Contact makes peace with its shareholders

By CHRIS DANIELS energy writer

Fans of blood sport at annual meetings may now have to take Contact Energy off their calendars after it signed a Christmas peace pact with the Shareholders Association.

Contact, which has thousands of small shareholders thanks to its birth as a privatised state-owned enterprise, has been known for having testy annual meetings, with shareholders routinely grilling directors over their pay and performance.

But all the argy-bargy was consigned to the past yesterday at a well-rehearsed press conference in Auckland, where Contact chairman Phil Pryke and Shareholders Association chairman Bruce Sheppard shook hands and declared peace.

Contact, in consultation with the association, has decided to abolish all retirement payments for its directors while almost doubling their fees.

If shareholders agree at the annual meeting in February, base directors' fees will increase from $45,000 to $60,000, plus another $30,000 of shares that will be held in trust for three years, or until retirement, whichever comes first.

Pryke's remuneration goes up from $80,000 to $120,000 in fees and another $60,000 worth of the restricted shares.

He has twice been granted the Shareholders Association's "Golden Glob Award", for his behaviour at annual meetings and for what was seen as an attempt to evade shareholder scrutiny in a scheme to invest in an Australian power station, in concert with Contact's parent Edison Mission.

Sheppard was yesterday effusive in his praise for Pryke, saying that the Contact chairman did not need approval from any shareholder other than 51 per cent owner Edison Mission to raise the fees.

But instead of relying on Edison, Contact directors had decided to consult all shareholders and put the pay rise to a vote requiring 75 per cent approval.

Assuming Edison approves the new scheme, half of the remaining shareholders will have to also vote in favour.

"You will be aware that last year we awarded Phil the Golden Glob," Sheppard said. "I would suspect that he either has the skin of a rhinoceros or alternatively he is exceedingly brave."

He said regardless of which of those two Pryke really was, the outcome had been good for all shareholders and the chairman had displayed "exceedingly good leadership".

Pryke had agreed to join the Shareholders Association, but had initially wanted this kept secret.

"A number of directors are now members and this in no way implies any change in our philosophy, it simply implies that some of our views are gaining widespread support,"said Sheppard.

In the new year, Contact and the association would co-operate, helping the company to meet its members throughout New Zealand.

Pryke said the new scheme had nothing to do with the actions of Edison Mission, which is selling some of its non-US investments.

In November 2001, Pryke recommended shareholders accept an Edison takeover offer, saying that if it failed, it was likely the share price would fall.

The Contact share price has since risen by nearly 35 per cent, at one stage reaching more than $5.60. They are now trading around $5.30.