Eftpos provider Smartpay wants to boost the pool of money available to pay its directors. Photo / Martin Sykes
Eftpos provider Smartpay will find out today if its shareholders have approved a proposed 50% jump in the total pool of money available to pay its directors.
The company wants to increase the pool from $500,000 to $750,000 – a move that would see its chairman’s pay rise from $90,000 to $120,000 and directors’ pay from $65,000 to $75,000.
Smartpay last adjusted its fee pool in 2022 but says that since then the “regulatory landscape has continued to change, with increased regulatory risk and obligations increasing demand on directors’ time and broadening their scope of responsibilities”.
“The board is conscious of its obligation to ensure directors’ fees are set in a manner which is fair, flexible and transparent. Further, the board seeks to ensure that directors’ fees are set at an appropriate level to assist Smartpay to attract, secure, and retain the skills and experience at board level necessary to govern the business and enhance long-term value.”
To that end, it commissioned the New Zealand Institute of Directors (IoD) to undertake an external review of director remuneration to enable it to help set the fee increase.
Stock Takes doesn’t have a problem with directors being paid more within reason but it seems the board has given itself a lot of wriggle room for future pay rises without having to go back to shareholders for further approval.
The current proposed pay rises will only take up around $535,000 of the pool, leaving the board a further $215,000 in headroom to use down the track.
“The board does reserve the right to amend the fee allocation following the establishment of additional committees as Smartpay continues to grow, or for one-off situations which may require a substantial uplift in the commitment of directors’ time. The company is also actively looking to appoint one further director in the near future with industry-specific skills and competencies.”
It has said it won’t review the pool available for directors’ remuneration in the medium term but doesn’t specify what timeframe that covers.
Oliver Mander, the chief executive of the New Zealand Shareholders’ Association, said it would be voting undirected proxies against the proposal due to the size of the pool increase.
“The IoD Report recommends a fee range of chair $112,000/$120,000, director $70,000/$75,000 and the chair of the audit and risk committee $16,500. The report includes comparator company data. We note that the IoD report makes no recommendation as to the overall fee pool appropriate for a listed company of this size.”
Mander said the notice of meeting also indicated the intention to add headroom for two new independent directors to the existing board.
“On this basis, the individual role-based payments assessed within the IoD report amount to an implied fee pool range of $478k – $550k, depending on the mix of Australian directors. With an allowance for ‘headroom’ of 20%, the range becomes $575k - $650k. This range also falls close to NZSA’s own assessments of total fee pool.”
Mander said it would rather see more regular reviews of the pool than a higher amount approved now that was not justified by the current size of the company.
If shareholders vote in favour of the pool increase, directors will get their pay rise from August 1.
Smartpay shares opened at $1.25 on Thursday and are down more than 30 per cent over the past year.
Slow international traveller growth is weighing on Auckland Airport, prompting analysts to warn its profit outlook is weakening.
Forsyth Barr’s Andy Bowley and Hugh Lockwood said in a note this week that weak cyclical conditions, poor airline economics and deterioration in New Zealand’s competitiveness as an international tourist destination are all affecting passenger (pax) growth.
“The Covid pax recovery for Auckland International Airport (and New Zealand more widely) has stalled. We now expect broadly flat international pax growth in FY25, given subdued demand and current airline scheduled capacity.”
They warned the prospect of the airport needing to raise new equity capital was increasing as the profit outlook worsened.
Latest tourism numbers show visitors to New Zealand are only back to 80% of pre-Covid levels. Visitors from China remain well down on pre-Covid times.
The analysts have downgraded the target price from $8.15 to $7.85 and have an underperform rating on the stock. Analysts and investors are now waiting on the Commerce Commission’s interim report on the airport’s aeronautical pricing.
“This is unlikely to be positive. Moreover, with AIA trading at ~20x one year forward EV/ebitda (and ~41x PE), it continues to appear expensive relative to its own bond rate adjusted trading history and the domestic market.”
Analysts have revised down their near-term expectations for Contact Energy after softer guidance from the electricity generator.
Contact provided guidance on Monday that its FY25 earnings before interest, tax, depreciation, amortisation and fair value adjustments would be $770 million - well down on what the market was expecting.
That saw Forsyth Barr analysts cut their target price from $11.25 to $10.80 although they maintain an outperform rating on the stock. Likewise, Jarden cut its target price from $10.97 to $10.75 while also retaining a buy.
Jarden’s Grant Swanepoel, Nevill Gluyas and Finley Mahoney said the guidance was $85m behind its prior estimate due to geothermal volumes being affected by the slower-than-expected startup of Tauhara and the costs of risk mitigation were higher than expected.
“We cut our FY26 forecasts as we had not factored in the full impact of the planned Tauhara shutdown and running for longer at lower capacity.”
The analysts reduced their FY26 forecast from $884m to $854m and warned the lower estimated ebitda and higher capital expenditure would require Contact to raise more capital bonds so as not to breach its covenant.
Forsyth Barr’s Andrew Harvey-Green and Hugh Lockwood said the guidance was a “big disappointment”.
“In essence, Contact is short generation and needs to cover its position in a market with elevated wholesale electricity prices.
“The modest-to-flat dividend outlook means investors will have to wait, possibly another three years, before there is meaningful dividend growth.”
But they said while the short-term outlook had taken a hit Contact’s long-term value story remained intact. Contact increased its dividend outlook by 2 cents per share to 37cps in FY25 and another 2cps to 39cps in FY26 but indicated investors should not expect further dividend increases until after the completion of stage one of GeoFutures, estimated to happen in the second half of FY27.
“This is well below our and market expectations and suggests a change in thinking has taken place alongside the GeoFutures changes announced May 2024. The signal is Contact plans to take a more conservative dividend path.”
Auckland-based ocean carrier Armacup is poised to be fully bought out by Norwegian shipping giant Wallenius Wilhelmsen following amendments to a shareholder agreement.
The transaction will see Wallenius Wilhelmsen acquire the remaining 35% of the shares in Armacup it doesn’t already own from minority holders Mark Ching and Grant McCurrach.
The Oslo-based company initially flagged the takeover in February 2022 but it has only now reached an agreement with the minority shareholders.
Armacup referenced the upcoming deal in its latest annual accounts, released last week, where it said the full takeover would be effective on December 31 this year and included the 35% shareholding in both Armacup Limited and Armacup Maritime Services Ltd.
”The roles of both Mark Ching and Grant McCurrach, directors of both companies, subsequent to settlement is yet to be determined,” a note in the annual report stated.
Wallenius Wilhelmsen noted in its full-year accounts that the fair value of Armacup at December 31, 2023, was $US14 million ($23m).
Armacup continued to raise decent profits from its New Zealand operations, reporting an after-tax net profit of $27.92m for the year ended December 31, 2023. That followed a $47.57m net profit in the 2022 financial year.
The company has benefited from imports of electric vehicles.
Wallenius Wilhelmsen itself reported sizeable profits, posting a record US$967m ($1.59 billion) last year as revenues climbed 2% to US$5.15b. Armacup paid out dividends of $29.5m in 2023, following a $23m payout in 2022.
According to the Companies Office, Ching currently owns 31.5% of Armacup with accountant Grant McCurrach, who also owns 3.5% with wife Kristine.
Ching bought Armacup in 1992 after it pioneered the Japanese car trade into New Zealand. Over the years he sold down his stake to Wallenius Wilhelmsen.
Tamsyn Parker is the Herald’s business editor. She has covered business news for more than 20 years and has specialised in personal finance, capital markets and investment.
– additional reporting Duncan Bridgeman
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