KEY POINTS:
The New Zealand Exchange is facing a shareholder revolt over an option package that would see chief executive Mark Weldon nearly double his shareholding in the exchange to almost 10 per cent.
Based on the current market capitalisation of the NZX company, that stake would be worth about
$20 million.
The Business Herald understands shareholders are concerned that the hurdles for achieving the options are too low and that Weldon and other NZX staff who also own stock may end up with too much control of the company.
Weldon currently owns 5.3 per cent of the NZX, but the proposed scheme would see him increase his stake to as much as 9.7 per cent. Shareholders are banned from owning more than 10 per cent of the company.
Under the scheme, which was revealed to shareholders in a notice of meeting this week, Weldon would be given financial assistance to buy shares in the exchange if he met performance targets.
The NZX boss would be able to purchase his shares at the share price in June this year in two to three years' time if the total shareholder return - the share price rise and dividends - was 10.5 per cent or more per year.
Some NZX investors are concerned that the share price is not a good measure of performance and that return on assets employed would be a better measure.
The scheme needs shareholder approval and NZX chairman Simon Allen is understood to have been talking to institutions and leading investors about the plan this week. He was travelling yesterday and unavailable for comment.
The NZX's largest shareholder - Fisher Funds Management which owns 9.7 per cent - said it would be raising the issue with the NZX.
"We are assessing the proposed package with a view to discussing it further with the board early next week," said Fisher Funds chief investment office Warren Couillault.
Investment company Guinness Peat Group, which owns 2.3 per cent of the NZX, is also likely to be concerned.
When Weldon was given options over about 5 per cent of the company's shares at the NZX's float in 2003, GPG director Tony Gibbs expressed concern about that level of ownership, so is unlikely to want to see it nearly double.
Shares in NZX hit a record high of $9.20 this week and closed down 10c at $9.10 yesterday. Weldon's salary is $450,000 with a bonus of up to $450,000.
