Shareholders want Origin kept at arm's length

Major shareholders in Contact Energy want an independent committee created to handle business decisions related to its 51 per cent shareholder, Australia's Origin Energy.

In a notice of the generator's likely-to-be-fiery October 19 annual meeting, investors led by Brook Asset Management said such a committee was needed because Origin was a potential competitor.

"Origin is a major prospective supplier of fuels [natural gas] to Contact," the shareholders said.

"Origin has also publicly disclosed that it intends to investigate the construction of electricity generation plant in New Zealand.

"Origin appointees on the Contact board are privy to commercially sensitive information that may disadvantage Contact in its dealings with Origin or afford Origin a competitive advantage."

Brook also wants chief executive David Baldwin's terms of employment revised. Baldwin, who is seconded from Origin and is on a remuneration package of as much as $1.4 million also faced a conflict of interests, it said.

"It is inappropriate for a supplier and competitor to have such a level of influence over Contact," Brook said.

The Shareholders Association has called for independent directors, Phil Pryke, Tim Saunders and John Milne, to be removed for not adequately representing minority shareholders' interests during Origin's now-aborted bid to merge with Contact.

Another group of shareholders is calling for Contact to try, by all means possible, to recover from Origin Energy the $8.6 million cost of the aborted merger. They also want directors' fees to be reduced by $500,000 a year until the costs are recovered. Last year Contact paid its directors $770,000.

The Contact board said it did not support any of the resolutions, saying directors represented shareholders' views and that it had procedures to manage conflicts of interest.