A shareholder showdown is looming over plans to award A$546,000 in performance rights to new Kathmandu chief executive Xavier Simonet.
The proposal will be put to a vote at the firm's annual meeting in Christchurch this Friday, but investors are furious about a lack of detail surrounding the targets Simonet needs to achieve to receive the long-term incentive.
Briscoe Group boss Rod Duke, whose firm owns a 19.9 per cent stake in Kathmandu, was initially planning to send representatives to the annual meeting.
But late yesterday, he said it was unlikely that Briscoe - which failed in a recent takeover bid for the outdoor retailer - would vote for the proposal and he would travel to Christchurch to make his views known.
Kathmandu's notice of annual meeting, released last month, said Simonet would receive 50 per cent performance rights if the company achieved 15 per cent compound average annual earnings growth over the next three years, from a base profit of $20.4 million in the last financial year.
The other 50 per cent of the rights is dependent on total shareholder return.
Simonet's fixed annual remuneration is A$780,000.
In his Business Herald column on Saturday, Milford Asset Management executive director Brian Gaynor said it was "totally inappropriate" for the company's board to set a performance target of only 15 per cent a year when Kathmandu had suffered such a large decline in annual profit - it had fallen from $44.2 million two years ago to the $20.4 million reported for the past financial year.
Yesterday, Kathmandu announced it would still put Simonet's A$546,000 rights award up for a vote, but the earnings growth targets he needed to achieve would be increased - by an unspecified amount.
Duke said he had received about eight phone calls yesterday from other Kathmandu shareholders, upset about being asked to vote on such an undetailed proposal.
"I've never ever heard of something quite so arrogant as that," he said.
"I've never seen a resolution by any board that says, 'Sign this off and I'll tell you the answer a bit later when I feel like telling you'."
Kathmandu chairman David Kirk said details of the new growth targets could not be disclosed ahead of the meeting because they were yet to be determined by the board.
"We don't want to throw out the whole scheme; the scheme works well," Kirk said. "We just didn't twig, so now we realise we need to adjust those [targets]."
Duke said that under the initial proposal, Simonet would still have met his performance targets even if Kathmandu failed to achieve the $30.2m million profit it has forecast for the current financial year - a forecast it used to fight off the takeover bid from Briscoe.
"I would have thought the starting point [for the performance target] should at least be the forecast they put in the market."
Gaynor said it was "unsatisfactory" to ask shareholders to vote on an unspecified increase in growth targets.
"I don't understand how you can just say that you are going to adjust it without saying what you are going to adjust it to."
Milford, which holds shares in Kathmandu, would vote against the proposal, Gaynor said.
Kirk said the board might provide some more detail on the growth targets before the meeting, if that was what the majority of shareholders wanted.
"It's not a question of us not wanting to provide more detail - it's just that we haven't been in a position to get together to do that," he said.
Briscoe mounted its takeover bid in July, but Kathmandu's board advised shareholders to reject the offer, which amounted to $1.80 per Kathmandu share through a combination of cash and scrip.
An independent assessment by Grant Samuel put a $2.10 to $2.41 valuation on Kathmandu shares, which closed up 1c at $1.56 yesterday.