Contact chief stays on after Edison exits

By CHRIS DANIELS

Stephen Barrett, chief executive of Contact Energy, is staying with the company for another year, despite his employer, Edison Mission, bailing out of the local energy scene.

Australian company Origin Energy paid $1.68 billion in July to Edison Mission for its 51.2 per cent stake in Contact.

Edison Mission sold out as part of a global asset fire sale, needing to raise cash to pay off huge debts incurred during the 1990s energy bubble. Most assumed that Barrett, who was on secondment from Edison Mission, would also head back to his home in the US.

But Contact, with approval from its new majority owner Origin, said yesterday it had been able to convince him to stay in the job, at least for another year.

Contact chairman Phil Pryke said the company had been "very keen" to keep Barrett on.

Pryke said Barrett's contract would end in September next year. While Barrett's income as chief executive ($900,000 base salary plus the potential of annual bonuses worth $436,000) would not rise, the costs incurred by Contact would, since other costs paid by Edison would now be borne locally.

That was primarily an allowance of up to $589,000 a year to ensure Barrett was not penalised by US tax laws that worked against American taxpayers earning their money overseas.

"It's not throwing a whole pile of money into his pocket,"Pryke said.

"Contact's board believes it is in the best interests of the company to continue to have access to Mr Barrett's services. This judgment is based on Mr Barrett's excellent track record, and the importance of maintaining strategic focus through this period of change."

Origin told Contact yesterday that it also wanted to cut the size of its board from eight to six directors.

Pryke is stepping down as chairman - a post to be taken by Origin managing director Grant King - to become deputy chairman. Patrick Strange, who is a former chief executive of Auckland powerlines company Vector, is leaving the Contact board altogether.

Pryke said he did not expect too much difference in the operation of a board with six, rather than eight members.

* All Contact shareholders will soon be getting the Origin takeover offer posted to them. Under takeover rules, Origin has to make the same offer it made to Edison Mission to all shareholders. There is no chance a full takeover offer will succeed, nor is it designed to do so. Shareholders will be offered $5.67 for each Contact share, while they are currently trading on the NZX at more than $5.80.