Departure costly for Fletcher boss
Fletcher Building boss Mark Adamson has paid a high price for departing the company at a disappointing juncture, forfeiting more than $8 million worth of shares plus a million share options in the construction firm.
In addition, the building firm had previously confirmed Adamson would not be paid a short-term bonus for the year to June 30, which could have been worth $2m had Fletcher performed well.
Fletcher said in a statement to the New Zealand stock exchange yesterday that Adamson had forfeited just over a million shares in the company, worth more than $8m, which he would have been entitled to under a long-term incentive scheme had he stayed.
Adamson has also forfeited a million share options in Fletchers.
The first tranche of 500,000 options was issued in 2012 and would have had an after-tax value of $140,700, based on Thursday’s closing share price, Fletcher spokeswoman Leela Gantman said.
Fletcher chairman Sir Ralph Norris announced Adamson’s departure on Thursday as the company released a profit downgrade and a delay to the completion of a construction project, which is now known to be SkyCity’s International Convention Centre in Auckland.
Norris said Fletcher’s board decided it was the right time Adamson to leave the firm.
Asked whether he believed the board had handled matters appropriately, Shareholders Association chairman John Hawkins said: ‘‘When the board did choose to move, it did move decisively – we would grant them that.’’
It was unusual for businesses to release details about chief executive remuneration immediately on their departure, but Fletcher had been right to do so, he said. ‘‘They get some kudos from us on that.’’
Hawkins would not comment on whether the association believed Norris should step down as chairman.
‘‘At this stage, it is not something we have considered.’’
The association was likely to make further comment later about how the company had managed its affairs, he indicated.
‘‘The Shareholders Association will be making statements in due course.’’ had for
Adamson will be replaced on Monday by interim boss Francisco Irazusta. Up to his departure Adamson will remain entitled to his salary, worth about $1.95m.
Fletcher said earlier this week that British-born Adamson was on bereavement leave in the United Kingdom.
Adamson said in a statement that he was disappointed to be finishing his tenure on the back of a ‘‘challenging result’’ for Fletchers’ construction division.
Fletcher Building said on Thursday that three-quarters of a $100m earnings downgrade it announced on Thursday could be attributed to higher costs and over-runs on two projects, known to be the $700m convention centre and the Justice Ministry’s new $300m precinct in Christchurch.
The remainder was attributable to the reduced expected profitability of a number of other construction projects that are due to be completed in the next six to nine months.
Norris said Fletcher Building had been hurt by an ‘‘unprecedented’’ volume of work in the construction industry, which it had not managed for well, and which had pushed up costs such as subcontractors’ rates.