NZ Shareholders Association move to dump Rakon director

Monday, 1 August 2016

The NZ Shareholders Association is questioning the commercial skills of Rakon chief executive Brent Robinson following another annual loss.

The New Zealand Shareholders Association is pushing for governance changes at hi-tech company Rakon in the wake of a $1.7 million loss.

NZSA will spend thousands of dollars writing to about 6000 Rakon shareholders seeking proxy support to reduce the Robinson family's level of control over the company.

Founder Warren Robinson and sons Brent, chief executive, and Darren Robinson, sales executive, are all on the board of the Auckland-based company which makes timing devices for the telecommunications, defence and space industries.

NZSA chair John Hawkins said major changes were needed after a 'dismal' five years which saw Rakon returning only a small profit of $3.2m 'in a sea of red ink totalling $118.7m.'

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At the company AGM in mid September he said the association would actively oppose the re-election of Darren Robinson to the company board.

Shareholders were fed up with the Robinson family taking half the seats on the board when they owned about a quarter of the shares, Hawkins said.

'We think this undue influence is holding back necessary change. The resignation of two independent directors after relatively short tenures is a pretty clear indication to us that there are serious issues at the top.'

In announcing a $1.7m net after tax loss in May, Brent Robinson said a drop in spending by telecommunications companies globally had a major impact on revenue.

But the company was expecting increased sales in the coming year as new products came online, and increasing use of GPs tecnology also offered significant opportunities for the company.

Hawkins said investors, who had never received a dividend, had had a very rough ride.

Many of the company's problems, including a disastrous foray into China, were self inflicted, and it had not made necessary adjustments to meet market challenges.

'Rakon has blundered down the same path with endless promises that things would be better 'next year.''

Hawkins said the final straw was Brent and Darren Robinson'spay increases of about 23 per cent which meant they earned $907,892 and $734,605 respectively.

This flew in the face of a promise made at the 2012 AGM to freeze director and executive director pay until the company had achieved a certain level of earnings.

'In our view, a freeze is a freeze and Rakon's latest plunge back into loss showed there was no reason for a thaw, ' he said.

The association believed Rakon needed to appoint another two independent directors and suggested Warren Robinson should voluntarily stand down from the board.

The NZSA's support for Rakon board chair Bryan Mogridge would depend on whether he had a clear strategy for the company. 'But if it's more of the same we may well vote against Bryan as well.'

Hawkins said Brent Robinson had strong technical skills, but questioned whether he was the right person to be chief executive in view of the company's track record.

Rakon chief financial officer Simon Bosley said neither Brent Robinson nor Mogridge were available for interviews.

Mogridge said in a statement that the company shared the Shareholders Association's frustration 'with recent results'.

'We regularly engage with our shareholder base on a range of issues, including governance and company structure, and value their perspective,' the statement said.