F&P bloc fails to cast out directors

By GEOFF SENESCALL

The band of institutional shareholders in Fisher & Paykel, who snuffed out plans to issue discounted executive options, proxy-voted against the directors up for election at yesterday's annual meeting.

But a unanimous show of hands ensured that chairman Sir Colin Maiden and executives David Henry and Lindsay Gillanders kept their board seats.

After the meeting, institutions spoken to by Weekend Business expressed concern about the number of executive directors on the board.

Simon Botherway, of Arcus Investment Management, said it was not prudent for the company to have four executive directors as well as former executives on a board of nine people.

"We believe there should be more independence."

Mr Botherway also questioned the ongoing level of capital expenditure in the whiteware business. Despite this spending, there appeared to be little in the way of a sustainable competitive advantage in markets where there were cheap Korean imports.

Mr Botherway said investment might be better deployed in the healthcare business, where more attractive returns were being achieved.

According to Sir Colin's address, Fisher & Paykel had budgeted $50 million for capital expenditure this year.

That included $14 million on healthcare and $36 million on whiteware.

Chief executive Gary Paykel said the healthcare division had performed above expectations in the first quarter.

It was aiming to double sales over a five-year period.

"We are ahead of that target."

On a group basis, Mr Paykel anticipated a slight rise in profit for the first half, with the potential to achieve a strong result for the full year.

The overall goal was to achieve 15 per cent on shareholders' equity within two to three years. Last year, the company moved from 9.2 to 14.3 per cent.

Mr Paykel, who had recently returned from visiting overseas investors and shareholders, said he was saddened by the lack of interest in investing in New Zealand.

His feeling was best summed up by an investor in the US who said: "There is a certain irony in marketing your well-performing New Zealand company at a time when New Zealand is off the international investment map.

"It is a complete change from your previous visits when you were selling a promise of improved performance within a positive New Zealand environment."

Mr Paykel also noted that sales had dropped to virtually zero in Fiji since the hostage crisis.

Fiji had represented 70 per cent of South Pacific business.

He also said the Deutsche Bank review of the company's operations should be completed by the fourth quarter of this year.