Sparks flying in Vector’s power struggle
Why it’s starting to look like a Shakespearean tragedy is unfolding behind the scenes of lines company
The recent dumping of two directors and the parting shots fired by outgoing chairman Michael Stiassny raise important questions about the future of Vector under controlling shareholder Entrust.
They also raise governance issues that should be concerning to minority shareholders and the roughly 330,000 Auckland consumers who are currently income beneficiaries of Entrust’s annual dividend from the lines company.
Clearly, the consumer trust has removed key obstacles to whatever it might be planning, while drawing a line in the sand for future Vector directors to stay behind.
The ugly face of an agenda-driven campaign is there for all to see.
To briefly recap, two respected Australian-based directors David Bartholomew and Sibylle Krieger were effectively rolled from the Vector board last Friday under pressure from Entrust, which owns 75.1 per cent of NZX-listed Vector.
At this week’s annual meeting, two Entrust-aligned candidates were elected to the Vector board with former Hirepool chief executive Michael Buczkowski voted in as a new director and Dame Alison Paterson re-elected, both by a wide margin.
Both Bartholomew and Krieger were independent directors appointed by a board process, approved by the trust only nine months ago.
Bartholomew is the former chief executive of Duet group, an ASXlisted utilities and energy company, and among other positions is a nonexecutive director of electricity distributor Endeavour Energy, majority owned by a private consortium in partnership with the NSW government.
Likewise, Krieger is an experienced Sydney-based director and board chair with more than 35 years of commercial experience.
She is an expert in infrastructure and regulated industries and sectors undergoing significant change or reform.
By all accounts both know more than most about the complexities of regulated electricity network companies with difficult ownership structures.
In fact, you’d be hard-pressed to find two more qualified people to help guide Vector chief executive Simon McKenzie with what is a highly technical business.
To say they were only temporary appointments would be more than a stretch. So there’s another reason why they lost the support of Entrust.
The catalyst may have been an apparent split of opinion at Entrust between two trustees Karen Sherry and James Carmichael and the other three trustees, chairman William Cairns, Buczkowski and Paul Hutchison.
But it came to a head when Entrust, in late August, called for a special shareholders meeting at Vector to expedite Stiassny’s departure, even though he had already signalled his intentions to step down at the AGM.
It is understood Bartholomew and Krieger thought the whole process of spending $150,000 on what they saw as a pointless exercise was a waste of shareholders’ money. In other words, they exercised their independent thought on the matter and made it a point of principle.
In return, the Entrust trustees saw fit not to back them as directors on Vector’s board.
So now all eyes will be on who the trust will look to line up for board seats given they have made it clear that every director must look to the trustees first before making a call on anything.
Much is at stake given Vector’s assets and the annual dividend Entrust pays out to Auckland consumers of around $355.
One theory doing the rounds is
Sadly, some actions of my fellow directors in the last few months have not been driven by any wish to do what is best for Vector but rather for their own personal desires.
Michael Stiassny
that some Entrust trustees favour selling parts of Vector’s network outside of Auckland and returning the capital to the trust, presumably for the council to access in some form.
That’s different to what Stiassny was saying in August when he suggested Entrust wanted to sell down its holding in Vector.
But the consequences are the same in that the dividend payout would be reduced.
Stiassny was a divisive personality at Vector and he reinforced that when he appeared to single out remaining Vector board members, including Dame Alison and Jonathan Mason, for caving in to Entrust’s wishes.
“Sadly, some actions of my fellow directors in the last few months have not been driven by any wish to do what is best for Vector but rather for their own personal desires,” he said following the formal part of the AGM.
The next move in all this will be to see who Entrusts puts forward as appointees to the Vector board.
That will give another hint at what’s motivating the trustees and what the future holds.
But rest assured, more shenanigans are likely.