID. I do want to take a moment to reflect and remind us all of the months leading up to the pandemic.
For three years, the country was dealing with the effects of the drought, and for Inghams, this manifest in record high feed prices. To give that some perspective, feed input costs to the business in the previous six years have risen not by AUD millions, but by tens of AUD millions of dollars. We dealt with this through a combination of costs and efficiency initiatives, astute forward feed purchasing, price adjustments, and good management.
Most of us had direct or indirect experience with the bushfires over the November to January period, and Inghams escaped a close call or close calls at our Tamworth and Bargo sites thanks to our people and in particular, the New South Wales Rural Fire Service. Additionally, during this time and over many weeks, our operations team persistently found creative solutions to get products to customers when routes were blocked by fires.
Despite the drought and fires, financial performance was ahead of target when COVID hit. At the time, the board were confident we would hit and likely exceed our EBITDA targets. Today, we have all adjusted our lives to deal with this pandemic, and it's easy to overlook how, as an essential service, the Inghams business had to assess and accommodate an enormous raft of challenges and changes to keep our people safe, our operations compliant, and our products moving to customers and consumers.
This included close collaboration with governments, unions, customers, and other stakeholders to ensure continuity of supply. Success of which is a testimony to Jim, his management team, and our some 8,000 employees across Australia and New Zealand who work tirelessly and continue to do so today. We forget that New Zealand pretty much closed down for business for four weeks.
Restaurants and fast food on both sides of the Tasman shut down, and consumers switched from buying barbecue chicken to factory-produced trade packs, which all put enormous burden on our people, production facilities, and costs. It's also clear that the many strategic capital projects in our plants over the previous 18 months began to bear fruit through efficiency, effectiveness, and flexibility, and most importantly, cost improvements. The business was guided through the year by an experienced leadership team and adherence to the blueprint of our five-year plan. In spite of this, the disruption from COVID produced financial results that fell slightly short of our targets, including additional poultry inventory provisions of some AUD 9 million. I can remind you that we delivered a statutory net profit after tax of AUD 40.1 million and AUD 78.8 million on an underlying basis.
The underlying results exclude the AUD 23.7 million impact of the adoption of the new AASB 16 lease accounting standard and other non-recurring items. This result, combined with strong cash generation, enabled us to provide shareholders with a fully franked dividend of AUD 0.14 per share for the full- year. This reflects a payout ratio of 66% of underlying net profit after tax pre-AASB 16. We were pleased to be able to reward shareholders with a dividend when many companies chose to suspend it in the face of COVID challenges.
The management and the board recognize the critical nature of dividends to shareholders, and we are pleased to announce today, following the adoption of AASB 16, we have changed the dividend payout ratio from 60%-70% of underlying NPAT before the impact of AASB 16 to 60%-80% of underlying NPAT inclusive of the AASB 16 to keep flexibility to continue to provide, among other things being equal, cash dividends similar to historic payouts. This revised dividend policy will be the first plank in our capital management strategy platform we plan to detail by the half year. Shareholders will note the board exercised its discretion to approve a reduced STI capped at 45% of the off-target dollar amount.
The board believe this decision reflects a fair and balanced assessment of the management team's performance, given the business was on track to meet or exceed the AUD 190 million EBITDA target established pre-COVID. The initiatives taken by the management team to protect our people. Our transform operational performance in a commercial environment turned upside down, along with a focus on improving customers' engagement scores, ensured the business would continue to operate and get back on track.
The board noted the voting received from shareholders prior to today's meeting in relation to Resolution 5 on the remuneration report, and Resolution 6 regarding the CEO's FY 2020 TIP. In the course of preparation for the AGM, there has been considerable discussion regarding these resolutions, and today's voting outcomes reflect the feedback from shareholders that the board's decision on executive remuneration in FY 2020 were not in line with shareholder expectations.
The board takes this feedback from shareholders extremely seriously and provide an undertaking to maintain an open dialogue on remuneration with shareholders as we move forward from today's AGM. We welcome new appointments to the board and senior management team over the past year. I'd like to welcome Mike Ihlein to the board, who is standing for election today. Mike complements our board skills with his experience as a chief executive officer and chief financial officer in major ASX-listed companies, including Brambles, Coca-Cola, and Coca-Cola Amatil. Mike is chairman of our Finance and Audit Committee. Ricky Lau retired from our board on the 30th of June this year. I thank Ricky for his contribution as a director of the Inghams Group from 2013 as a representative of TPG. Chief Financial Officer Gary Mallett joined the team in October 2019.
He brings more than 30 years of experience in a range of senior financial roles with companies including Brambles, Origin Energy, and Senex Energy. Mike and Gary Mallett's experience in listed companies bolsters our bench strength on prudent financial management to the benefit of our long-term profitable growth and returns to shareholders. During the year, we conducted an independent review of board composition and performance. This review concluded we had an appropriately diverse and skilled group of directors able to add value to our business. This review also considered board development and succession, which continues to be work in progress. Our biggest shareholder, AustralianSuper, expressed an interest in having better knowledge and understanding of the detail of our directors' backgrounds, particularly their experience as it applies to the Inghams board.
We will, as a result, be updating our website with more detailed backgrounds on directors and senior management in the coming weeks. We have detailed our commitment to safety, animal welfare, and operating sustainability in both our business sustainability report and our corporate governance statement in our annual report. While I do not intend covering these today, I commend them to you to better know and understand our policies and commitments. While we've all been challenged by COVID-19, Inghams has steered well as a company through the crisis, and our products continue to be reviewed by customers as the healthier and more economic protein choice. We will continue to focus on keeping our people safe, maintaining pressure on continuous improvement, and a bias for action.
This, along with the board's confidence in our leadership team and business model to deliver against our five-year plan, I am certain will deliver results in the more consistent, predictable, and reliable returns for shareholders. Other encouraging signs worth mentioning are that Australia's status as a leading agricultural sector and having a reputation for providing safe and clean produce augurs well for our export. Total retail chicken volume is growing above the historical three-year run rate. Australia is one of the world's top five countries for per capita poultry consumption, and New Zealand is not far behind. The Inghams brand has the highest brand awareness of any poultry brand in Australia at 83%, and chicken continues to be the most affordable protein, averaging a quarter of the price of beef and half the price of pork.
Finally, speculation is that the wheat crop will be the best in 25 years and that feed prices will reduce as a result in time. Furthermore, in the Prime Minister's recent address to the National Press Club in October, he proposed to allocate AUD 1.5 billion towards manufacturing industry across six primary sectors, one of which is food and beverage, a sector that is one of the country's fastest-growing and largest employers. While it remains unclear precisely how Inghams will benefit from these investments, we are already in conversations with the government. I'd now like to hand over to our Managing Director and Chief Executive Officer, Jim Leighton. Jim will take you through further operational highlights and more of the detail that underpin our continued improving performance. Thanks, Jim.
Thank you, Peter. I want to start by saying how proud I am of the Inghams team and all they've achieved. Echoing the chairman's address, our five-year plan and our people have helped us navigate through a challenging year and have enabled us to continue to nourish our communities as an essential service provider. We presented our five-year plan to investors in October 2019. Our plan was anchored by our purpose to nourish our world and our commitment to make a positive difference in our products, our people, our partners, planets, as well as our profits. This integrated approach was designed to deliver our objective, and that is to deliver more consistent, predictable, reliable returns to our stakeholders. It was incredibly fortunate to have this solid five-year plan in place for what has been a year like no other.
Throughout our first year of implementing the plan, it has enabled us to deliver profitable results in remaining dynamic and adaptable during a volatile trading environment. It's proven its value. Our plan has three strategic pillars geared for growth. We are optimizing the core of our operations through continuous improvement. This has included the commissioning of new leg auto-deboning equipment at Te Aroha in New Zealand, as well as Bolivar in South Australia. Taking Bolivar's new leg auto-deboning equipment as an example, this capital investment was projected to deliver a payback within 13 months. Pleasingly, we delivered a payback on this investment in just eight months, and our production throughput on this line has doubled. We have also brought online two new spin chillers at Somerville in Victoria, which have unlocked an additional 40% capacity.
This new equipment increases chilling capacity to maintain a lower temperature, therefore allowing us to run the line more efficiently. We will also start installing a new spin chiller in Osborne Park. These two projects are examples of how we are investing in the right technology to add value to our business. We are also investing in our people and processes to create more value for our shareholders. For example, a project to address overall equipment efficiency, OEE, across the business has delivered a 10% efficiency gain and saved AUD millions across our primary processing plants. The implementation of an integrated business planning process and new project management office is now in place and delivering short as well as long-term benefits.
Through integrated business planning, we've extended our planning horizon to a 52-week plan, and within the next two months, we will be extending out further to a 72-week horizon to enable us to better forecast performance, mitigate risks, and execute our strategy. This enhanced capability is critical in effectively planning and managing our entire business to achieve or exceed financial targets. We are transforming for tomorrow by embracing new ways of thinking and thus working. In an Australian first, we are constructing two new HatchCare hatcheries that are global best practices when it comes to animal welfare by providing greater nutrition to our day-old chicks. This will translate into a lower feed conversion ratio and overall lower cost of production. We're also excited to continue to bring new products to the market under our strategic pillar to create the new.
This includes launching some new brands, including The Free Ranger, and plant-based brands, including The Plant Collective and Let's Eat. Our strategy is consumer-centric, with our ambition to be the most trusted food producer in our market. We are working closely with our partners to leverage consumer and shopper analytics to drive our actions. This is a win for our customers, and we will provide products that will help grow the category and optimize our collective profitability.
T he 2020 financial results have delivered a practical demonstration of the value of our five-year plan, its impact on increasing resilience of the business, and our ability to deliver profitable growth to our shareholders. It has long been our focus to ensure the health, safety, and well-being of our people. This deeply embedded safety culture has enabled us to stay safe and continuing delivering products to our communities during COVID.
Importantly, through COVID, our people trusted us to keep them safe, and they showed up with both passion and pride. This is in stark contrast to offshore poultry and meat companies that had to shut down because their people didn't feel safe at work. Since the pandemic emerged in February and March, we have taken many steps to keep our people and communities safe.
Just to give you some perspective on this and the enormity of the tasks we successfully undertook throughout the pandemic, responding quickly to 50% surge in demand in retail chicken sales by shifting the product mix from our operations to match the fast-changing needs of customers from deli tray pack products. We recorded more than 4,000 truck movements a week across Australia as we transported grain, feed, eggs, chicken meat and products for both domestic and international customers.
We kept our 100 sites operational during the financial year with zero, let me repeat that, with zero interruption of overall supply and kept our 8,000 people safe and employed while also supporting our staff during school lockdowns with flexible shifts and working from home arrangements. We installed 400 protection dividers across our operations to support physical distancing within our plants. In addition, when the second wave hit Victoria, we worked closely with the government to support our status as an essential service while educating and influencing more appropriate restrictive measures. We also worked hard to keep up with the customer demand while operating with government-imposed reductions workforce in Victoria by streamlining our product line.
The scale of response required has been enormous, but made possible by the amazing effort of every one of our employees working together to keep our people safe and our operations running. With COVID remaining a threat, we'll continue to meet the highest safety standards. Unfortunately, our people and our operations, although resilient, have not been immune to COVID. In May, we had two people in New Zealand test positive for COVID. Fortunately, the swift reporting and contact tracing meant that we didn't have to close the facility, and we proactively closed our Thomastown further processing plant in July for two weeks when five of our employees tested positive for COVID. Despite the challenges of COVID, we reduced our lost time injury frequency rate by 45%, down to 3.8, and total recordable injury frequency rate down 63% to 8.1.
Sadly, however, one of our team members sustained a serious incident at our Tamworth facility in February. We are supporting him and his family with his ongoing recovery and rehabilitation. This injury served as a stark reminder of the importance of staying safe. The priority on our people's safety and wellbeing is firmly reflected in the recent completion of an organizational culture survey, where we established a baseline and action to move us even closer to our desired state. The food and beverage retail sector has had a very challenging year, which included unprecedented and unpredictable demand during the panic buying period at the beginning of COVID. I would like to commend our people who received several notes of thanks from our many customers during this time for outstanding support and service in meeting this demand.
It's pleasing to see that chicken continues to be a protein of choice for families across both Australia and New Zealand. It's predicted there will be a 4% boost of another 1 million people around the Christmas table this year due to travel restrictions. The retail sector therefore likely will benefit, and that's great news for Inghams and our ambitious growth plans in our new products. We're also working closely with our quick-serve restaurant customers to develop new in-store products to maximize sales.
This includes, but certainly isn't limited to, a new chicken menu at McDonald's that launched in October, which was highly successful. We'll continue to build on the foundations of our great partnerships with our customers by driving quality, innovation, a robust supply chain, and most importantly, trust. Having completed the first quarter of trading for FY 2021, we have today provided earlier a business update to the ASX.
In our first quarter, we achieved an increase in core poultry volume sold of 6.2% on the prior comparative period in FY 2020. This result is also up 7.5% on the last quarter of FY 2020. This reflects strength in demand from our customers, with trading now at or near pre-COVID levels. We've also reduced poultry inventory levels by AUD 16 million in the first 17 weeks of FY 2021.
We will continue with initiatives to further reduce inventory that resulted from COVID by the end of this current financial year, supported by Christmas demand. This is also further upside with Australia's wheat crop production projected this harvest to be at or close to historical highs. Rabobank's recent 2020/2021 winter crop production outlook has cited wheat production up 91% year- on-y ear with an estimated 28.8 million tons. With a significant crop, we expect feed pricing to reduce.
However, there is likely to be a lag before it translates into lower costs due to our feed purchasing strategy and the time between harvest and delivery of our finished products. We do expect the improvements in the cost of grain to have a favorable impact on our financial results fully by Q4 of this financial year, and importantly, flow into the next financial year. Pleasingly, a recent report on La Niña, an agricultural stock winners and losers report, is also favorable, with the report citing that it expects Inghams to be positively impacted. While we cannot perfectly predict the year ahead due to the uncertainty of COVID, we have proven the resilience of our plan, our business model, and people as we work hard to deliver more consistent, predictable, and reliable returns to our shareholders.
Before I turn it back to our chairman, I would like to close by recapping on the seeds that we have planted for long-term growth. One, we have built a solid foundation for profitable growth and have demonstrated our resilience. Two, we know where we are and we know how to get there. Three, we have the right people in place and the right resources to do so. Four, we are beginning to see the benefits of improvement of the initiatives we have in place now that we've implemented those, and they're showing up in our results. On that note, I would like to thank the Inghams team for their ongoing commitment to providing quality products that our customers and consumers love and trust, enabling profitable growth, capital returns, and value creation for our shareholders.
It is my great pleasure, privilege, and pride to continue to build upon the legacy of the Inghams name, heritage, and brand. I would also like to thank our board of directors and our shareholders for your continued support of Inghams. Thank you. I will now hand it back over to the chairman.
Good. Thank you, Jim. I'll now address the formal items of business for meeting. The notice of meeting, dated 6th October 2020, was lodged with the ASX and is also available on the Inghams website, Investors section. I propose the notice of meeting be taken as read. Each resolution set out in the notice of meeting is to be considered as an ordinary resolution, to be approved by a simple majority of votes cast by shareholders entitled to vote. We will display the votes by both shareholders and proxies received prior to this meeting on the slide following the discussion of each item of business. The Inghams Group Limited directors and executives identified as key management personnel will not be voting their own shares or undirected proxy votes in relation to Item 5, the Remuneration Report.
For all other business where undirected proxies have been given to the Chairman or any of my fellow directors, we will be voting in favor of these items. Jim Leighton will not be voting on Items six and seven regarding the FY 2020 Transformational Incentive Plan and the FY 2021 Long Term Incentive Plan. Poll results will be released to the ASX on the Company Announcements platform and the Inghams Group Limited website as soon as they're available.
The first item of business is to receive and consider the Inghams Group Limited Financial Report and reports of the directors and auditor for the year ending 27 June 2020. This item of business is for discussion only, and the Corporations Act directs there is no vote required. As I said at the outset, joining us today is our auditor for the 2020 financial year, Audit Partner Julie Cleary from KPMG.
Julie is available to respond to questions relevant to the conduct of the audit and the preparation and content of the independent audit's report and the independence declaration. David Matthews, our company secretary, will read out any questions to the meeting. David, are there any questions regarding the financial reports?
Yes, Chairman. We have a question from Ronald Scrimgeour and Mark Scrimgeour submitted prior to the AGM. They ask, "How are you keeping people safe through COVID? And has COVID affected sales? And have you had to reduce staff at production units due to COVID?" We had a similar question from Timothy Clifton.
Thank you, David. Both mine and Jim's presentation speeches covered our responses to COVID in considerable detail. In FY 2020, we did not reduce staff in our production units. In FY 2021, we have been required to reduce staffing levels in Victoria due to the Stage 4 lockdown. The impact to our people has actually been mitigated due to some absenteeism, allowing us to supplement this with our casual employees. This has meant minimal overall impact on total work available for our people. David, any more questions?
Yes, Chairman. There was a second part to Timothy Clifton's question, which was submitted prior to the AGM. He asked, "What indications are there that the two HatchCare hatcheries will provide hatched chicks with immediate access to food and water supplies? Will this new technology reduce operational costs in the hatcheries?"
You heard, I think, some of this from Jim in his presentation. The new hatchery technology was purchased overseas, where the technology has been operating successfully. The cost savings are expected to result from improved feed conversion ratio as a result of greater nutrition provided to the chicks from day one. David, another question?
Yes, Chairman. We had a question from a company shareholder called Superannuation Fund Proprietary Limited, and that was again submitted prior to the AGM. They ask, "Can you please advise the shareholders what plans are in place to increase shareholder value and reduce company debt levels?"
Thank you, David. Our five-year plan positions us for the long-term growth and creating shareholder value by focusing on our strategic pillars of optimizing the core, transforming for tomorrow, and creating the new. This was talked about in detail in today's presentation. The second part of the question, with long-term growth, we expect to increase earnings, which can be applied to the payment of dividends to shareholders, reinvestment to create our future, and also to reduce debt. Thanks. David, any more questions?
Yes, Chairman, another question from the same shareholder, Superannuation Fund Proprietary Limited, again submitted prior to the AGM. They ask, "What is the Inghams board doing to reduce debt? Do forecast earnings support fiscal ability to cover liabilities, as the rise in total liabilities is a concern?" Chairman, this question was addressed to the auditor.
Thank you, David. This question is not in relation to the audit and the procedures performed by KPMG, I'll put this question to the Chair of our Finance and Audit Committee, Michael Ihlein. Look, before I do, I know that the question regarding debt reduction has already previously been answered. Mike?
Thank you very much, Peter. That's correct. The FY 2020 balance sheet certainly does reflect increased liabilities due to the transition to the new accounting standard, AASB 16. What's important to remember, though, is that the lease liabilities are non-cash, and they do not affect our external debt or our ability to service that debt. It's important to note that the leases we have across our operational sites were in fact in place before the adoption of AASB 16, and those facilities are essential to our network and our integrated supply chain. Thank you, Chairman. Back to you.
Good. Thank you, Mike. David?
Yes, Chairman. There's a further question also again from Superannuation Fund Proprietary Limited. They ask, "Does the board see the fall in the share price as a concern and reflection of management notwithstanding COVID-19? How is increasing balance sheet debt being arrested?"
Thanks, David. Look, the share price is a matter for the market, and we believe that today's presentation will give shareholders confidence in the business. On the second part of the question, as I said earlier, with long-term growth will come increased earnings, which can be applied to the payment of dividends to shareholders and reinvested to create future value and also reduce debt. David, any more questions?
Yes, Chairman. The next question is from Luke and Susan Gleeson, and they ask, "How is the company addressing climate change?"
Thanks, David. I'll refer this question to our Chair of the Risk and Sustainability Committee, Jackie McArthur. Thanks, Jackie.
Thanks, Peter. The annual report's business sustainability section details our commitment and plans for climate change adaptation and resilience. An example would be to achieve sustainable water management, we proactively manage water catchment usage and the treatment of wastewater. All sites have a bespoke environmental management plan which measures greenhouse gas emissions, water usage, and landfill waste. As the Chairman noted in his address, we commend shareholders to better understand our sustainability policies and commitments as outlined in our annual report. Back to you, Chairman.
That's very good. Thank you, Jackie. David?
Yes, Chairman. There was a long comment from a shareholder essentially expressing concern about the quality of our product in one of our retail stores and asking why Inghams is doing so badly when chicken is the meat of choice for most families, when pork and beef, et cetera, are so expensive in comparison.
With regard to the quality of products in our stores, we have passed the detailed feedback from this shareholder on to our quality team to be addressed. With regards to our performance, as outlined in Mike's speech and Jim's, the company has performed very well through COVID-19 and delivered over the year, and we will continue to deliver. David?
Chairman, we've had a question come through online during the meeting from Elizabeth Fish at the Australian Shareholders' Association. Elizabeth asks, "What is the current situation regarding the cost of feed? We note it impacted profitability in FY 2020."
Thank you, Elizabeth and the Australian Shareholders' Association. Look, I think Jim answered the feed question in quite good detail during his speech. I think the essential outcome is that there is great speculation that the wheat crop is the best in 25 years, but there will be a lag effect and unlikely to hit our P&L till at least the fourth quarter. David, are there any further questions?
Yes, Chairman. We have a further question from a shareholder. "Do shares held in escrow pay dividends and have voting rights?" Again, that's from Elizabeth Fish from the Australian Shareholders' Association.
I think we might have to take that question on notice, and we will come back.
I can answer that question. There are some shares held in escrow, and those shares do pay dividends, but they don't currently have voting rights. They are shares that are issued and on the register, and so dividends are paid to them.
Well done, David. Thank you. Any more questions?
No. No further questions, Chairman.
There are no further questions on this item of business, so I will move to the next item. The next item of business is the election of directors. There are three resolutions proposed for the election of Michael Ihlein, the re-election of Jackie McArthur, and Helen Nash. The board have considered and support the re-election of Mike, Jackie, and Helen. I'll first address the election of Michael Ihlein as a director.
Mike was appointed as a Non-Executive Director on 16 April 2020. Under the company's constitution, he will retire at the conclusion of the meeting and be eligible, is nominated for re-election a director during the meeting. Appropriate background checks were completed before Mike was appointed to the board, and the board considers him to be independent. Mike serves as Chair of the company's Finance and Audit Committee and is a member of the People and Remuneration Committee.
Mike's appointment to the board was in recognition of the need for public company boards to have a suitably qualified audit committee chair with appropriate accounting or related financial management credentials and expertise. Before I ask Mike to say a few words, shareholders have raised questions of the workloads of Mike and Jackie, both of whom currently hold a total of four NED roles, including Inghams.
I can assure shareholders that Mike and Jackie have attended diligently to all their duties, are available for meetings, even at short notice, and readily support management as and when required. Both are experienced and capable directors with vast experience in their respective fields and have proved to be genuine assets to the board and company. I'd now like to invite Mike to say a few words on his experience and expertise in support of his election.
Thank you, Peter, and good morning, fellow shareholders. I'm very pleased to present myself today for election to the Inghams board. I've already found my experience with the company, albeit short, to be very rewarding, and I'm very much looking forward to contributing to the continued growth and development of Inghams as the leading poultry company in Australia and New Zealand. My background, as some of you may know, is originally in finance, and I've had extensive experience in that field, both in executive life and now as a non-executive director.
I am, as Peter's indicated, Chair of the company's Finance and Audit Committee and believe I can continue to significantly contribute in that role if I am elected today. I've also had extensive experience as a senior executive of the major Australian listed companies, Coca-Cola Amatil, with periods as Chief Executive Officer and Chief Financial Officer.
My membership of other boards provides me with additional perspectives that I believe assist my insights in my role on your board. I believe that I have the energy, I have the passion and the time, and most importantly, the commitment to devote to our company to help make it a continued success. I present myself today for election, and it would indeed be an honor to have your support for my role as a director. Inghams has a wonderful future, and I would welcome the opportunity to be part of that future. Thank you very much.
Thank you, Mike. I can say that around the board table here today, people are nodding. He's made a great contribution since joining the board. Thank you, Mike. Are there any questions, David, on this item of business?
No, Chairman. No questions on that item.
Good. Thank you, David. The total valid proxies for this item of business are now displayed on the screen. I think congratulations is in order, Mike. Thank you.
Thank you.
The next is the re-election of Jackie McArthur as a director. Jackie was appointed as a Non-Executive Director on the 19th September 2017 and elected by shareholders on the 31st of October 2017. Under the company's constitution, Jackie will retire at the conclusion of the meeting and being eligible, is nominated for re-election as a director today. Jackie is Chair of the company's Risk and Sustainability Committee and a member of the People and Remuneration Committee. I'd now like to invite Jackie to say a few words on her experience and expertise in support of her re-election.
Thank you, Chairman. It has been a privilege to serve on the board of Inghams since 2017 and now to be considered for re-election. I have more than two decades of experience in agri supply chains, food manufacturing and technology systems, logistics, product innovation, global and regional supply chains, crisis and risk management. Although I never in the past have felt the need to even mention it, pandemic and infectious disease control for both humans and animals, as well as zoonotic diseases, has also been in my remit. My career so far has afforded me the opportunity to have had significant exposure to nearly every major food processor and logistics service provider, both in Australia and in the Asia Pacific, Middle East, Africa region. I have a deep belief that Australia supplies some of the best food products in the world.
The board has, since I joined it, overseen a new CEO and senior leadership group transition, new strategic capital projects, a drought, a pandemic, supply and demand disruptions born through bushfires and COVID. I feel I bring a very relevant skill set to continue my contribution both at the board and now as chair of Risk and Sustainability. Thank you, and I hope to have your support for re-election. Thank you.
Thank you, Jackie. A very impressive and relevant resume. David, are there any questions on this item of business?
Yes, Chairman. There's a question asked by Edmund Carew, and his question is, "Ms. McArthur is not just a director of ING, but also of a competitor for share of mouth, Tassal Group. Salmon and chicken compete in retail as well as food service. Is it really appropriate to have a director who also advises at board level a competitor? Isn't this a corporate governance question? What steps does Ms. McArthur take to ensure that information she receives regarding the company's detailed strategy isn't, even if just casually, communicated somehow to a direct competitor of Inghams?"
Thank you, David. The board considered Jackie's appointment in the context of her other board duties, and we regard her as independent, and it's understood that there is a vast difference between agriculture and aquaculture. In the event the business of the board or the company was regarded as being in conflict, Jackie is excluded from those conversations, and any board papers are redacted. Thank you, David.
Thank you, Chairman. There's no further questions on that item of business.
The total valid proxies now for this item of business on Jackie's re-election are now on display on the slide. I think congratulations are in order, Jackie. Thank you. The next is the re-election of Helen Nash. Helen was appointed as a non-executive director on 16 May 2017 and elected by shareholders on October 31, 2017. Under the company's constitution, Helen will retire at the conclusion of the meeting and being eligible, is nominated for re-election as a director at the meeting. Helen is chair of the company's People and Remuneration Committee and a member of the Nominations Committee. I'd now like to invite Helen to say a few words on her experience and expertise in support of her re-election. Thanks, Helen.
Thank you, Chairman, and good morning, ladies and gentlemen. In offering myself for re-election to the board of Inghams, I'd like to share with you an overview of the experience and skill set I bring to the board and where I believe I make a contribution. I have been a full-time non-executive director of various ASX-listed companies for the last seven years. Alongside my role at Inghams, I'm currently a non-executive director at Metcash and also Southern Cross Media. On all three boards, I chair the People and Culture Committee. At Inghams, I'm also a member of the Nomination Committee. My executive career spanned more than 20 years across the FMCG media and retail industry. I have held C-suite marketing, commercial, operational, and general management roles. I seek to add value by bringing the consumer's voice to board discussions.
For Inghams, this is critical as one of our five-year strategic objectives is for Inghams to become a consumer-centric company. Having led and delivered many strategic plans in my executive career, I'm well-placed to keep management focused on the key strategic imperatives that will deliver greatest value to shareholders. I am also committed to strengthening the effectiveness of your company via greater diversity and through the development of a high-performance culture that has been proven to deliver results. I am optimistic about Inghams' next phase of growth. I believe our five-year plan with a combination of top-line growth initiatives driven by innovation, new products, brand-building activity, alongside further improvements in operations, will deliver long-term value. Inghams plays an essential role in nourishing this country.
In seeking another term, I aim to partner with the rest of the board and management team in further strengthening Inghams' market position for the benefit of all shareholders. Thank you very much.
Thank you, Helen. The total valid proxies for this item of business are now displayed on the presentation slide. Very good. Thank you, Helen, and congratulations are in order. The next item of business is to adopt the remuneration report for the year ended 27 June 2020. The remuneration report is contained on pages 42 to 58 of the 2020 annual report. Having addressed shareholder feedback regarding this resolution in my address today, I'll now move to address questions or comments from shareholders about Inghams' remuneration policies. David, do we have any questions?
Yes, Chairman. We've got one question from Elizabeth Fish of the Australian Shareholders' Association, and she asks, "One would expect that circumstances may change over the course of the year. How is that a justification for backdating a potential bonus more than one-third of the way through the term?"
Thank you, David. I will pass that question to the chair of our Remuneration and People Committee, Helen Nash. Thanks, Helen.
Thank you, Chairman, and thank you, Elizabeth, for your question. As Peter has already mentioned, we met with yourself and Allan Goldin a few weeks ago, and I will repeat the answer that we gave to your question then. This year, a new long-term incentive plan, the Transformational Incentive Plan, was introduced, replacing the previous existing long-term incentive plan. These changes were made to align with our 2020-2025 strategy, focusing on delivering an engaging and motivating reward for critical senior talent. The importance of this change was also reinforced through the COVID-19 pandemic and the clear need for the achievement of a range of strategic projects in the near and medium term to ensure the sustainable performance of the business long term. Back to you, Chairman.
Good. Thank you, Helen. David, more questions?
Yes, Chairman. We have some questions submitted prior to the AGM. At least we have a comment from a shareholder who said, "Directors should not receive any reward over and above employees as they are paid to improve the company." Also indicated that the CEO's remuneration should be tied to the share price to reward performance.
Thanks, David. Directors, apart from the Managing Director and Chief Executive Officer, only receive fixed remuneration as set out in the annual report. The remuneration framework for the Managing Director and Chief Executive Officer is linked to shareholders' interests as outlined in the Remuneration Report. Other question, David?
Chairman, there's another comment from a shareholder who's indicated, "If staff want to remain employed, their incentive is to work hard. Failing that, they will lose their jobs, and the same should apply throughout the company. Any performance rights should be spread equally.
Thanks to the shareholder for those comments. Look, they've been noted. David, more questions?
There's no further questions on that item of business, Chairman.
Thank you, David. The total valid proxies for this item of business are now displayed on the presentation slide. I will now move to item six. Item six requests shareholders to approve the grant of performance rights to Jim Leighton as his Transformational Incentive Plan for FY 2020. Thank you, David. Look, we apologize for those technical difficulties. We understand. Screen that shareholders may have been looking at did not provide the numbers. What I'd like to do is go back to the first item of business, the re-election of Michael Ihlein, and ask David to provide the meeting with the voting details for this item and the subsequent items up to and including item five, the remuneration report. Thank you, David.
Certainly. Thank you, Chairman. I'll refer to item two and the proxy results for item two, the election of Mike Ihlein. There were approximately 283 million votes received, 98.68% of those votes were in favor, and 1.12% against. For item three, the re-election of Jackie McArthur, there were approximately 286 million votes received, 99.7% of those votes were in favor, and 0.1% were against. In relation to item four, the re-election of Helen Nash, there were approximately 286 million votes received, 99.61% were voted in favor, and 0.19% were against. In relation to item five, the remuneration report, there were approximately 139 million votes received, 48.65% of those votes were in favor, and 51.15% were against. Then, Chairman, I believe that you were referring to item six, when the technical difficulties occurred.
Would you like me to read those proxies out for item six, or once you come to that point?
Given the technical difficulties, I will go back and start again for the benefit of the meeting at the beginning of item six. David, we'll see whether or not the technical difficulties have really been resolved. I may have to ask you to read those out when the time comes. Item six, request shareholder approval for the grant of performance rights to Jim Leighton as his Transformational Incentive Plan for 2020. With regards to this item of business, at last year's AGM, shareholders approved the grant of performance rights to the managing director and chief executive officer as his 2020 award under the company's long-term incentive plan. However, following shareholder approval, market conditions changed prior to the grant being awarded, and the board determined that it was no longer appropriate to proceed with the grant under LTIP.
The Board has now determined that the proposed Transformational Incentive Plan will be an appropriate incentive to reinforce and drive performance against critical near, medium, and longer-term strategic objectives. The FY 2020 LTIP has not been awarded to the MD and CEO, as it is proposed that the award is replaced by the proposed FY 2020 Transformational Incentive Plan. Having addressed shareholder feedback regarding this resolution in my address today, I'll now move to address questions and comments from shareholders about this item of business. David, are there any questions?
No, there's no questions on this item, Chairman.
Thank you, David. The total valid proxies for this item of business are now on the screen.
Chairman, in case they don't come up, I'll read them out while we're waiting.
Thank you, David.
No, they haven't come up on the screen, Chairman. There were approximately 140 million votes received for this item. There were 48.7% in favor and 51.09% against.
Thank you, David. Look, the size of the no vote on items five and six means that these resolutions are not passed and that there is a first strike on the remuneration report. I have already acknowledged in my presentation how seriously the Board takes this message from shareholders, and as indicated, we will pursue a course to consult with shareholders as we consider our further remuneration policies.
The final item of business today requires shareholder approval for the grant of performance rights to the Managing Director and Chief Executive Officer as part of his long-term incentive plan for FY 2021. This award forms a key part of his at-risk remuneration. Under the long-term incentive plan, or LTIP, the Managing Director and Chief Executive Officer is eligible for an award equal to 200% of his total fixed remuneration for FY 2021, or 901,882 performance rights.
As detailed in the explanatory notes to this item in the notes of the meeting, the board has evolved and simplified the FY 2021 LTIP to include two financial measures, a relative total shareholder return, and a return on invested capital. The board considers these measures to be stretching but achievable and strongly align management performance to the shareholder expectation over the next three-year period. Total shareholder return will be compared to the ASX 200, but excluding companies classified as financial, mining, and resources.
While we're not in the ASX 200, by market capitalization, it is viewed as an appropriate performance indicator, and we embrace the challenge to outperform the ASX 200 starting from a lower base. The underlying return on invested capital pre-AASB 16 will be calculated as the equivalent of net operating profit after tax divided by the average invested capital.
The ROIC, for each of the three years of the performance period will be averaged to provide an overall outcome. ROIC has been selected for a number of reasons, including its increasing prevalence as a returns measure for such plans amongst the S&P/ASX 200 companies. In addition, its effectiveness in reflecting the impact of management decisions on the returns generated by measuring management efficiency at allocating capital under its control to deliver profitable investments. As ROIC performance conditions are considered commercially sensitive, the company will not be disclosing its performance targets, but we will disclose the relevant targets retrospectively in Inghams' remuneration report in the year of vesting. David, are there any questions on this item of business?
No, Chairman, there's no current questions on this item of business.
Thanks, David. It should be noted that Jim Leighton will not cast any votes for undirected proxies in favor of this resolution. Now, the total number of proxies for the item should show on the screen. David, could I please ask you to read them?
Yes, Chairman. Item seven, the approval of grant of performance rights to the MD and CEO. There were approximately 235 million votes cast. For that resolution, 81.88% were cast for the resolution and 17.9% against the resolution.
Okay, thanks, David. Now the formal items of business have been conducted. As I said earlier, voting will close in five minutes. A timer at the top of the screen will count down to the close of voting. If you haven't already, please cast your vote now. As I said earlier, poll results will be released to the market by the ASX company announcements platform and available on Inghams Group Limited website as soon as possible, which is expected to be this afternoon. We now come to the part of the meeting where shareholders have the opportunity to ask questions regarding the company's operations and questions of management. David, are there any questions in general business?
No, there's no further questions at all, Chairman.
Good. Thank you, David. If there are no further questions for general business, I will move to close the meeting. I'd like to thank shareholders and guests for joining us today and apologize for our small technical issues. I will, however, now declare the annual general meeting of the Inghams Group closed. Once again, thank you and have a good day.