Forum Archive Index - October 2000

[Brian Gale <brigale@i4free.co.nz>]

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.

Regards
Brian
(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.
>
> Warner
>
>
>
>
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