The New Zealand Shareholders Association is recommending its members vote against Peter Huljich in a Pushpay board election this afternoon - citing that the biography presented to shareholders failed to mention a 2011 guilty plea to misleading investors about his KiwiSaver scheme.
But early investor Aaron Bhatnagar says the ginger group is failing to take into account how Huljich saved the startup when it couldn't make payroll in its early days, then helped lay the groundwork for its success today.
Peter Huljich - who has previously served as an alternate to his father Christopher - was named to the board during a May reshuffle. Today's AGM will be the first time he has faced a shareholder vote to affirm his appointment.
The Huljich family interests hold 22 per cent of Pushpay shares, "so in that sense are aligned with outside investors", the NZSA says in a notice issued to its members.
But it also notes the "controversial activities" of Peter Huljich's KiwiSaver scheme. The 2011 misleading public statements case saw Huljich himself was fined almost $113,000 while the company, Huljich Wealth Management, was fined $239,000 plus $95,265 in legal and court costs.
"With this background, even allowing for the passage of time, we have concerns around the appropriateness of this appointment. We also consider that this adverse information
should have been disclosed in the notes accompanying the Notice of Meeting, consistent with relevant commentary in the NZX Corporate Governance Code, the NZSA says.
NZSA chief executive Michael Midgley told the Herald his organisation was not targeting Huljich or Pushpay, but rather standing up for a good governance principal.
Pushpay did not immediately respond to a request for comment on Huljich's biography, but early backer Aaron Bhatnagar spoke out strongly in his defence.
"I'm very disappointed in the Shareholder Association's position, and I say that advisedly as I used to be a committee member for the Auckland branch of the NZSA for about five years, ceasing two years ago," he tells the Herald.
"It's a matter of public record that Peter Huljich saved Pushpay."
In late 2013, Pushpay had run out of money and couldn't pay their staff, and had, in fact, told staff they would understand if they no longer turned up to work, Bhatnagar says.
"It was Peter Huljich who then arrived on the scene, providing bridging finance to enable Pushpay to keep going in late 2013.
"It was Peter who then brought together a consortium of investors in early 2014 which included myself and our family interests. As an executive and major investor, he helped drive the capital raise round which led to be compliance list in August 2014, plus helped drive subsequent capital raises and the ASX listing as well."
It reflects poorly on the Shareholders Association to not take this into account, Bhatnagar says.
While the NZSA plans to speak against Huljich today, momentum could be with the director in the context of strong results.
Pushpay recently reported a maiden full-year profit of US$18.8m against a year-ago loss of US$23.3m as revenue jumped 40 per cent to $98.4m.
Its shares, however, have recently flattened after a steep run-up (see chart above).
Although taking a stand against Huljich, the NZSA will make something of a departure from its philosophy by backing recently-departed Pushpay CEO Chris Heaslip to keep his board seat. Heaslip was also appointed in May and faces his first shareholder vote today.
Last year, the NZSA spoke out against outgoing Sky TV CEO John Fellet's plan to sit on the pay TV broadcaster's board, saying it would crimp the style of new-broom chief executive Martin Stewart.
Then NZSA chairman John Hawkins said, "The difficulty with an immediate appointment or continuation is that the ex-CEO will carry too much influence and may inhibit necessary change being made – particularly if it casts his or her tenure in a poor light and seeks to change or reverse earlier strategies and policies."
But in Pushpay's case, having Heaslip as a director would be good for continuity, Midgley told the Herald.
Heaslip and co-founder Eliot Crowther left the virtual collection plate software company within months of each other - Crowther to concentrate on his family after a split with his wife, and Heaslip because he thought it was time to pass the baton from an entrepreneurial leader with startup skills to a more process-focused CEO, Bruce Gordon. (read: "'It's hard to be vulnerable as a CEO,' Pushpay co-founder Chris Heaslip on his surprise decision to quit).
Okay with fee increase
Pushpay shareholders will also vote on whether to increase the directors' fee pool from US$450,000 to US$650,000.
The NZSA backed the bump. Midgely said while substantial, it was necessary to attract top board talent in the US.
Most of Pushpay's revenue is generated from US churches and 283 of its 389 staff are based in the US (with most of the balance in Auckland).