"That's many more times than people earn in a hard-working job."
National leader John Key said Contact should "show restraint. All New Zealanders are being asked to tighten their belts because of economic conditions and I would have thought the directors of Contact would have taken that on board, especially given the price increases that are flowing through to consumers," he said.
The company had no response to the political broadsides yesterday, but was prepared to answer concerns at today's meeting.
Contact has said the fee pool has not increased since 2004 and says it is now "well below the market", citing a report by consultants Mercer. It also "signalled the intention" to use $1.16 million of the $1.5 million in the first year, a spokesman said.
With the backing of Australia's Origin Energy, its 51 per cent owner, the fee increase and reappointment of two directors is a formality.
However, small shareholders are not convinced by the arguments. Corporate liaison spokesman for the Shareholders Association, Des Hunt, said he had no problem seeing high performing directors get a "reasonable" fee but the Contact board had not served minority shareholders well.
Board members of unlisted state-owned power companies were paid much less.
Meridian's annual report shows $2.6 billion in revenue - $100 million less than Contact - but its deputy chairman Ray Watson is paid a seventh of the amount his counterpart at Contact, Phil Pryke, receives.
Hunt said he feared Contact's power price increases of between 10 per cent and 12 per cent could aggravate politicians and risk tighter regulations.
The association has had running skirmishes with the company at previous meetings. Hunt said the temperature this time was especially hot, aggravated by the company's failure to reply to association concerns.
"There's going to be a lot of anger. We don't see justification for any increase," he said.
Milford Asset Management executive director Brian Gaynor believed Contact was heading down the same road as Telecom, which had reform and restructuring imposed on it.
"You can play that game for a while but as Telecom found out much to their dismay it can come back and bite you quite badly and affect your ongoing operations."
In times of deep recession utility companies were big targets for politicians. "They're easy meat when people are feeling bad times. You will get the politicians saying we'll cap electricity price increases or force companies to reduce their prices."
The Shareholders Association has taken issue with Mercer's assessment of appropriate board remuneration and challenged consultants to explain it at today's meeting.
A Mercer spokeswoman said: "If the market goes down, indicating director or executive pay could also go down, we would advise our clients as such. This has been the case in the past and will be in the future."
She said a company's board was accountable for making the final determination on director pay.
"The global economic conditions are really unprecedented, which means more than ever, organisations should make decisions based on all the information they have at hand."
Contact shares closed down 24c at $7.31 yesterday.
The meeting
What: Contact Energy's annual meeting of shareholders.
When: 10.30am.
Where: Hyatt Regency Auckland, corner Princes St and Waterloo Quadrant.
- Additional reporting NZPA
