NZSA pans Kathmandu's lack of disclosure on directors' fee increase

Friday 16th November 2018

Outdoor clothing and equipment retailer Kathmandu Holdings’ proposal to hike its directors’ fee pool by 25 percent has drawn the ire of the New Zealand Shareholders’ Association.

Kathmandu’s board wants to increase the pool by A$200,000 to A$1 million. It isn’t the amount of increase that irks the association but the lack of disclosure about why the increase is necessary.

“We do not believe the board has provided the necessary information or made a fact-based case for an increase in the fee pool,” the association told members.

“The level of information provided is unacceptable in the modern era.”

Because of that, the association says it sees no alternative but to vote all the undirected proxies it is given against the resolution.

It’s certainly been a long time since Kathmandu’s directors last asked shareholders to raise the fees available to them – the last increase was approved seven years ago at the 2011 annual meeting when the pool rose from A$600,000 to the current A$800,000.

The association says there is no indication in the notice of meeting of the proposed individual fees for 2019 and nor is there an external report including company comparator information, even though the board says it reviews directors’ fees annually and seeks advice from independent remuneration consultants “as necessary.”

The notice of meeting says the increase “would allow the capacity to appoint other non-executive directors to the board as required and to ensure that the right mix of skills, experiences and diversity necessary for the proper functioning of the board is maintained.

“Also, this allows for succession planning by facilitating the appointment of a new non-executive director before the retirement of an existing non-executive director.”

The association also takes issue with the fact that Kathmandu provides no breakdown of how existing fees are paid to individual directors or whether they partly relate to board committee work.

However, it does propose to vote undirected proxies in favour of the other four resolutions, including the re-election of David Kirk as chairman and the grant of performance rights to managing director Xavier Simonet.

The association says the structure of Simonet’s performance rights align his interests with those of shareholders “and it is only fair that Mr Simonet should receive the performance incentives.”

(BusinessDesk)

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