April 3, 2010 10:46am by David Farrar

Gaynor on GPG

However GPG’s New Zealand shareholders still have some influence and the May 7 annual meeting is an important one for the company.

It is 20 years since GPG was reconstituted by Sir Ron Brierley and this is the year he has vowed to return value to shareholders.

This promise seems to be waning and shareholders need to give a strong message to the directors that procrastination is unacceptable.

The best way to do this is to vote against Resolution 2 (the directors’ remuneration report), Resolution 3 (the re-appointment of Tony Gibbs as a director) and Resolution 4 (the re-appointment of Ron Langley to the board).

Why does Gaynor say this?

GPG’s annual report shows the company had a loss of £36 million for December 2009 compared with a loss of £50 million for the previous year.

These figures are not overly important as the key issue as far as investment companies are concerned is their sharemarket performance and that has been fairly dreadful in the case of GPG.

The company has underperformed the benchmark NZX50 Gross Index in four of the past five years and had a negative 2009 return of 4.9 per cent, including dividends and 1 for 10 bonus issue, compared with an 18.9 per cent appreciation in the benchmark NZX50 Gross Index.

GPG has had a negative return of 28.6 per cent since the end of 2004 compared with a positive 6.6 per cent return by the NZX benchmark index.

Pretty bad results, to say the least.

The directors have been extremely well paid even though the company has underperformed the NZX by a wide margin. Since the end of 2004, Tony Gibbs has had total remuneration of $23.1 million.

Blake Nixon, who is based in London, has earned $17.7 million and Gary Weiss $21.7 million.

The company’s performance does not justify these huge remuneration packages.

Many company directors are underpaid, but I don’t think that is a description one can apply to GPG.

These three Directors have been paid around $63 million for a result of wiping out 29% of the company’s worth.

It is time for shareholders to say enough.