Fisher & Paykel Appliances grants MD Broadhurst incentive options

Monday 17th October 2011 1 Comment

Fisher & Paykel Appliances has put in place a long-term incentive plan designed to ensure managing director Stuart Broadhurst stays in the business “and will continue his focus on achieving the objective of long-term shareholder wealth creation.”

Key features of the plan include “phantom options” with an effective issue date of Oct. 1 this year, a particularly low starting point.

The shares didn't trade on Oct. 1, a Saturday, but closed at 45 cents on Sept. 30 and on Oct. 3 which is presumably the grant value. Company spokesman Matt Orr wasn't available to answer questions.

The shares fell as low as 40 cents last month, their lowest level since April 2009 when the company was in crisis mode ahead of its $200.5 million recapitalisation which saw China's Haier become a 20% shareholder.

The current share price of 46.5 cents, 1 cent down on Friday, is also well below the shares' 12 month peak at 65 cents in June.

Broadhurst's “phantom options” can be exercised for cash after three years from the date of issue and remain exercisable for a further two years. They are only exercisable if total annual shareholder returns are equal to or greater than a compound annual pretax rate of 13.8 percent during the three years after they are issued.

For 2010 and 2011 the options are the equivalent of 25% of Broadhurst's base remuneration or $212,500 each year, or a total of 5.38 million phantom options, all with an effective issue date of Oct. 1 this year.

“The maximum aggregate amount payable to Broadhurst with respect to the options issued on October 1, 2011 will be capped at an amount equal to five times the aggregate grant value of those options,” the company said.

Chairman Keith Turner said while details of Broadhurst's remuneration package were disclosed in December 2009, that didn't include a long-term incentive plan.

“The board believes the structure and quantum of the long term incentive for Broadhurst is appropriate for the size of his role and by being linked to strong performance targets aligned with delivering significant returns for shareholders,” Turner said.

Fisher & Paykel's annual report shows Broadhurst's total remuneration in the year ended March 31 was $770,659, up from $762,140 the previous year.

(BusinessDesk)

BusinessDesk.co.nz

Comments from our readers

On 18 October 2011 at 10:07 am Graeme said:

My past impression was that F&P appliances tended to be run for management instead of its shareholders. Its previous boss Gary Paykel issued large numbers of options to his managers and diluted shareholders interests hugely. Under his control the company almost went bust. Now we see a new chairman, who has never run a listed public company, showering so-called "phantom options" on an unproven CEO. If the CEO does well then reward him afterwards but dont mortgage what is left of the company. It was an innovative company but to succeed it needs sensible sound governance and a board that understands shareholders interests.