David Kirk, Kathmandu chairman (left) and Rod Duke, Briscoe Group boss and Kathmandu shareholder. Photo / Natalie Slade, NZPA
David Kirk, Kathmandu chairman (left) and Rod Duke, Briscoe Group boss and Kathmandu shareholder. Photo / Natalie Slade, NZPA
The New Zealand Shareholders Association has given Kathmandu chairman and former All Black captain, David Kirk, a "yellow card" over the company's long-term incentive scheme for its new chief executive, Xavier Simonet.
Association chairman John Hawkins said the latest clarification from the Australia and New Zealand outdoor goods retailer regarding the earnings per share component of the scheme made the situation less clear for shareholders.
A shareholder showdown is looming over plans to award A$546,000 in performance rights to Simonet.
The proposal will be put to a vote at the firm's annual meeting in Christchurch this Friday, but investors remain in the dark about the detail surrounding the targets Simonet needs to achieve to receive the long-term incentive.
Hawkins said the association had no issue with Simonet himself. "He has a strong background, a clear strategy and has moved rapidly and decisively to revamp the ailing retailer.
"Our problem is with the Kathmandu board that appears to have no idea how to set up an effective incentive scheme," Hawkins said.
Under the original scheme sent to Kathmandu shareholders, Hawkins said the chief executive was required to achieve 10 per cent compounding earnings per share (EPS) growth for 3 years to score 50 per cent of that part of his long term incentive payment, and 15 per cent compounding over 3 years to get the full 100 per cent.
While it sounded impressive, it actually equated to profits in three years time of $27 million and $30.9 million respectively, Hawkins said. "Even the higher figure is only just ahead of the current year forecast and the CEO has three years to achieve this."
The association said that if the current forecasts were correct, the chief executive could actually have a profit decrease from the current forecast figure and still get 50 per cent or more of the EPS component of his incentive payment.
"The problem is that it comes off this year's very low profit figure that the company was very keen to describe as atypical not so long ago," he said. The association's view is that the current year forecast figure of $30m profit should be the starting point for earnings per share calculations."
"If this was a rugby game, Kathmandu Chairman David Kirk would have been yellow carded for this performance," Hawkins said.
If this was a rugby game, Kathmandu Chairman David Kirk would have been yellow carded for this performance.
Simonet was appointed chief executive in January, taking over from Peter Halkett, who left the company in November.
