Contact directors face quiz on pensions

By CHRIS DANIELS

Contact Energy's directors may finally get their long-awaited pay rise, but shareholders are trying to slash their retirement payouts.

The energy company's directors yesterday announced that shareholders will be asked at the annual meeting next month to approve a 21 per cent increase in directors' fees from $223,000 to $270,000.

This means chairman Phil Pryke would be paid $80,000 a year, up from $68,889, while the other New Zealand directors would be paid $45,000 each, a rise of $8300.

Previous attempts have been defeated by shareholders or withdrawn, after criticism that the company's performance did not justify any pay rise for directors.

In an announcement to the Stock Exchange, Mr Pryke said the board would ask for shareholder approval to bring its directors' fees "into line with those paid to the directors of other listed public companies of similar size and complexity".

Directors fees were last set in 1998 by the Government, before Contact was floated as a private company. Mr Pryke said the scope of the company's activities had broadened greatly since then, "adding to the considerable responsibilities of the Contact directors".

The Contact board has commissioned PricewaterhouseCoopers to produce a report supporting their claim for a pay rise.

Mr Pryke said the issue of directors' fees had deflected attention from the performance of the company and the board's plans. Last year was a good one for Contact, because it was able to take advantage of high electricity prices caused by the lack of water flowing into the South Island's hydro storage lakes.

Revenue increased from $868 million to $1097 million. Dividends per share rose from 17.36c to 19c.

Shareholders Association chairman Bruce Sheppard said he had no problem with the proposed increase in Contact's directors' fees.

"The case for a minor increase is reasonable. At least this time they've done well, though the reason they've done well is because the lakes were empty," he said.

Mr Sheppard and fellow members of the Shareholders Association are trying to get the constitution changed to allow a retirement payout of no more than 10 per cent of the total remuneration earned by that director. The payment would also have to be authorised by a shareholders' resolution.

A retiring director can be paid up to three years' worth of fees upon leaving the board, without any shareholder approval.

Mr Pryke said the issue of retirement allowances was for shareholders to decide and that the Contact constitution was "a mirror reflection of what is required under the Stock Exchange rules".

A Contact Energy annual report published last year raised eyebrows when it showed that two directors, Andrew Thomson and Brian Wood, were paid a retirement allowance of $65,000 each, compared with annual directors' fees of $29,200.

There was no explanation in the report of how the figure of $65,000 was arrived at.