The country’s second biggest company has joined the list of corporates seeking to increase the pool of funds available to remunerate directors despite growing criticism from investors.
Just a day after Nuplex withdrew a proposal to increase its fee pool by 50% to $1.5 million, Fletcher Building has announced it is seeking a $500,000 increase to $2 million in the fee pool for non-executive directors.
Sky City Entertainment and Skellerup are also seeking aggregate fee pool increases with shareholders due to vote on the proposals this month.
The proposals have run up against opposition from investors, with the Shareholders' Association questioning the size of the increases relative to the performance of the companies.
Yesterday Nuplex said it withdrew its proposal due to some shareholders raising concerns about the long time-frame and "consequential quantum" that the directors' fee pool increase was intended to cover.
In a notice for its annual meeting to be held on November 16, Fletcher Building said its planned increase will be only the second in the ten year history of the company.
It said the current limit would be inadequate to cope with any further increases in director fees while also providing flexibility for special ad hoc committee payments, such as due diligence.
“The recommended new limit for non-executive director remuneration would allow market levels of remuneration to be paid, without the need for shareholder approval to be sought again for some years.
“The increase in the maximum amount payable to directors does not mean that fees will increase to this level in the next couple of years. It simply allows for further increases to be payable.”
The proposal is supported by an independent report from PricewaterhouseCoopers based on the market for comparable companies in Australia.
The proposal comes hard on the heels of a profit warning from Fletcher Building, which hammered the company’s share price.
Fletcher, which is battling tough economic conditions here and in Australia, blamed delays in the Christchurch earthquake rebuild for the downgrade.
First half earnings were likely to be down about 10% on the $166 million earned in the same period the previous year.
Fletcher shares [FBU:NZX] sank on the news and are now trading at about $6.35, down from a high of $9.32 in April. The recent share price decline knocked Fletcher Building off its perch as the the largest copmpany on the exchange, being replaced by Contact Energy.
Fletcher earlier this year shelled out $A800 million to buy Australian building products company Crane Group.