Pharmacybrands wants to lift directors' fees

BUSINESSDESK: Pharmacybrands, the retail pharmacy and medical centre company, will ask shareholders to approve a 22% hike in its pool for directors' fees and sign off on the implementation of a dividend reinvestment plan at next month's annual meeting.

The maximum aggregate remuneration for the Auckland-based company's board will rise to $380,000 from $310,000, taking effect from April of this year if shareholders approve the resolution.

Directors haven't had the pool raised since 2005, and the proposal reflects increases by similar-sized listed companies.

"The company wishes to offer competitive fees in order to attract and retain the highest quality directors," it said in its notice of annual meeting.

Pharmacybrands almost doubled annual profit to $9.9 million in the 12 months ended March 31 after it acquired the Radius pharmacy and medical business last year. At the time, it announced a 3.5 cents-per-share dividend and said it will offer a dividend reinvestment plan.

The reinvestment plan, which would let shareholders forego a cash return in favour of receiving more shares, needs investor approval to let majority shareholders Cape Healthcare and LPL Trustee participate without breaching Takeovers Code requirements.

Cape Healthcare and LPL Trustee each hold a 30.4% stake in Pharmacybrands and, based on the company paying a similar dividend over the next five years, could potentially increase their respective stakes to 35.1%.

The dominant shareholders came out of a 2009 deal when NZX-listed Life Pharmacy, whose brands included Life Pharmacy, Life Metro and Care Chemist, made a $20 million all-scrip offer for Pharmacybrands, the country's then-biggest retail pharmacy group with the Amcal and Unichem brands.

An independent report by Simmons Corporate Finance found the plan's positive aspects outweighed its negatives, and is "unlikely to have any material impact on the company’s share price or the liquidity of its shares" or diminish its appeal as a potential takeover target.

If shareholders don't approve the plan, Simmons estimated it could reduce Pharmacybrands' equity and cash balances by $4.3 million, or 3.6 cents per share.

Pharmacybrands shares rose 4.2% to 99 cents yesterday, valuing the company at $119.3 million. The shares have climbed 20% this year, and have surged some 168% since the merger in 2009.
 

This article is tagged with the following keywords. Find out more about My Tags

Comment & Question

Commenter icon key: Subscriber Verified

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7777 -0.0001 -0.01%
AUD 0.9509 -0.0007 -0.07%
EUR 0.6333 0.0005 0.08%
GBP 0.4966 0.0002 0.04%
HKD 6.0304 -0.0021 -0.03%
JPY 92.8110 0.2660 0.29%

Commods

Commodity Price Change Time
Gold Index 1198.3 8.880 2014-12-18T00:
Oil Brent 59.3 -1.910 2014-12-18T00:
Oil Nymex 54.4 -2.430 2014-12-18T00:
Silver Index 15.9 0.010 2014-12-18T00:

Indices

Symbol Open High Last %
NZX 50 5518.5 5545.0 5518.5 0.44%
NASDAQ 4712.4 4748.4 4644.3 2.24%
DAX 9711.6 9811.1 9544.4 2.79%
DJI 17367.8 17778.4 17356.9 2.43%
FTSE 6336.5 6466.0 6336.5 2.04%
HKSE 23158.3 23189.6 22832.2 1.27%
NI225 17511.0 17552.0 17210.0 1.84%