Tower appeases shareholders

At Tower’s well-attended, but ultimately mild annual meeting it seems shareholders could do just one thing to register their frustrations over the company’s poor performance - bring in the heavies to do their hatchet work.

Friday, March 28th 2003, 8:20AM

by Sue Allen

After nearly two hours of polite shareholder questions over its weak performance last year, shareholders finally got the chance to make a statement, and they did.

With four candidates up for three seats on the board, shareholders turned their back on not one, but both of the "Tower" men.

Donald Baskerville, a former manager of Government Life, subsequently Tower Corporation, and Hutton Peacock, Tower chief executive from 1979 to 1990, were not elected.

Gary Weiss and Anthony Gibbs representing aggressive newcomer GPG, which has snapped up 9.9% of Tower’s shares over the past few months, join the board.

GPG says its mandate is to take "an appropriate ‘proprietorial’ interest" in Tower’s affairs.

The meeting inevitably looked back at what acting chief executive Keith Taylor called a "year to forget".

In 2002, Tower made a $74.9 million loss impacted by weak investment markets and large writedowns.

The biggest problems being in Australia, which now accounts for 70% of Tower’s business.

Tower Australia went from a $43.9 million profit in 2001 to a $60.6 million loss in 2002.

Despite poor systems, out of control expenses, weak sales and writedowns, Taylor defended staying in Australia saying there were huge growth opportunities if the company got it right.

Taylor did not actually mention withdrawing to core business, but he did say Tower would be looking at "fewer operating structures and fewer product lines".

Taylor also spoke of working to get Tower’s ailing Australian business out of a "no mans land" where he said it had fallen between two stools of an old, multi-agent model and new dealer groups.

He also promised to look at customer service, which he described as high quality but "not yet the norm across the group"

Chairman Olaf O’Duill tackled the thorny issue of directors’ remuneration and retirement allowances.

He proposed restructuring directors’ fees to "better reflect market rates" and of eliminating retirement allowances altogether.

He even said the board would consider looking at linking directors’ fees to company performance, possibly by investing a proportion in company shares.

There was some good news on the horizon for Wellington, O’Duill said the company had no plans to move its head office to Auckland. Better still, he said there were no plans to relocate to Australia.

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