Wednesday 14th August 2019
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Days after announcing that it will vote against Xero’s proposed increase in directors’ fees, the New Zealand Shareholders’ Association is holding out Infratil as an example of best practice of how to go about getting its approval.
Infratil wants to increase its pool of directors’ fees by $294,802 to $1.33 million a year and has won over NZSA while Xero is asking for an $800,000 increase to $2.2 million.
Xero’s market capitalisation at A$8.77 billion is more than double Infratil’s $3.26 billion but it's not just the magnitude of increase that caused NZSA to oppose Xero’s resolution and to support Infratil’s.
NZSA notes that shareholders approved a $59,000 increase in Infratil’s directors’ fees at last year’s annual meeting but that since then there have been a number of changes in the company, most notably the acquisition of Vodafone New Zealand.
“This will increase the size and scale of the company considerably,” the retail shareholders’ advocacy group notes.
“The company is to be commended for providing detailed information to shareholders in the notice of meeting as well as putting the full independent remuneration report online,” it says in its advice to members on how it will vote any proxies it receives.
And it’s disclosure that is at the nub of NZSA’s stance. Xero didn’t commission an independent report, its directors instead engaging consultants and conducting a benchmarking exercise but providing scant details in the notice of meeting from NZSA's perspective.
So NZSA concluded it had “no option but to vote undirected proxies against the resolution.”
With both companies, NZSA engaged with the boards and says taking to Infratil’s chair helped it better understand that board’s position.
“We have also recommended that Infratil share the wider contextual information on the board’s position at the ASM to better inform all retail investors. The wider context primarily relates to director workload, securing director talent and constraints on seeking other directorships,” it says.
Since the appointment of Catherine Savage to Infratil’s board on Aug. 1, the company will temporarily have eight directors but Humphry Rolleston will step down at the general meeting on Aug. 22 after serving on the board since 2006.
Noting that Savage is chair of the New Zealand Superannuation Fund and has a storied career at both director and executive level, NZSA says the board with have three female directors and four male directors, most with executive backgrounds in banking, finance and funds management.
“We consider the skill sets to be appropriate to the company,” it says.
NZSA also notes that this is the 25th year since Infratil listed on NZX in 1994 after a $50 million float and that it now owns airports, electricity generators and retailers and renewable energy operations.
Gaining NZSA’s approval is becoming increasingly important for listed companies.
Chief executive Michael Midgley says more than 20 percent of members had signed up its standing proxy service within two weeks of it starting. The service lets shareholders automatically appoint NZSA as their proxy for some or all of their holdings without having to fill in new forms every time.
Now the count is well over 30 percent and “increasingly, we’re in the top 20 shareholders on the day,” Midgley says.
Any shareholder can appoint NZSA as their proxy holder, whether or not they are NZSA members.
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