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Re: [sharechat] WRI

From: Brian Gale <>
Date: Sat, 28 Oct 2000 20:40:07 +1300

Hi Warner
            Whilst I share your general concern where companies seem to reward their directors and executives out of proportion to the company's performance and seemingly at the expense of the shareholders, in the case of WRI I think it is a little different from how it appears on the surface.

1. The issue is of 5M options not shares.
2. The exercise price is $0.57 (set by Price Waterhouse) for an option issued in 2000
3. The issue of options will form part of  a senior executives remuneration.
4.  The basic idea is to encourage executives to create shareholder wealth
5.  The following statements from the Annual Report help to make the proposal clearer :-

      "The board believes that incentive remuneration (where part of a senior executive's remuneration is determined by reference to financial performance) is the best way to align the interests of shareholders and senior executives.  This approach encourages senior executives to focus more closely on those strategies for the Company which add value for shareholders"

"For this reason, the remuneration of senior executives include a significant incentive component, comprising a cash payment and a right to acquire equity securities in the Company.  Entitlements under both elements of the incentive component are measured against prescribed performance hurdles."

IMHO this does not seem to be an unreasonable proposal and in looking at the remuneration levels paid by WRI they do not seem to be excessive by comparison to other sizeable public companies.  The top rate is $400k with some other 59 executives earning over $100k, half of whom are under $130k.

Just looking at the question as to how this proposal was passed.  Of course the small shareholders, even in groups, can never influence decisions as they have insignificant voting power. So we need to look at where the voting power lies and of course to remember that these people are also very concerned about shareholder value !

The Major Shareholders are :-  Guinness Peat Group  26.7M
                                             Ithaca Custodians       28M
                                             N Z Central Securities  26.5M
                                             Marathon Asset Mng    13M

Total shares on issue 134M.  It is interesting to note that 96% are NZ shareholders.

Excuse me for being the ' Devil's Advocate' for WRI but I felt these facts should be brought to notice.

(Yes I have some WRI ) 

At 12:47 28-10-00 +1300, you wrote:
Just read the sharechat article on Wrightsons. The last sentence really
pissed me off, after years of pathetic seasons and returns, shareholders
have agreed Senior Execs may issue themselves up to 5 million shares over
the next twelve months...FOR WHAT??????. WRI turns around a $1m loss to a
$7.5m profit on $600m in revenues...(a 1.25% return) VERY PATHETIC

And they are "hoping" for their shares to get back over $1.
The company still performs like a dog and they want immediate rewards, and
this has been a GOOD season.
I hope for their sake the weather stays wright.


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