Diversified closed down after its funds were sold to Fisher Funds Management and director Vicky Watson took a job there.
But she and the firm’s other director, Norman Stacey, disagree on the circumstances surrounding the sale. That has now culminated in a High Court case in Auckland.
Taking the stand on Friday, Stacey said he thought the salary Watson was offered by Fisher Funds was unusually high.
“It was approximately twice the salary that we were currently being paid and just from my general knowledge of salaries for financial advisers in the market place, I think our salaries were about market, they seem to range between $80,000 and $120,000 for senior advisers,” he said.
The pair were being paid $110,000 plus expenses for their work as directors of Diversified.
He said Diversified had not been marketed and the price they were offered for the funds by Fisher was “very, very low”, a deal negotiated by Watson.
Her salary offer was effectively a component of the assets’ purchase price, he said.
She was also offered a buy-back clause that meant she could buy the funds back from Fisher Funds at the same price, if she were to leave within three years.
Stacey said he was unaware of the salary or the clause when the documents were signed.
He told the court that had he known about her pay, he would have demanded an equivalent benefit. “We were getting market salaries the pair of us in the partnership. I would have expected to have been told if the salary was significantly above it; it was multiples above it and it was part of the sale process that was done privately. I would expect to have been told about that.”
He said he never saw the buyback clause in any of the draft agreements.
“I learnt from discovery, it was initially in her employment contract and was confidential. It was after I had left the country that it was taken out of that, and put in here, which is quite unfortunate if it wasn’t deliberate. It’s not referred in the cover emails anywhere."
The clause was included in an agreement emailed to him in Thailand.
“I was viewing these offshore on an iPad which didn’t download very quickly. So I mistakenly thought that some of the pages I opened were much the same as a prior one or some of the versions I opened were much the same as the prior one. I certainly looked at the cover notes to see if there was anything I should be looking at.”
He said he would not have gone ahead with the sale, had he known. One or the other could have bought each other out of the business, or the funds could have been sold to another bidder.
Stacey said it was the Financial Markets Authority that suggested the sale to Fisher Funds.
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