SkyCity defends directors' fees

Chairman Rod McGeoch called the fee increases 'hardly an excessive grab' when he addressed SkyCity shareholders yesterday. Photo / Steven McNicholl

What was billed as the annual meeting fight of the season saw SkyCity Entertainment face shareholders yesterday looking to boost its director fee pool to $1.3 million a year.

The 36.8 per cent rise included a 25 per cent increase in chairman's fees to $250,000 and 33.3 per cent for director fees to $120,000 a year.

In the build-up to the meeting in Auckland, the Shareholders Association said it had difficulty approving the whole increase because it was not backed up by performance.

The association accepted that some increase was necessary and had suggested directors have half this year and the balance next year, dependent on results.

SkyCity chairman Rod McGeoch said the fees had not risen since 2006 and the company had commissioned Ernst & Young to benchmark them against a group of NZX and ASX companies.

Total shareholder returns for the year ended June 30 were 31 per cent, which the company said was the third-best performance in the top 20 NZX public companies.

McGeoch said Ernst & Young had used 2010 remuneration data.

"So we're shifting from 2006 to the levels of 2010, hardly you would say an excessive grab when it is also at the median level of those that we've taken the comparison of."

Shareholders spoke both for and against the fee increase.

One called the proposed rise obscene: "Are the directors so insulated from the public as to be unaware of the protests around the world, and in Auckland itself, against corporate greed."

Another said the Shareholders Association did not speak for all.

"I for one am very much in favour of the methodology that you've taken to approach the increase," he said.

"I think given the last increase was in 2006, I think it's more than reasonable and I as a shareholder will be voting in support."

The resolution was passed but in effect the decision was already sealed, with 90 per cent of about 320 million proxy votes given in support.

The 2012 financial year had started well with the first four months of normalised revenue of $325.8 million - up 8.8 per cent on the previous year.

Chief executive Nigel Morrison said he was pleased the momentum of the second half of 2011 had carried over into the 2012 year to date.

"Whilst the impact of Rugby World Cup was less than expected, we believe the continued momentum in our core businesses across the group will deliver more value to shareholders over the longer term."

The World Cup was estimated to have driven about $12 million of revenue growth primarily during the finals period in Auckland from hotels, new outlets and other bars and restaurants.

"While the Rugby World Cup may provide some boost to consumer confidence, given the uncertain state of global markets, the timing of a sustained economic recovery in New Zealand still remains somewhat uncertain," Morrison said.

Based on current market conditions and trading patterns, SkyCity expected full-year normalised profit for the year ended next June 30 would be in the $140 millions, up from $130.9 million the previous year.

The balance sheet was in great shape with $400 million of undrawn facilities, Morrison said.

"Quite frankly we're a little bit undergeared, we're not maximising the potential of our balance sheet ... we're in a great position to invest for the future and further generate growth for this organisation."

The company is the Government's preferred developer to build the National Convention Centre in Auckland.

Morrison said the company expected to conclude negotiations in the new year.