The New Zealand Shareholders' Association (NZSA) and KiwiSaver provider Simplicity are calling for Fletcher Building's chairperson to resign as the company faces a GIB supply crisis.
The company has a near-monopoly of the plasterboard market and its recent chronic shortages have been widely publicised.
On Friday, NZSA and Simplicity met with Fletcher Building's board, and on Monday, they released a joint letter they sent to chairperson Bruce Hassall outlining their concerns with the construction company.
They have asked for the resignation of the chair, for the remaining board members to put themselves up for re-election, and for some independent reviews of conduct, culture, and risk.
In their letter, they said over 1 million New Zealanders will be shareholders of Fletcher Building, either directly, or via the KiwiSaver funds they invest in, and as representatives of many of these shareholders, they wanted the company to thrive long-term, for the benefit of all stakeholders.
"We note that the share price performance of Fletcher Building has been disappointing. A five-year view of share price shows an approximately 20 percent decline, while a three-year view shows a 'flat' return, despite overall business conditions that should have been beneficial to the company," NZSA and Simplicity said.
"This performance has occurred while being governed by one of the highest-paid public company board of directors in New Zealand. The chair received over $344,000 in directors fees last year, and the lowest-paid director over $170,000. Fees of this magnitude should result in superior share price performance and delighted customers. They have not."
They said following their meeting with Fletcher Building, they found the culture of the business was still "internally focussed", which is likely "a result of the company having been in a privileged position and as a dominant player for a long time".
"We have yet to see any 'mea culpa', or substantial admittance of fault for FBU's [Fletcher Building] role in the current plasterboard supply crisis," they said.
"Your refusal to acknowledge the existence and depth of stakeholder dissatisfaction speaks to a corporate culture based more on hubris than humility.
"There has been poor risk management and business decision-making, exemplified by the management of the current GIB supply crisis provides evidence. At our meeting last week, there was no evidence provided to support the quality of your risk & assurance processes.
"The company does not appear to have learnt the lessons from the past in terms of effective risk management."
NZSA and Simplicity came to several conclusions following their meeting with the board. They said:
- The board is light on relevant building sector experience
- Fletcher Building has, and must maintain, a social license to operate. It has an obligation to customers and stakeholders to maintain supply and competitive pricing to ensure the overall health of the building sector, and it is failing this
- Because of the second point, they question the sustainability of the business model to deliver long-term performance for the company
- They believe the conduct of the company has now created significant regulatory risk and a possible customer revolt
- This crisis has highlighted what they call "systemic failures" within the company which they said are ultimately the responsibility of the Fletcher Building board.
"Responsibility for the poor performance of the company, and the management of the GIB supply crisis, rests with this board," NZSA and Simplicity said.
A Fletcher Building spokesperson told Newshub the company acknowledges the letter from NZSA and Simplicity following their meeting last week. They will continue speaking with both companies directly.
"Both the board and management understand and sympathise with the difficulties our customers are facing," the spokesperson said.
"We remain singularly focused on running our plants around the clock, maximising our local production of plasterboard, continuing to source product offshore and distributing it across New Zealand to our customers as fast as possible."