Tea and bikkies beat the tough questions

By KEVIN TAYLOR

Telecom chairman Dr Roderick Deane was a beacon for investors last night after starting yesterday in the glare of hard questions from the Shareholders Association.

But other shareholders at Telecom's annual meeting in Wellington yesterday appeared more interested in the after-match tea and bikkies than in tough questions about board and executive pay schemes.

Association chairman Bruce Sheppard put four resolutions to the meeting relating to director and senior executive pay.

All were lost by a considerable margin, the company said last night.

The 2 1/2 hour meeting, attended by more than 300 shareholders at the Duxton Hotel, was good humoured, considering it came after Telecom's first bottom-line loss - $188 million for the year to June.

But there was no slugging match between Telecom's charming and witty chairman, and the equally witty but more cynical Sheppard, who had four resolutions on the agenda:

* The board investigate and report to shareholders on the best way to align directors' remuneration with shareholders' long-term interests.

* The constitution be changed to restrict directors' retirement allowances to no more than "10 per cent of the total remuneration of the director in his or her normal capacity as a director of the company", and the payment be authorised by an ordinary resolution of shareholders.

* The board review the remuneration strategy of key executives to ensure it included appropriate incentives for creating long-term shareholder value.

* The board curtail the existing share options scheme pending a review of other remuneration plans to support shareholder value-creation.

Telecom opposed all the motions, and gave shareholders written reasons before the meeting.

But Deane gave Sheppard the floor to put his case.

Telecom appeared to have put considerable work into answering the association's questions, and Deane waved a thick document of correspondence to the audience to show the company was on the case.

Director Patsy Reddy outlined the company's remuneration strategy, giving detailed information in pay bands covering every employee and assuring the audience that reviews were regularly done.

But before Sheppard started probing Deane's apparently chinkless armour, other questions came from the floor.

A Wellington man wanted to know why nothing had been done to distinguish between fax and phone numbers in the Wellington phone book, and why the "Macs" were all mixed up on page 345.

Another lamented that the board had too many lawyers and accountants, and not enough engineers.

A woman wanted free toll calls from Kapiti Coast to Wellington.

Another man suggested the board give all male shareholders a tie with "Telecom 2002" written on it. Women should get a brooch, and it should all be paid for out of the directors' own pockets. "It would add very much to the morale and interest of the shareholders," he said.

Deane told another questioner that Telecom's annual meeting next year would be in Auckland.

Then it was Sheppard's turn. "If I start to bore you just stand up and I will sit down," he told the audience.

"Shall I sit down or stand up?" Deane retorted to laughter.

As Sheppard started charging into his work, some in the sea of grey and white hair in the audience were heading for the exits.

Undeterred, he carried on. If shareholders knew the terms of remuneration in detail, they could assess what value they had derived from their board and senior executives and ensure shareholder meetings did not continue descending into the "greed-envy debate".

Deane said that the remuneration information given to the meeting was some of the most detailed he had seen revealed in Australasia.

The association did have positive things to say, declaring Telecom a well-run company.

And at the end of the meeting Sheppard handed Deane a certificate and a model lighthouse for being a "beacon" over corporate governance issues in the light of overseas debacles such as the Enron scandal.

The award was given for Telecom reacting so quickly in separating auditing and advisory functions by hiring KPMG as its auditor.

The company's former auditor, PricewaterhouseCoopers, is now its adviser.

Sheppard said after the meeting that a third of the shareholders were the tea and bikkie brigade and wanted the event finished quickly, a third were genuinely interested, and the remainder were on the verge of getting annoyed with him.