NZSA urges Ebos shareholders to deny director pay increase

The New Zealand Shareholders Association has said it was “not impressed” with pharmaceutical retailer Ebos Group’s recent capital raising efforts, and will vote against the group’s effort to raise director pay by as much as 28 per cent at its upcoming annual general meeting.

According to the NZSA, it requested access to an independent report cited by Ebos which justified the pay increase, and received a summary in confidence.

“Our opinion is that there are no valid reason why this information should not be available to all shareholders,” the NZSA said in a statement. 

“Regardless of that, the company’s treatment of its shareholders does not meet the standards NZSA expects and accordingly it is not appropriate for the directors to have any increase in remuneration until the overall conduct of the company to its owners shows a dramatic improvement.”

Pressure by the NZSA resulted in Ebos Group stating how the increased pool of funds would be distributed among its directors and committee members – with some set to receive as much as $17,500 more under the proposed changes.

However, Ebos stated the main reason it wanted to increase the directors fee pool from $1.1 million per annum to $1.41 million was to ensure directors were paid for undertaking “additional duties”, while also leaving room for additional directors to be brought on board. 

Despite this, the NZSA will vote in favour of three resolutions at the AGM.

According to an Ebos spokesperson, the pharmaceutical retailer and NZSA have shared positive discussions in recent weeks.

“Whilst Ebos respects the position of the NZSA in this regard, many shareholders have previously requested the directors to increase the size of the board given the significant growth and success of Ebos,” the spokesperson told Inside Retail.


“The directors are currently undergoing a review of the make-up of the board with a view to adding two new directors with appropriate experience. The proposed increase is critical to this process.”

“Not impressed”

Much of the NZSA’s understanding of Ebos’ treatment of its shareholders is related to the way the business handled its recent capital raising effort, which raised $175 million from a discounted placement to institutions.

“We were not impressed by its public announcements and wrote to the company, but the responses from the chair were dismissive,” the NZSA said. 

“The reasoning was contradictory and the revelation that the placement was heavily oversubscribed to approximately $700 million was startling evidence of just how attractive it was, and that underwriting was clearly unnecessary.

“Ordinary shareholders were significantly disadvantaged and the company’s communication with them was appalling.”

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