The Shareholders Association has come out against Ebos Group's proposal to increase directors' fees while criticising the company's capital raising process back in April.

The NZSA previously strongly opposed the company's $150 million capital raising, arguing that it was done via an underwritten placement to the detriment of ordinary shareholders who may have wanted to participate.

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"We were not impressed by its public announcements and wrote to the company
but the responses from the chair were dismissive. The reasoning was contradictory and the revelation that the placement was heavily oversubscribed to approximately $700 million was startling evidence of just how attractive it was, and that underwriting was clearly unnecessary," the association said.


"Ordinary shareholders were significantly disadvantaged and the company's communication with them was appalling."

The association tried to talk to the company "but this did not take place until just recently in mid-September when we met the chair designate. We understand the company had its reasons for acting as it did, but we remain unconvinced that it could not have treated its existing shareholders more fairly".

Chief executive John Cullity had been reported as saying that he wouldn't do anything differently, the association said, but it expects "that this conduct shall not be repeated under refreshed governance and the guidance of a new chair".

In advice to members, NZSA says it will vote the proxies it holds against a proposed $310,000 increase to the director fee pool to $1.41 million.

Ebos holds its AGM next Tuesday in Christchurch.

NZSA has succeeded in getting Ebos to expand on its bare bones notice of meeting, which only outlined the aggregate additional amount sought, by spelling out how much each director would be paid if the increase in fees is approved.

The organisation also succeeded in getting Ebos to provide it with a summary of the report from the external consultants, Mercer, "but only in confidence," NZSA says.

"Our opinion is that there are no valid reasons why this information should not be available to all shareholders," it says.


It cites the NZX Code of Corporate Governance which says that any increase in director remuneration should be presented "in a transparent manner." The organisation's own policy is that "where consultant reports are used to justify fee increases, the NZSA believes the full report should be made available to shareholders as part of normal disclosure."

In the original notice of meeting, Ebos said it wanted the increase because "the size and complexity of the group's business continues to increase with a consequent increase in workload for directors."

It said directors were paid an aggregate of $976,000 in the year ended June.

It also wanted to ensure that the fee allowance would be sufficient to pay additional non-executive directors and so that it could "offer competitive fees in order to attract and retain non-executive directors of a high calibre."

Ebos is proposing to give its chair – Elizabeth Coutts will replace Mark Waller as chair when he steps down at the annual shareholders' meeting – a $20,000 a year increase. That will take the chair's fees to $320,000.

It is planning to give the other directors a $10,000 a year increase to $160,000 and to increase the remuneration of the chairs of two board committees as well as the directors sitting on each of those committees on top of that.

In response to the criticisms, Ebos said today: "Representatives have held positive discussions with the association in recent weeks."

Ebos noted the association was in favour of three resolutions to be tabled at the annual meeting but acknowledged the association's position in recommending against the fourth resolution to increase directors' fees.

"While EBOS respects the position of the association, many shareholders have previously requested the directors to increase the size of the board given the significant growth and success of EBOS.

"The directors are currently undergoing a review of the make-up of the board with a view to adding two new directors with appropriate experience. The proposed increase is critical to this process and attracting the best possible available candidates in what is a highly competitive market," the statement said.

Ebos plans to make further comment after the annual meeting.

Ebos has a market capitalisation on the NZX of $4b. Shares in the business were trading here on Friday at $24.88 each.

- Additional reporting by BusinessDesk