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Snapper
16-10-2008, 11:54 AM
As I've got a reasonable chunk of my capital tied up in NZO I thought it would be a good idea to go to Wellington for the AGM and eyeball the guys who are running the show.

First of all, who else is going to this and secondly, what sort of questions should shareholders be asking? There are a few obvious ones...

*What's the director's plans for the cash?
*Is a dividend policy going to be established?
*How do they justify increasing director's fees from $340K to $600K?

What other questions are worth asking??

Just a point on the director's fees, I think that a director should be able to charge at about the same rate as a senior corporate lawyer, say $500/hr. There are 7 directors currently getting $340K which averages out to just under $50k each. If they get their pay increase then it averages out at $85K each. Do the directors spend 1700 hours on NZO business each year? Doubt it.

Has anyone on this forum been a director of a listed company? What sort of work goes into it?

Wilkins_Micawber
16-10-2008, 12:04 PM
Just a point on the director's fees, I think that a director should be able to charge at about the same rate as a senior corporate lawyer, say $500/hr. There are 7 directors currently getting $340K which averages out to just under $50k each. If they get their pay increase then it averages out at $85K each. Do the directors spend 1700 hours on NZO business each year? Doubt it.

Minor correction ... $85K / $500 per hour = 170 hours = approx 4.5 working weeks

Snapper
16-10-2008, 12:14 PM
Minor correction ... $85K / $500 per hour = 170 hours = approx 4.5 working weeks

Just as well I'm not a director considering my maths :o ...starts to look a bit more reasonable.

Naylz
16-10-2008, 05:36 PM
I'd love to go myself but have had far too much time off recently.
Would love to chat to you about questions you are going to put to the board.

Wiremu
16-10-2008, 07:23 PM
Snapper,

Its not just the board meetings, its the participation on the committees that takes the time, and more so if you are chairman of a committee.

In my opinion at $600k all up they are still being underpaid.

Snapper
16-10-2008, 09:26 PM
Snapper,

Its not just the board meetings, its the participation on the committees that takes the time, and more so if you are chairman of a committee.

In my opinion at $600k all up they are still being underpaid.

So for the average non-executive director, how much time would they spend per year on NZO business?

duncan macgregor
17-10-2008, 07:22 AM
Snapper,

Its not just the board meetings, its the participation on the committees that takes the time, and more so if you are chairman of a committee.

In my opinion at $600k all up they are still being underpaid.When the left wing dictators bleed the system dry the people eventually rebel and the system collapses.
We have the extreme right system where the directors of companies running companies collapsing our system of trading with similar greed.
Nobody should get paid higher than the prime minister of the country in a paid job. At least the Aussie prime minrster is going to do something about it.
Want big money go private or obey the rules. Macdunk

digger
17-10-2008, 09:37 AM
Snapper,

Its not just the board meetings, its the participation on the committees that takes the time, and more so if you are chairman of a committee.

In my opinion at $600k all up they are still being underpaid.

They would be underpaid if they spent all there time committed to one company. The real situation is that directors are what they call professional and are a closed group that go around being directors of companies all over town.Piles of 60 or 70 thousand repeated many time adds up.
The ausies are on to it it has to change.
Directors and CEO pay has to be fixed not by a cosy inside arrangement but by each company forming a shareholders council made up active and committed long term holders that are not also directors,staff or on any board of any company.If the western world had done that we would not be in the position we are in today.
See the bank of England directors after stuffing up the banking systen are now complaining that the usual christmas bonus will not exist.The average joe on the street does not get a bonus if he stuffs things up so why should a director.To answer my own question it is because directors set their own pay and conditions,the average joe gets what is left over.
This crash has sort of got me a bit excited as have never been happy with the unfairness of how the finanical world works.Time for a big change.
Digger

swissboy
17-10-2008, 10:09 AM
Now we will see the difference in Management greed.
Vectors chief rejects increase, because of slump on sharemarket. What will these guys do?????

digger
17-10-2008, 10:41 AM
Now we will see the difference in Management greed.
Vectors chief rejects increase, because of slump on sharemarket. What will these guys do?????

Swissboy and everone else,this is not the right question. The western world has been brought to its knees by just letting the recepient decide what payout they should get. The real question is not what will they do but what will you do. I will be voting against director and CEO pay rises and additional directors hoping on baord until we sort out the structure of how the company should work.Care to join me?
Digger

KiwiBear
17-10-2008, 11:04 AM
Minor correction ... $85K / $500 per hour = 170 hours = approx 4.5 working weeks

That $500 an hour for the lawyer is to pay for everything - Staff - office- bills - equipt, travel etc. Director is all brass in pocket, wih an expense acct to boot. And also coy perks AS WELL!

Snapper
17-10-2008, 11:35 AM
Swissboy and everone else,this is not the right question. The western world has been brought to its knees by just letting the recepient decide what payout they should get. The real question is not what will they do but what will you do. I will be voting against director and CEO pay rises and additional directors hoping on baord until we sort out the structure of how the company should work.Care to join me?
Digger

Sounds interesting, Digger. What sort of structure did you have in mind?

Nitaa
17-10-2008, 12:03 PM
Digger,

Perhaps you may wish to give your email address (create a new one) for others to communicate with you for some brain storming ideas. Its good to see some healthy debate on this issue. in my view, now is not the time for directors to be putting their hands ups.

I also think the employee share plan needs a closer look. In the overal concept i am for it but on the face of it it looks too easy money for the employees. Although some hold TR in high regard, he is not hurting by his recomendations over the years for various payouts and incentives.

Overall however i think nzo have been quite prudent in their overall spending but since they have taken on board extra geologist and other personal its perhaps time to see their plan for growth apart from Kupe, Pike and Tui.

manxman
17-10-2008, 08:06 PM
Care to join me?
Digger

Yes. Directors and senior staff should be well rewarded, but there needs to be a better alignment of their interests with those of shareholders.

Options and partly paid shares set up a situation where the management get huge benefits from the gains without sharing the risks of the disasters. This doesn't make sense to me.

Digger can have our proxy if the total pool for directors fees and expenses is capped at (for example) 1% of tax paid profits, and senior management rewards (ESOP etc) are modified to ensure that they have more skin in the game.

I have no objection to generous rewards when things go well, but I get deeply suspicious when I stand to lose more than half the directors if things turn pear shaped. I could go on... but have just been celebrating Pike River first coal.

Cheers

digger
17-10-2008, 08:41 PM
Digger,

Perhaps you may wish to give your email address (create a new one) for others to communicate with you for some brain storming ideas. Its good to see some healthy debate on this issue. in my view, now is not the time for directors to be putting their hands ups.

I also think the employee share plan needs a closer look. In the overal concept i am for it but on the face of it it looks too easy money for the employees. Although some hold TR in high regard, he is not hurting by his recomendations over the years for various payouts and incentives.

Overall however i think nzo have been quite prudent in their overall spending but since they have taken on board extra geologist and other personal its perhaps time to see their plan for growth apart from Kupe, Pike and Tui.

Nita and Manxman,
Will give your ideas some thought,but as manxman says lets celebrate Pike for tonight.
cheers digger.

arjay
17-10-2008, 10:22 PM
To repeat what I recently said to a director of another oiler wanting to increase directors fees - Justifying an increase because directors in other companies get more is simply not valid. Directors should be paid for how they increase shareholders wealth. In my view, NZO directors have been doing a good job and have delivered on what their current fees were voted for them to do (therefore there is no need to reduce current directors fees). NZO's recent better-than-expected performance was more about Tui coming on stream just as $100 oil arrived. This had nothing to do with any particular crystal ball gazing by our directors. Let us instead tie directors fees to shareprice/dividend. If this year they get $350K for an average of say $1.50/10c let next years fees rise or fall relatively.

shasta
17-10-2008, 10:37 PM
To repeat what I recently said to a director of another oiler wanting to increase directors fees - Justifying an increase because directors in other companies get more is simply not valid. Directors should be paid for how they increase shareholders wealth. In my view, NZO directors have been doing a good job and have delivered on what their current fees were voted for them to do (therefore there is no need to reduce current directors fees). NZO's recent better-than-expected performance was more about Tui coming on stream just as $100 oil arrived. This had nothing to do with any particular crystal ball gazing by our directors. Let us instead tie directors fees to shareprice/dividend. If this year they get $350K for an average of say $1.50/10c let next years fees rise or fall relatively.

I'm an ex NZO holder, so am looking at this on an unbias position.

There should be some set criteria each year to benchmark the SP performance (v NZX50, ASX200 whatever) so that shareholders enjoy a certain %age growth BEFORE the Directors recieve any options/cheap shares. (same with the employee share plan)

I would also prefer to see Directors either take half there fees in shares (purchased on market), or at least any "exec options" put into escrow for 12 months & cancelled where the performance criteria isn't meet.

Yes, you need to remunerate Directors for there time, effort & skills, but those that are worth there salt will put there reputation first, & there hand out second.

Just my thoughts

Disc: I'm an accountant & have experience in setting board fees

cycat64
19-10-2008, 10:57 AM
The proposed increase in the fee pool for directors (which no doubt will be fully taken up) represents an increase of 76.4%. This is huge and in my view insulting in the current climate where excessive director's fees will come under intense scrutiny.

Two questions that should be asked of each director at the AGM are:

1. Will you continue on as a director if the fees are not increased ?
2. If you do continue in the role will you be showing less commitment as a result
of the fees remaining static ?

Now, I doubt any of them would resign as they know damn well that they are on to a good thing. If any answer yes to the second question then we need to get rid of them.

I have no doubt that there are enough fat cats around with the votes to get this through. Those small shareholders who are able to attend the AGM have the opportunity to express an alternative view and I hope that opportunity is taken. While $240,000 is actually not a lot of money when put in the perspective of the number of shares, a good company should not be spending that amount if they DO NOT NEED TO.

Balance
18-03-2012, 10:02 AM
Snapper,

Its not just the board meetings, its the participation on the committees that takes the time, and more so if you are chairman of a committee.

In my opinion at $600k all up they are still being underpaid.

This is indicative of what someone like Wiremu think of NZO's directors and management.

Be really nice, Wiremu, for posters to see you now take the directors to task for the appalling mess that Pike River was (and still is) and happened under their watch.

But hi, let us not allow facts to get in the way.