Contact acts to take heat out of AGM

David Baldwin. Photo / Greg Bowker

Power company meets Shareholders' Association in bid to defuse tension Contact Energy has held peace talks with small shareholders aimed at avoiding a repeat of last year's turbulent and damaging annual meeting.

Chief executive David Baldwin and new director Sue Sheldon met the Shareholders' Association to discuss concerns ahead of this year's meeting on Thursday.

Association corporate liaison spokesman Des Hunt said the amicable meeting at the end of last month was the first truly meaningful one with the company he knew of.

A Contact spokesman characterised the Auckland meeting as a way of "keeping in touch".

Last year the company tried to double the pool of directors' fees against a background of a poorly timed price increase for consumers and worsening prospects for many of its small shareholders. That led to angry outbursts at the annual meeting and a backdown on fees which came too late to stem dissatisfaction with the company, 51 per cent-owned by Australia's Origin Energy.

"The reason for the meeting is that they indicated they didn't want another shambles like that again," Hunt said.

The association wants a change to the way bonuses are paid to chief executives, including Baldwin, to peg them to long-term rolling averages and basic pay rises to be more in tune with what staff are paid.

"We have no objection to bonuses being paid on three-to-five-year rolling averages."

Hunt said he also wanted Origin to commit to not using its majority to vote on directors it deems independent but whose independence is questioned by small shareholders.

The company lost 40,000 customers in the wake of last year's meeting.

"What they need to do is show they are listening and are putting independent people on that you can respect. We want to be constructive in our comments but we don't want to be sucked into being bullied."

Sheldon, John Milne and Phil Pryke are listed as independent directors. Hunt said the long-serving Pryke was a lightning rod for dissatisfaction among small shareholders.

"We don't see him as independent and we would prefer to see him go. Why not use him as a consultant if he has some benefit to the company?"

The Contact spokesman said the five resolutions related to the setting of auditors' fees and directors' re-election and, for Sheldon and Baldwin, confirmation of appointment. He did not expect fireworks at the meeting.

Shareholders will want an update on performance from Contact, which suffered a 50.4 per cent fall in net profit to $117.5 million for the year to the end of June, largely due to a surplus of water in the South Island for much of the period which meant its gas-fired plants were not as profitable. Those conditions persist.