F&P staunch on staff, directors' benefits

By ELLEN READ

Fisher & Paykel Appliances is defending its employee share option packages and its plans to raise directors' fees in the face of shareholder opposition.

The manufacturer responded to criticisms by issuing a lengthy statement to the New Zealand Stock Exchange.

It plans to issue 6.3 million new options to staff - and will ask shareholders for approval at its August 16 annual meeting.

Shareholders Association chairman Bruce Sheppard said the new options, when combined with past issues, would see more than 6 per cent of the company tied up in outstanding options.

He said Appliances, and its Healthcare sister company, were hurting shareholders by giving away too much. He accused them of being out of step with other large companies on the stock exchange.

In yesterday's NZX statement, the F&P directors "categorically" disagreed with suggestions the options scheme would transfer undue shareholder value to staff.

Directors said shareholders would be better off because the share price would have to rise for the options to be exercised.

They said an independent valuation of the options scheme showed the annual cost to the company over five years to be $554,000.

"The plan provides an appropriate incentive to the management team of the company to act in the best interest of shareholders, and in particular to enhance longer-term shareholder value," the statement said.

A planned $150,000 hike in directors' fees relates to the recent purchase of Farmers Finance and the need to appoint a sub-committee of non-executive directors to review the integration with F&P Finance.

Asked if plans to introduce the new measures were to help control shareholder meetings, F&P directors said the proposed amendments to the company constitution were needed to comply with NZX listing rules.

Sheppard this week wrote to F&P Appliances outlining shareholder concerns including the options and donations made by the company and the role of its auditors.