Stock Takes: Rakon chiefs enjoy pay jumps

Brent Robinson's total pay rose 24 per cent to $907,892 for the 2016 financial year. Photo / Getty Images

Rises of more than 20 per cent linked to 2015 data, says CFO.

Rakon shareholders may have been a little perplexed by the remuneration section of the technology firm's annual report, released last week.

It revealed that despite reporting a $1.7 million net loss for the 2016 financial year, compared with a $3.2 million profit a year earlier, executive directors Brent and Darren Robinson enjoyed substantial pay increases.

Brent, the quartz crystal component maker's chief executive, received a 24 per cent lift in his total remuneration, to $907,892 in the 12 months to March 31, 2016, up from $732,484 in the 2015 year.

His brother Darren, meanwhile, was paid a total of $734,605 in the 2016 year, a 22 per cent lift on the $600,390 he took home in 2015.

It's worth noting that the Business Herald's executive pay survey, (which doesn't include Rakon as the company is no longer in the S&P/NZX 50), found the average total pay increase received by New Zealand's top bosses in the 2015 financial year was a comparatively modest 12 per cent.

But, as is often the case with these things, all is not quite what it seems.

Rakon chief financial officer Simon Bosley told Stock Takes that the brothers' pay increases were the result of performance payments related to the 2015 financial year that were paid in the 2016 year.

"In the 2015 year, Rakon returned to net profit after a number of strategic and structural actions had been undertaken in the 2014 and 2015 years," Bosley said.

Still, long-suffering shareholders may well find it irksome to see the executive directors being rewarded for bottom-line improvements that proved unsustainable.

The company blamed reduced capital expenditure by global telecommunications companies for the loss it reported for the last financial year. Rakon shares, which soared as high as $5.67 soon after the firm's 2006 initial public offering, closed at 23c last night.

Losses regained
Brexit's initial impact on New Zealand stocks was short and sharp, but Britain's decision to leave the European Union is likely to remain a long-term source of market volatility.

The S&P/NZX 50 closed up 1.4 per cent at 6897.52 last night, 1.1 per cent above the 6821.35 level it closed at on June 23, the day before the referendum.

We're not out of the woods yet, however. Brexit has thrown Britain's political leadership into a state of flux and is widely expected to push the British economy into recession, which will weigh on the global economic situation.

Safe haven
As is often the case during bouts of global volatility, the local sharemarket fared better than many of its larger counterparts overseas.

Despite this week's rebound, Wall Street's S&P 500 - as well as the benchmark stock indices in France and Germany - remained well below their pre-Brexit levels yesterday. Interestingly, London's FTSE 100, like the NZX 50, has more than gained back its losses.

Though the New Zealand market continues to trade at hefty multiples, JBWere's NZ equity manager, Rickey Ward, said it would remain a popular option for international investors in the post-Brexit environment.

"We have reliable income streams from the electricity companies in particular," he said. "It will have a degree of attraction."

Bright side
The Brexit decision was generally received with a mix of shock and horror in financial markets.

But Nikko Asset Management New Zealand's managing director, George Carter, has given a contrarian view on the historic vote in a note posted on the fund manager's website.

He said there was a bright side to Brexit.

"Although much of the media appears to be relishing predictions of doom and gloom, it's significant to note that 52 per cent of Britain's populace envisages a brighter and more prosperous future outside the EU with more control over their own policies," Carter said.