Fuzzy ruling nags Tower

By PAUL PANCKHURST


Seven months after sharemarket regulator the Market Surveillance Panel ruled on insurance company Tower's unauthorised payments to directors, the key parties still cannot agree on the meaning of the decision.

The Shareholders Association says the decision requires Tower to seek retrospective approval from shareholders for payments in the 2002 financial year and it wants Tower to do that at the company's annual meeting in Wellington on February 12. Tower says it requires no such thing.

Tiring of the association's complaining on the issue, chairman Olaf O'Duill said: "The whole thing's a bloody nonsense, frankly."

A letter from the panel to the association in September last year supported Tower's interpretation.

However, the association says what matters is the wording of the original decision - not what was said later.

In April last year, association chairman Bruce Sheppard complained that Tower had breached listing rule 3.5.1, which requires shareholder approval of directors' pay.

In June, the panel found Tower in breach for the 2002 financial year.

The company's annual report showed fees of $651,275 for directors on the group board versus the $360,000 approved by shareholders.

The sum was higher because directors who also served on subsidiary boards had received fees from those boards too.

The panel said all fees should be rolled together when seeking shareholder approval - otherwise, companies could beat the rules by pushing money through subsidiaries.

However, it also said Tower had acted in accordance with legal advice and had disclosed all payments.

The decision concluded by saying, "the only action required by Tower is to seek approval for payments made to its directors covering group board and subsidiaries at its next annual general meeting".

The association assumed the decision meant Tower needed approval from shareholders for the 2002 fees.

But, in a later letter, the panel told the association that retrospective approval was not required - "though the board may choose to bring previous payments within its constitution and the listing rules by seeking such ratification".

The notice to shareholders of Tower's annual meeting confirms the company will not be doing so.

Association director for advocacy, Ross Dillon, said he was perplexed Tower had not attempted what looked like "a relatively easy fix".

"We will raise the issue at the AGM and, depending on the response, decide whether it's worth pursuing it - and, if so, how to go about it."

O'Duill said the association had a bee in its bonnet over nothing.

Tower would follow the panel's guidance, by treating directors' fees from group and subsidiary boards as one when seeking shareholder approval at next month's meeting.