Defiant board weathers shareholders' vitriol

By DITA DE BONI

A grim-faced, grey-suited Contact Energy board of directors faced off with more than 1000 small shareholders, decked out in their summer finery, at the company's annual meeting yesterday.

Armed with its legal adviser, the board sat defiantly through an hour of bile from more vocal shareholders while others nodded in agreement or bayed for louder microphones.

But while most remained well-behaved, the sheer number present indicated that the company had not succeeded in explaining why it had rubber-stamped more than $6 million in payments to former chief executive Paul Anthony.

The turnout also indicated a huge chasm between the expectations of small New Zealand shareholders and large American stakeholders such as Edison - a gap only widened by the board's quest to pay itself more.

Contact chairman Phil Pryke tried to mollify the crowd by addressing remuneration issues at the beginning of the meeting.

He was keen to impress on the assembly that he understood shareholder disquiet - but in each case disagreed with the fundamental argument that a poor share price should affect directors' fees.

Mr Pryke started several responses with the infamous management school catchphrase "I hear what you are saying," but couldn't avoid overheating at some shareholder remarks - especially those calling for his head.

He told one shareholder after a particularly vitriolic attack that he should consider selling up.

Contact's defiance over the remuneration issue was all the more vexing for shareholders given that directors had backed down over tabling the "divisive" resolution for fee rises just days prior.

But it is clear the board feels the increases are justified. Mr Pryke pointed to overseas benchmarks and the directors' hard work during the turbulent transition from a state-owned enterprise.

He said the board felt "a bit demeaned" by the argument and accused the media of exaggerating the issue.

But slack jaws only widened at news that the company gave two directors $65,000 plus crystal glassware when they retired last year after just four years on the board.

Despite this, shareholders are almost certain to rubber-stamp the re-election of directors Ray Vickers and John Milne. Ballot results will be released this week.

Perhaps the best reassurance for shareholders came from one of the board's Edison imports - Bob Edgell, who said the US company was committed to Contact and advised shareholders to be patient.