Tim Miles hits the Jackpot

Tim Miles, the former PGG Wrightson Managing Director, is a lucky man.

He received $8,108,621 for his 31 month stint as head of the rural services group, an average of $261,568 per month.

Miles had a gold plated income even though PGG Wrightson’s had a negative sharemarket return of 55.5% during the 31 month period, after adjusting for dividends and a capital raising.  The NZX50 Gross Index was down only  4.7% over the same period.

Miles was appointed Managing Director by Chairman Craig Norgate on 18 March 2008 when the company’s share price was $2.07. During his tenure the company had a nine for eight rights issue at $0.45 a share. PGG Wrightson’s share price was $0.56 when Miles finished on 19 October 2010.

Tim Miles at PGG Wrightson

PGG Wrightson’s June 2011 year annual report reveals that Miles received $4,318,535 for four month’s work during the year, including an ex gratia payment of $3,000,000.

 In addition Miles received 2,500,000 PGG Wrightson shares at $2.00 each but these were bought back by the company on the termination of his employment contract at no loss to Miles. He sold most of the ‘rights’ associated with these shares for 10 cents each during the nine for eight capital raising. He took up his entitlement with his remaining ‘rights’ at $0.45 each and then sold most of these into the Agria takeover offer at $0.60 a share.

 Miles’ remuneration is yet another reminder that managing directors of poorly performing companies can still receive huge departing payments.

 Gary Toomey of Air New Zealand was the country’s highest paid managing director ten years ago after he received $4,205,000 for his last year at the ailing airline.

 James Boonzaier, the departed head of troubled Tower, was the highest paid chief executive the following year with a total remuneration of $2,812,437.

 How can the interests of shareholders and executives be aligned if the highest paid chief executives are from the worst performing companies?

Brian Gaynor