KEY POINTS:
Contact Energy shareholders at the company's annual meeting have voted to reject substantial pay hikes to the directors' fee pool.
The company has came under fire from political leaders and shareholder activists, as it seeks to double the directors' fee pool to $1.5 million while raising power bills for its customers by 10 per cent.
But proxy votes, including those of 51 per cent shareholder Origin Energy, have yet to be counted. It is these that will ensure the directors fee hike is passed.
At the annual Contact shareholders meeting held in Auckland this morning, Shareholders Association chairman Bruce Sheppard successfully interrupted proceedings demanding a vote on the pay issue be taken early, before other business was done.
Armed with his trademark plastic devil's trident and Viking helmet, Sheppard told nzherald.co.nz before the meeting that the directors' fee increases were "excessive and inappropriate". The job they did was not difficult and they were under-performing.
The vote to increase directors' was held with an almost unanimous show of hands at the shareholders meeting opposing the motion.
A similar majority opposed the re-election of longtime director Phil Pryke to the board.
Sheppard told Contact chairman Grant King that the fees hike had "damaged the company's relationship with the people of New Zealand".
He has also claimed that Origin had an unknown "pecuniary" motive in increasing the fees.
"Go down and pick up the shovel so you can start shovelling the dosh into your trough," said Sheppard.
At this point an elderly man in the audience interjected "And may God have mercy on your souls!"
Pryke, who has borne the brunt of much of the criticism of directors, particularly from Bruce Sheppard, said the media and commentators had "taken potshots" at him, but he would not rise to the personal attacks.
Bill Rayner, Contact shareholder and member of the North Shore Grey Power group, said the proposed fee increase was the equivalent of the pensions of 60 married people.
Another shareholder, Mr Wilson, said he wished to "voice my disgust" - he said the increase was universally condemned and there were directors who "had their snouts in the trough".
King told shareholders that directors fees were "in the bottom quartile" - which meant that 75 per cent of companies paid more than Contact.
He said Contact was in the top quartile of New Zealand companies.
The directors' fee rise was attacked by both Helen Clark and John Key yesterday.
Speaking at an election meeting in Taupo, Helen Clark accused Contact of extorting customers and its directors of being greedy.
"This is absolutely extraordinary when the ordinary consumer is extorted over power bills, so there is a lot of greed out there and people's tolerance with that is long, long gone," Helen Clark said.
Clark said after the pay rise the directors would each receive an average of $250,000 a year for a part-time job. She likened their behaviour to the Wall St executives who received massive payouts despite overseeing the collapse of major companies.
"That's many more times than people earn in a hard-working job."
National leader John Key said Contact should "show restraint. All New Zealanders are being asked to tighten their belts because of economic conditions and I would have thought the directors of Contact would have taken that on board, especially given the price increases that are flowing through to consumers," Mr Key said.
The company had no response to the political broadsides yesterday, but was prepared to answer concerns at today's meeting.
Contact has said the fee pool has not increased since 2004 and says it is now "well below the market", citing a report by consultants Mercer. It also "signalled the intention" to use $1.16 million of the $1.5 million in the first year, a spokesman said.
Milford Asset Management executive director Brian Gaynor believed Contact was heading down the same road as Telecom, which had reform and restructuring imposed on it.
"You can play that game for a while but as Telecom found out much to their dismay it can come back and bite you quite badly and affect your ongoing operations," Mr Gaynor said.
In times of deep recession utility companies were big targets for politicians. "They're easy meat when people are feeling bad times. You will get the politicians saying we'll cap electricity price increases or force companies to reduce their prices."
The Shareholders Association has taken issue with Mercer's assessment of appropriate board remuneration and challenged consultants to explain it at today's meeting.
A Mercer spokeswoman said: "If the market goes down, indicating director or executive pay could also go down, we would advise our clients as such. This has been the case in the past and will be in the future."
She said a company's board was accountable for making the final determination on director pay.
"The global economic conditions are really unprecedented, which means more than ever, organisations should make decisions based on all the information they have at hand."
