KEY POINTS:
I am a traitor to the cause of journalism because I am starting to wonder whether we now have too much transparency of information. You would think that the campaign for the public to have access to every nosepick in the boardroom would mean we end up with more meaningful revelations about the exercise of power - sunlight is the best disinfectant and all that.
But I am not so sure. It seems that the more information we journalists get, the more we resort to plucking the low-hanging fruit. When confronted with the minutiae of detail, the media simply gravitate to the grisly stuff that taps into our most prurient emotions: fear, envy and disgust.
Take the rumpus over Contact Energy, the country's second largest listed company. The board wanted to increase the total amount it could pay its directors from $770,000 to $1.5 million, which would put it in line with Telecom, our biggest company. Something that one could justify, or at least argue the toss over.
This proposal coincided with the announcement that Contact's power prices were being raised by 10 per cent. There is no connection between the two: the directors could forgo their entire fees and it would not make a jot of difference to power prices. Nonetheless, you know the narrative that developed: the board are a bunch of rich pricks.
"The fee increase is being described as obscene and excessive," TVNZ reported. The dissemination of nosepicking-type details such as the fact that the board had a dinner at Viaduct restaurant Soul, apparently with bubbly, did not help to dispel this impression.
Shareholder activist Bruce Sheppard knows it is idiotic to draw a connection between the power price rise and the directors' fees. "I know that and you know that but 500,000 New Zealanders don't know that," Sheppard says he told Contact chairman Grant King, warning that customers would leave as a result. "Customers make their decisions based on emotion."
Sheppard was right, but he is not doing much to help them engage their brains. Exploiting the eat-the-rich attitude, Sheppard also undermines investors' confidence about putting their savings into listed companies. Why do it if you are going to get ripped off by greedy directors?
Sheppard's explanation would be that much of his problem with the Contact fee rise was to do with whether its independent directors, including Phil Pryke, are fulfilling their role. He also thinks Contact's business is less complicated than Telecom's, so the directors should get paid less.
Sheppard told me that Contact, majority owned by Australian company Origin, needed to realise it had to abide by the ethics of the New Zealand marketplace. That is, even if these are kneejerk reactions driven by envy rather than rational analysis.
Sheppard is very successful at what he does. Contact backed down over the fee rise - simply confirming the snouts-in-troughs impression. Of course, if consumers are not happy with power prices going up they have every right to change companies, and apparently 5000 of them did last week. Although they might be better off lobbying politicians for more regulation in the energy sector than begrudging the directors what could be described as fair pay.
Still, if you are on a board and thinking of putting your fees up, you might like to think again. Or at least keep it under your hat.
deborah@coneandco.com
