Fletcher Building boss pays big price for departure
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 NZX 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 longterm 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, a Fletcher spokeswoman 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 now known to be SkyCity’s International Convention Centre in Auckland.
Norris said Fletcher’s board had decided it was the right time for 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.
Hawkins would not comment on whether the association believed Norris should step down.
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 Fletcher’s construction division.
Fletcher Building said on Thursday that three-quarters of a $100m earnings downgrade it announced 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 various other construction projects due to be completed in the next six to nine months.
Norris said Fletcher had been hit by an ‘‘unprecedented’’ volume of work in the construction industry, which had pushed up costs such as subcontractors’ rates.