Cavalier shareholder questions payment
A shareholder in carpet manufacturer Cavalier Corp has questioned the large termination payment made to former chief executive and managing director Colin McKenzie after the company reported its worst loss in history, stopped paying dividends, and sold assets, to try to turn around the company.
McKenzie resigned from his role in May this year, replaced by former chief financial officer Paul Alston, initially as interim chief executive, and now confirmed this month in the role.
The company's annual report shows an agreement made by the board with McKenzie included a termination payment of $470,000, equivalent to one year's salary, in addition to other payments and benefits due to him during the six-month notice period.
Chairman Sarah Haydon said at the company's annual meeting in Auckland that she understood why shareholders may potentially be angry about what was a "large payment in anyone's terms," but McKenzie had an employment contract that included a restraint of trade.
Haydon also told shareholders the company's restructure is likely to see annual earnings rise this year with normalised profit expected to be in the range of $3 million-to-$5 million in the year ending June 30, 2016, compared to normalised earnings of $1.1 million last year.
Unusually high abnormal items such as asset writedowns and restructuring costs meant the company reported its worst-ever loss of $25.7 million in 2015.
The company's shares jumped 35 percent to 55 cents on the guidance.
One shareholder said investors had seen their investment in Cavalier drop 85 percent in the past three years and that the previous board had been "asleep at the wheel".
The company also said it expects to "return to acceptable levels of profitability" in the 2017 financial year.