The New Zealand Shareholders' Association is opposing Ebos Group's proposal to increase directors' fees by 28 percent because the company has refused to release advice it received from external consultants on the matter.
In advice to members, NZSA says it will vote the proxies it holds against the proposed $310,000 fee increase to $1.41 million.
It is the second time this year that NZSA has criticised Ebos over the way it has treated retail shareholders.
The first time was in April when NZSA says Ebos received $700 million in bids for a proposed fully-underwritten $150 million placement to institutional investors.
NZSA has succeeded in getting Ebos to expand on its bare bones notice of meeting, which only outlined the aggregate additional amount sought, by spelling out how much each director would be paid if the increase in fees is approved.
The organisation also succeeded in getting Ebos to provide it with a summary of the report from the external consultants, Mercer, "but only in confidence," NZSA says.
"Our opinion is that there are no valid reasons why this information should not be available to all shareholders," it says.
It cites the NZX Code of Corporate Governance which says that any increase in director remuneration should be presented "in a transparent manner." The organisation's own policy is that "where consultant reports are used to justify fee increases, the NZSA believes the full report should be made available to shareholders as part of normal disclosure."
In the original notice of meeting, Ebos said it wanted the increase because "the size and complexity of the group's business continues to increase with a consequent increase in workload for directors."
It said directors were paid an aggregate of $976,000 in the year ended June.
It also wanted to ensure that the fee allowance would be sufficient to pay additional non-executive directors and so that it could "offer competitive fees in order to attract and retain non-executive directors of a high calibre."
Ebos is proposing to give its chair – Elizabeth Coutts will replace Mark Waller as chair when he steps down at the annual shareholders' meeting – a $20,000 a year increase. That will take the chair's fees to $320,000.
It is planning to give the other directors a $10,000 a year increase to $160,000 and to increase the remuneration of the chairs of two board committees as well as the directors sitting on each of those committees on top of that.
The chair of the audit and risk committee's fees would rise by $17,500 to $37,000 while the chair of the remuneration committee would rise by $15,000 to $20,000.
Other members of the audit and risk committee would see their fees increase by $5,000 to $17,500 and other members of the remuneration committee would see their fees rise by $7,000 to $10,000 on top of their base fees.
Ebos says the benchmarking data provided by the external consultants "was one of the factors taken into account" when the board decided on the resolution to raise fees.
NZSA strongly opposed the company's $150 million capital raising in April via an underwritten placement. The demand was so great that the company raised the amount to $175 million.
"We were not impressed by its public announcements and wrote to the company but the responses from the chair were dismissive," NZSA says.
"The reasoning was contradictory and the revelation that the placement was heavily oversubscribed to approximately $700 million was startling evidence of just how attractive it was and that underwriting was clearly unnecessary," it says.
"Ordinary shareholders were significantly disadvantaged and the company's communication with them was appalling."
NZSA says it expects Ebos to "comprehensively explain" the need for the increase in directors' fees at the AGM but that it will still vote its proxies against the resolution.
"The company's treatment of its shareholders does not meet the standards NZSA expects and accordingly it is not appropriate for the directors to have any increase in remuneration until the overall conduct of the company to its owners shows a dramatic improvement."
Waller was Ebos' chief executive between 1987 and 2014 and became chair in 2015.
During his tenure, he transformed the company from a small player in the healthcare market with annual revenue of about $8 million to the largest trans-Tasman healthcare and animal care operator with annual revenue of nearly $7 billion, making it all the more unfortunate that he is stepping down on such a sour note.