KEY POINTS:
Hellaby Holdings is standing by its plan to raise total directors' fees by 50 per cent - despite shareholder opposition and the economic climate.
Hellaby shareholders will gather in Auckland today for the company's annual meeting to vote on the proposal, which if successful, will see the total
pool for director fees rise from $250,000 annually to $375,000.
It follows on the heels of Contact's successful move to increase its directors' annual fee pool from $770,000 to $1.5 million - although outrage from small shareholders later saw the board agree to hold fees at current levels.
Vector declined a 22 per cent increase for its directors, despite having the weight of institutional shareholder votes to pass the plan.
Hellaby's proposal had prompted the Shareholders Association to write to the company, saying it thought the move would be "unpopular due to the relative lack of performance of the company and due to the economic circumstances at this time".
It also disputed the ability of the directors themselves to vote on the issue - which led the company to declare under the listing rules last Thursday five individuals or entities linked to existing board members as "disqualified persons" for the vote.
Chairman Bill Falconer said yesterday the fee increase would be spread among the board of seven directors.
Falconer, as chairman, receives $80,000, while non-executive directors receive $40,000.
The increase would see individual directors get around 25 per cent more.
"These are sums which are well within the norms for companies of our size and not inappropriate."
But Des Hunt, from the Shareholders Association, challenged the notion of a large increase in fees without a corresponding improvement in company performance.
Hellaby, which last increased board fees in 2006, made an after-tax profit of $4.7 million last year.
The previous year the company lost $9.8 million.
Hunt said the fee increases should be more in line with company performance and inflation over the period.
"Why should directors have these big increases when employees are not?
"I would have thought that under the current situation and the fact that they haven't performed, I'm struggling to see why they should have any more than 10 per cent." Performance targets should be set for any fee increases beyond inflation.
"In today's environment, there's a good argument for directors not wanting any increase."
Falconer agreed with Hunt's belief that fees should be tied to company performance.
"It's a question though of what level of performance is appropriate in different economic circumstances.
"We have gone to considerable effort to introduce new experience to the board over the last year and that process will continue."
Three new directors have been added to the board since it embarked on a renewal process last year.
"If we're going to be able to continue to attract people of the calibre and experience we require, then we will have to raise our fee levels to those which are comparable to companies like ours.
"Refreshing the board in this way is in itself a performance achievement, but the thing is if you look at the performance of the company - aside from our investment in the BBQ Factory - it has held up remarkably well under different, difficult trading conditions."
Hellaby shares closed down 15c at $1.65 yesterday.