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Of Bulls & Bears

Friday 9th June 2000

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Aquarians take speculative option

Would-be e-commerce company Aquaria 21 has seen its share price in free-fall since a planned announcement of its new direction was superseded by a steep decline in the value of "new economy" shares. The company insists it will make an announcement but appears in no hurry. The past couple of weeks have seen widely differing performances of Aquaria's shares and options. While the shares have fallen around 14% to 4.4c, its options have leaped 25% to 0.7c. Considering the options are to buy shares at 20c and must be exercised by September 30, some investors must be very optimistic about the company's short-term future.

Investors selling down retailers

In April, South Island retailer Arthur Barnett announced an interim net profit to February 1 of $437,000, up 41% on the same period last year. Investors celebrated and its shares picked up from 78c to $1 or so in short order. But in two days' trading recently, the company's share price lost 20% and it fell with a clunk to a yearly low of 77c. No announcements have been made that might cause investors to lose faith in the company so Ferdinand can only assume that gloomy prognoses for the economy are dampening enthusiasm for retailers. He notes the Warehouse also has been doing a very good impression of a yo-yo lately.

A mother of employment contracts

At most annual meetings, shareholders enjoy complaining about directors' fees and the remuneration package of the chief executive. The level of complaints do not vary between companies producing record profits and share prices and those appearing to be on their last legs. This is despite the evidence that top businesspeople in this country are paid much less than their counterparts overseas. The Institute of Directors reports in its latest journal that at least one US company appears to be giving its chief executive more than most. According to a survey of corporate employment contracts, a company called Global Crossing has the worst contract with its CEO, Robert Annuziata. Among the inducements for him to sign up for a generous salary were a $20 million signing bonus and, get this, a monthly first-class airplane trip for his mother. It's hard to imagine a New Zealand executive getting that one past his or her board.

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