Sky City director fee hike gets the nod

Sky City Entertainment has passed the resolution pay its directors more.

Controversial plans to increase the total pool of director’s fees by 33% from July next year were put to shareholders at the company’s annual meeting at Sky City, in Auckland this morning.

That would expand the total pool available for directors’ fees from $95,000 to $130,000.

Chief executive Nigel Morrison said after the meeting that 90% of the proxie votes were in favour of the resolution.

Votes from shareholders in the room, representing between 5 million to 10 million proxies, have now been counted and the resolution was passed.

Independent directors who will benefit from the increase are: Rod McGeoch (chairman), Peter Cullinane, Brent Harman, Chris Moller, Bruce Carter and Sue Suckling.

The increase in annual base directors fees is the company's first fee hike since 2006.

Sky City will increase the chairman’s fee to $250,000 from $200,000; directors fees to $120,000 from $90,000 and committee member fees to $15,000 from $10,000.

The deputy chaiman, a new position, will be paid $150,000 a year.

Presenting the unpopular resolution to the meeting, Sky City’s outgoing chairman Rod McGeoch said Sky City’s directors were currently underpaid by all external evidence.

An Ernst & Young benchmarking study concluded Sky City’s current director fees were at the lower end of fees for similar-sized companies.

Mr McGeoch said the increase was necessary to ensure the board could attract the best talent and reflected the increased complexity, workload and responsibility of listed company directors.

At the meeting, shareholders applauded a comment from one shareholder that the proposed increase was “obscene” in the current economic climate.

Others said some of the board’s newly-appointed directors needed to have time to prove themselves ahead of any increase.

One shareholder said he thought the proposed increase was more than reasonable since there had not been any increase since 2006.

Mr Morrison said the board’s directors all held shares equivalent to one year of their fees.

Sky City is on a growing list of listed companies seeking to increase the pool of funds available to remunerate directors.

Yesterday, the country’s second biggest company Fletcher Building said it was seeking a $500,000 increase to $2 million in the fee pool for non-executive directors.

Fletcher Building said the planned increase would only be the second in the ten-year history of the company and the proposal was supported by an independent report from PricewaterhouseCoopers based on the market for comparable companies in Australia.



Skellerup’s board is also seeking aggregate fee pool increases with shareholders due to vote on the proposals this month

Nuplex bucked the trend this week when it withdrew its proposal to increase its fee pool by 50% to $1.5 million, after shareholder concerns about the long time-frame and "consequential quantum" that the directors' fee pool increase was intended to cover.

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.

The association has recommended companies review fees every two years to avoid having to make large one-off catch-ups.