Forum Archive Index - February 2001

["Malcolm Cameron" <malharcameron@hotmail.com>]

just vote against the options package they don't think there salarys enough 
to work for they think if they do it poorly they still get paid so if they 
do it properly they want to make a fortune. if they want options sugest they 
cut salary by 90% most of them  on past results would still be overpaid
malcolm


>From: "tennyson@caverock.net.nz" <tennyson@caverock.net.nz>
>Reply-To: sharechat@sharechat.co.nz
>To: sharechat@sharechat.co.nz
>Subject: Re: [sharechat] Brierley's
>Date: Tue, 20 Feb 2001 13:48:21 +0000
>
> >
> >I am a new investor and have some Brierley's shares and not sure
> >what to do about this current offer - in fact, after trying to read
> >the offer through I am totally confused - could someone explain to
> >me if it is a good move to change to US$ or not etc. Thanks Flo
> >
>Flo, I guess you are referring to the circular to shareholders dated
>9th February 2001.
>
>The change to denominate the shares in US currency rather than
>NZ dollars doesn't really matter.  It is analogous to measuring the
>temperature of boiling water at 100deg Celsius or 212deg Farenheit.
>In both cases the water is still boiling and whether you measure this
>is degrees Farenheit or degrees Celsius doesn't change the
>temperature of the water.  Just as measuring shares in $US or $NZ
>doesn't change the underlying value of the investments as long as
>those investments don't change.
>
>The other resolutions you are being asked to vote for are a bit more
>contentious.  These are where the steam should start to rise from
>investors brows.
>
>Brierley are looking at increasing the number of shares on issue by
>50% over the next few years by dishing them out as freebee options to
>management.   While the financial pie remains the same size this
>means that existing shareholders slices become proportionately
>smaller.  The argument is that by giving management a greater slice
>of the pie they will be more motivated to work harder.   While this
>is a good theory I do not believe it will work in the case of
>BIL.
>
>Firstly, all the senior management team is new and BIL has ensured
>that they have been employed at internationally competitive rates.
>So it would seem that you are now being asked to authorize extra
>remuneration for BIL management at *above* market rates.
>
>Since current Chief Executive Greg Terry assumed the helm of Brierley
>Investments the shareprice has approximately halved.   They have
>reached the point where if the company sold all their assets and
>sacked the management, the average shareholder would be twice as
>well off as they are now.
>
>The effect of issuing more shares options at current prices to
>management is effectively diluting the future returns of all
>shareholders.  If the share price does not go up then management do
>not need to buy these new shares and they are off the hook.  If the
>shares do go up then management and existing shareholders are equally
>happy- or are they?
>
>If new shares are issued at 30c, and the price goes up to 45c then
>management have made a profit of 50%.  Great for management, but cold
>comfort for those shareholders whose shares were worth 60c before the
>new management took over.   If this scenario happens, then the new
>management team will have destroyed one quarter of all shareholder
>value.   Most private businesses would sack such individuals for that
>sort of performance.
>
>In the case of BIL, not only would these managers be paid fully
>competitive market salary packages, they would actually be paid a
>huge *bonus* for their efforts destroying existing shareholder value
>and (this is where insult is added to injury) all paid for by the
>ravaged existing shareholders!
>
>The BIL argument is that only 10% of the 'option plan' available
>shares will be issued in any one year over a ten year period, so the
>market price won't be affected, doesn't hold water.   The proposed
>50% increase in shares on issue is huge by any standards and is
>simply a method of transferring wealth from existing shareholders to
>management.
>
>I would suggest that existing shareholders vote *against* the share
>issue mandate and *against* the share option scheme.   It would be
>far better if BIL bought back their existing shares on market and
>repackaged those as a share incentive scheme for management.   The
>scheme as proposed is an absolute disgrace IMHO. SNOOPY
>
>
>---------------------------------
>Message sent by Snoopy
>e-mail  tennyson@caverock.net.nz
>on Pegasus Mail version 2.55
>----------------------------------
>"Dogs have big tongues, so you can bet they don't
>bite them by accident"
>
>
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