Rakon says director fees, managing director's pay frozen
Rakon's board of directors won't get an individual fee increase until the company's pretax earnings almost double to $25 million and managing director Brent Robinson has agreed to a pay freeze on the same terms, chairman Bryan Mogridge says.
"We admit our performance hasn't been good especially when compared to where it has dropped to now from the overbid highs of 2007," he told shareholders at their annual meeting today.
Rakon shares rose 2.3 percent to 45 cents today. They're trading at just a 12th of their value in November 2007. It is rated 'outperform' based on a Reuters survey of four analysts, with a price target of 66 cents.
Last month the company forecast pretax earnings of $14 million to $16 million for the year ending March 31, 2013, up from $13.1 million last year, when earnings almost halved.
"I recognise that the current situation annoys those investors who want to produce quarterly gains, but in the current economic climate Rakon is unlikely to do that for you," Mogridge said. "The board collectively owning more than 30 percent of Rakon would naturally like that situation to be reversed and we are demanding of management to achieve growth."
The freeze on directors' fees excludes the increase being sought at today's meeting to $360,000 from $300,000 a year, allowing the company to add Peter Springford as an independent director.
Mogridge also reserved some criticism for Rakon's shareholders, commentators and the NZ Shareholders Association, saying they were quick to offer advice whether asked for or not.
"Some of it is helpful but a large percentage is not and often reflects a serious misunderstanding about the business that we own together and what it does, what its strategies are and the potential that it has," he said. He responded to specific criticism including the prevalence of members of founder Warren Robinson's family.
"Brent Robinson is CEO with 33 years' experience, Darren is the marketing director with 22 years' experience and Warren is the founder with 45 years' experience," Mogridge said. "In this industry clearly experience is essential for long term success."
He said of criticism of the board status of Darren Robinson: "The board's view is that it is critical to have the commitment of the marketing director around the board table and to be purely mercenary about it he doesn't get paid any extra for being a director he just takes on more risk."
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