Directors Building Wealth
Quote:
Originally Posted by
Balance
Director Danny Diab continues to mope up stock - buying shares at over 90 cents probably from institutions who got their shares from AMP at 57 cents - a huge 61% premium.
Who will prove to the clever one then?
Buy when insiders buy and sell out very fast when insiders are trying to get out - refer APX.
The above post was five years ago. With the RBD share price now hovering around $3.30, Danny Diab has proved to be the smart one.
But there are other ways for directors to build wealth, without having the 'skin in the game' of Diab. Over FY2009 when all the current directors were on the board, the director fee pool was $220,000. This was split up so that each director got $40,000, with Chairman Ted on $60,000. Early in the next year director Shawn R Beck quit. Without consultation with shareholders he was not replaced and his $40,000 was quietly divided up amongst the remaining directors bringing the base directors fees up to $46,000, with Ted getting $70,000 - nice.
In the notice of meeting for FY2014 we are told that a board of just 4 is "an atypically small board for a listed company of this size and profile." I want to remind shareholders that this "atypically small board" was entirely engineered by the current incumbents. The proposed new annual fee for five directors is $340,000. This represents a 54% increase in fees from FY2009 levels. The board classes the increase in fees from FY2011 (fee base $250,000), a different date as 'modest'. $30,000 'per director' over three years is 12% or 3.8% compounding per year. Not over the odds for a company that has turned the corner.
However, if we do the same calculation based on the 2009 fee base of $220,000 the increase is 54.5%, or 9.1% per annum compounding. This increase is far from modest, showing how important the base date for comparison is.
The 'Strategic Pay Limited' report states that the company's performance has improved and it has grown in complexity. But back in 2009 RBD was still battling with Pizza Hut in Victoria, and I would argue that replacing that with Carl's Junior has actually simplified the business. The 'complexity' of Carl's Junior is so great that when RBD opened a pair of new stores for KFC and Carl's Junior at the Auckland Airport precinct the two stores were identical.
The Strategic report goes on to say that "recently 8 Carl's Junior stores have opened, initiating a new brand into New Zealand." But this is untrue because Carl's Junior was actually introduced to New Zealand some years earlier by Michael Jones.
In summary I believe the reasons emphasised by directors asking for a pay rise are either selective or dishonest. This is not to say the directors do not deserve a pay rise. But they don't deserve it for the reason's outlined in the 'Strategic Pay Limited' report. For this reason I will be voting against the motion at the upcoming AGM.
SNOOPY