Simon Henry chief executive DGL Group. Photo / Supplied
Milford Asset Management - one of the country's largest investment managers - has sent a please explain letter to DGL and called for a meeting after its chief executive reportedly made derogatory comments about My Food Bag co-founder Nadia Lim.
DGL chief executive Simon Henry is reported to have referred to Lim as a "bit of Eurasian fluff", in an interview with business publication NBR last month, while comparing the public float of his chemicals company with that of My Food Bag.
Henry is reported to have said: "I can tell you, and you can quote me, when you've got Nadia Lim, when you've got a little bit of Eurasian fluff in the middle of your prospectus with a blouse unbuttoned showing some cleavage, and that's what it takes to sell your scrip, then you know you're in trouble."
He continued: "Go back to that prospectus and find that photo. You know you're in trouble. I mean, you know when you (sic) got a TV celebrity showing off her sensuality to hock scrip, then you know you're in trouble. The uglier the board, the more successful the share ..."
The only image of Lim in the prospectus is of her standing around a barbecue in a casual v-necked camisole top with jeans. The top has no buttons.
The comments have sparked strong criticism from governance experts and two KiwiSaver providers. Kiwi Wealth and Simplicity on Thursday said they would black-list the company from their investment portfolios.
Today Devon Funds Management also joined those putting DGL on its exclusion list.
Devon portfolio manager Victoria Harris said she was appalled by Henry's racist and sexist comments.
"At Devon, we do not condone these comments. We also do not want to be associated with any company or person that conducts itself with such disregard for diversity and inclusion. As such, we have placed DGL Limited on our excluded companies list until further notice and we will reassess pending further developments."
Harris said it had a fiduciary duty to its investors and the broader community when it came to its investment decisions and allocation of capital.
"Investing is voting with your wallet. More and more investors are aligning their investments with their ethics and values. Comments like these do not align with a lot of people's values and ethics, so they are letting their money do the talking."
While Lim herself initially deferred comment to My Food Bag's chief executive she has since spoken out about the issue saying she isn't looking for a personal apology.
"What would make me happy is if he really does internalise it, and think deeply about it, from other people's perspectives."
But so far the board and Henry himself have failed to respond to repeated requests for comment on the statements.
DGL dual-listed on the ASX and NZX last May. Henry founded the chemical supply chain management company in 1999 and it operates across New Zealand, Australia and internationally.
Henry is a New Zealander but the rest of the company's board are Australian. As part of the sharemarket float Milford, which manages more than $9 billion including around $5b in KiwiSaver, took a 5 per cent stake in the company although that has since reduced to under 5 per cent.
Frances Sweetman, portfolio manager and head of sustainable investment at Milford Asset Management, said it had been appalled by Henry's comments and had sent an official letter to the chief executive and the board requesting an explanation and a meeting.
"Obviously, we absolutely condemn any type of discriminatory and offensive comments like this.
"We would like to see them make an apology and retract the comments.
"And then we think it would be appropriate to strengthen the culture and governance of the business."
Asked if Henry should resign Sweetman said it would seek an explanation first.
"We have to acknowledge there is a risk he was misquoted here. Even though it seems highly unlikely. We would want to talk through the nature of how and why these comments were made before making that type of request."
Sweetman said keeping its stake in the company for now allowed it to get a foot in the door to discuss the issues.
"It is not going to be easy to front up and ask them why they have done it and what they are going to do about it. But to me it does feel like the right thing to do.
"We have got a bigger obligation here than just to sell a small holding and forget about it. It doesn't feel like that is enough."
She couldn't say what its plans for the shareholding were as that could be construed as market manipulation.
"We do abhor any comments of this nature. We are all absolutely appalled. It's not that we are trying to ignore it or that we condone what he said in any way it is just that I genuinely think we have got a bigger responsibility and we can get better outcomes by going and engaging with them than just selling."
On Thursday Simplicity managing director Sam Stubbs said the NZX should also take action as he believed the comments were a breach of the basic principles of governance of a public company.
But a spokesman for the NZX said the matter of Henry's reported comments was outside the stock exchange's rules and for DGL to deal with.
Asked to comment by the Herald, chief executive Mark Peterson said the NZX encouraged and celebrated "diversity and inclusion and respectful behaviour".
"Our corporate governance code recognises this.
"NZX is responsible for monitoring and enforcing the rules under which NZX's markets operate. This is a matter outside the rules and therefore one for the DGL board to address."
A spokesman for the ASX which is DGL's primary sharemarket listing, said it provided clear guidance on appropriate language to be used in announcements for releases to the market.
"The comments by the CEO were not made on the ASX announcements platform and would not have been released by ASX. ASX requires language to be factual, relevant and expressed in a clear and objective manner. Emotive, intemperate or defamatory language do not meet ASX standards."
It also placed the responsibility for dealing with the issue back in DGL's court.
"ASX's focus is on monitoring compliance with the listing rules, primarily disclosure of price-sensitive matters to keep the market informed.
"Comments by a CEO of the kind in this case are for the company, its directors and investors to assess and on which to take action."
DGL's share price fell sharply on Friday, closing down 20c or 4.94 per cent to $3.85. They were trading at $4.50 as of Friday last week.
The S&P/NZX 50 Index closed down 0.10%, falling to 12,627.32.