Rakon shareholders give Darren Robinson the boot
Shareholder activism claimed a scalp at the heated Rakon annual meeting this afternoon.
The votes have been tallied, and while chairman Bryan Mogridge retained his position with 84% of the votes cast, Darren Robinson was voted out as director, with 54% of votes against him.
Mr Robinson is also head of sales, and the lack of separation between executive and governance was criticised at the meeting, although he maintained his position on the board was essential to give credibility to customers.
The Rakon board was put under pressure, with its vague plans for the future, lack of board diversity, and big bonuses all criticised by shareholders.
The NZ Shareholders’ Association took an unusual step before the meeting and asked about 6000 Rakon shareholders for their proxy votes, to try and force change at the company, of which about 30% is held by Rakon directors, with no large institutional shareholdings. The association got 40 million proxies on behalf of shareholders.
Managing director Brent Robinson used his annual address to give an overview of the company’s history. This didn’t cut it with Shareholders’ Association chairman John Hawkins, who termed it “excuses” when investors want to hear of future plans, not the mistakes of the past.
Mr Hawkins says shareholders are upset that in the 10 years the company had been listed, there had been no dividend and no sustainable profit, while managing director Brent Robinson and his brother, sales director Darren, received a bonus which boosted their income from the company their father Warren founded by 23% to $1.64 million in the last year.
“Year after year, we hear promises that never eventuate… We hear regular pie-in-the-sky statements,” says Mr Hawkins, who is a small shareholder himself. “Why should shareholders believe the latest excuses from the same management and board?”
Rakon, which makes high-tech crystal components for mobile phones and the space and defence sector, reported a $1.7 million net loss for the year ended March after making a profit of $3.2 million the previous year, although the losses in the three years’ before that totalled $118.7 million.
Brent Robinson told the meeting the company’s performance is dependent on customer demands and timing. He said four major customers – Samsung, Cisco, Nokia, Ericsson – all changed or delayed their orders last year, affecting Rakon’s revenue.
But Mr Hawkins replied: “Other companies deal with these problems – why can’t Rakon?”
Chairman Bryan Mogridge, who was also up for re-election, said the board acknowledged the discontent from shareholders and was looking for a new independent director.
This was questioned by shareholders, as the company also promised last annual meeting to diversify the board.
According to the Shareholders Association the final straw for many shareholders was the decision last year to increase Brent and Darren Robinson’s pay by about 23% – to $907,892 for the chief executive and to $734,605 for the marketing director, respectively.
In 2012 the company promised to freeze director and executive director pay until underlying earnings hit $25 million, which has not happened.
Mr Mogridge said today the increase related to bonus entitlements from the 2015 fiscal year which the board approved for payment in 2016, while the base salaries remained frozen.
The chairman was paid $120,000 last year while Warren Robinson, who said he would retire before next year’s shareholder meeting, got the standard director fee of $60,000 per annum.
Mr Mogridge, who said he would not seek another term, said executive directors’ base salaries have been reduced by 12.5% and there will be no bonuses this fiscal year, which will reduce the income they receive by 28% compared to what was detailed in the 2016 annual report.
Brent Robinson said the company was on track to deliver a 20% cut in operating costs by the end of the financial year ending March 2017, but the full benefit of that wouldn’t be realised until the final year. He said redundancies were involved, but did not disclose how many.
Rakon raised $66 million at $1.60 a share when it was floated in 2006 and its shares climbed as high as $5.80 the following year.
Its share price rose 10% today to 22c, and has declined 38% in the past 12 months.
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