Forum Archive Index - July 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

>>>
>>>They take 4% profit for themselves which takes the cream away .
>>>
>>
>> Care to explain this a little further?   Not sure what you mean.
>> 
>>
> Management fee
>
>
Hmmm, maybe I'm a bit slow today but I'm still having trouble 
following this.

Management take 4% of the total profit *plus* whatever salaries they 
happen to be on?  How many staff do Infratil have anyway?   Are they 
all 'management'?  Who gets the 4% (obviously not the shareholders)?
Do the management hold shares, or share options at all?   

As far as Trustpower goes, Infratil are a significant shareholder, 
But how much of the day to day policy of Trustpower do Infratil set?  
My impression is that they have a strategic stake.  Any Infratil 
management on the board will be well rewarded by the directors 
fees and Infratil itself will be well rewarded by any gain in the 
market value of shares, and their fair share of the dividends.  

So 4% management fee is 4% of what?   Is it 4% of the 
appropriate share of the Trustpower dividend that goes straight to 
the management?   Do the management get a huge bonus of 4% of the 
capital profits (if any) when the Trustpower stake is finally sold?
I presume Infratil would have to pay an effective 33% tax on any 
capital gain on such a transaction, whereas a private investor would 
not.   What happens if whatever Infratil invest in goes down in 
value, or makes no profit in a particular year?   Why not invest in 
Trustpower directly if you want exposure to that? 

If you compare a 4% profit tax with the typical monitoring fees 
charged for a managed fund, it seems very high.  SNOOPY



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