Chorus to ask shareholders to lift directors' fee pool 12% to beef up board
By Paul McBeth
Sept. 24 (BusinessDesk) - Chorus, the telecommunications network operator, will ask shareholders to hike the pool for directors' fees 12 percent if it needs to bolster its board as it tries to limit the impact of regulation on its revenue streams.
Shareholders will vote on Oct. 29 in Wellington on whether to increase the pool to $1.1 million from $980,000 set in 2012 after Chorus was carved out of Telecom Corp, now known as Spark New Zealand, according to the company's notice of annual meeting. Chorus's independent directors unanimously elected not to take any annual increase in fees, with the existing structure set to continue through the 2015 financial year without change.
The Wellington-based company paid $889,500 in fees to its six non-executive directors in the year ended June 30. Chief executive Mark Ratcliffe, who also sits on the board but doesn't attract directors' fees, was paid total remuneration of $1.36 million, including incentive payments from prior years.
"Over the past two years considerable additional work has been required of directors beyond normal business, particularly given the challenging regulatory environment and the reshaping of the Chorus business," the notice said. The bigger fee pool would "provide sufficient flexibility to appoint an additional director should that be considered appropriate in the future."
The Institute of Directors last month said the median fee for a non-executive director rose 11 percent to $40,000 in 2014, and was $78,570 for private listed company directors. The base fee for a non-executive director at Chorus was $107,000, and $214,000 for the chair, Sue Sheldon, in 2014.
Chorus has been locked in a battle with the Commerce Commission over the past 18 months after the regulator imposed steeper cuts to the regulated price of services over the network operator's copper lines. The company has been fighting initial determination based on international benchmarks in the courts, while at the same time lobbying the regulator to take a softer approach in its more fulsome review.
Chorus has also clamped down on the cost of building a national fibre network, and negotiated easier funding terms with Crown Fibre Holdings for the build, while also looking at new services it can introduce that skirt regulation.
Shares of Chorus yesterday rose 0.8 percent to $1.785, and have climbed 24 percent this year, after being punished in 2013 during the height of the regulatory uncertainty.