Two Fletcher Building directors urged to go and board pay to be slashed

Friday, 27 June 2025

Fletcher Building has made a series of bad news announcements over the last year, and shareholders are not happy.

Two long-serving directors on Fletcher Building’s board should resign and board members’ compensation be reviewed, Simplicity KiwiSaver managing director Sam Stubbs says.

At its investor day on Tuesday, Fletcher Building announced that it expected “significant items” totalling between $573 million and $781m would hit its bottom line over the year to June.

Of the total, between $300m and $500m were new restructuring and impairment costs.

It followed a string of bad news for the company, including the announcement of a $134m first-half after-tax loss earlier this year, and SkyCity’s decision to sue it for $330m over delays to the opening of the New Zealand International Convention Centre in Auckland.

Following the announcement, Stubbs met with Fletcher Building chief executive Andrew Reding and chair Peter Crowley for a “robust discussion” about the performance of the beleaguered company on Thursday.

Fletcher Building chair Peter Crowley has been on the company’s board since 2019.

He had delivered a strong message on behalf of shareholders and KiwiSavers, and part of it was that there were still two directors on the board who should not be there, he said.

One of those is Crowley, who has been on Fletcher board since 2019 and was appointed chair earlier this year.

The other is non-executive director Cathy Quinn, a commercial and corporate lawyer who has been on the Fletcher board since 2018 and who was reappointed last year.

Stubbs said that over the time they had been on the board Fletcher shares had gone down by 19% while the NZX had gone up by 21%.

“So there’s been a 40% under-performance over their time on the board, and that doesn’t inspire a lot of confidence in them.”

Part of the message related to director compensation, as the board remained among the best paid in the country, he said.

“They need to take a pay cut to reflect how much shareholder funds they have frittered away.

Fletcher Building needs to address director compensation and a culture of hubris, Simplicity’s Sam Stubbs says.

“Because there’s a complete discrepancy between the loss the shareholders have had to bear, and how much the directors continue to pay themselves.”

It was another example of the hubris that had permeated the organisation, particularly at governance level, he said.

“There needs to be significant cultural change in the company, and the hubris, including in pricing on products such as Gib board, needs to be rooted out.

“The board also needs to seriously look at divesting under-performing divisions, which it does say it is doing, and should embrace automation and more efficient ways of doing things, such as ordering products.”

In the investor day presentations, Fletcher Building said lessons had been learned, and a major turnaround of the company was under way.

The balance sheet had been reset, a strategic review had been completed, significant cost reductions had been made, and short and medium-term profit improvement plans had been identified, it said.

Stubbs, who has an interest in the company due to Simplicity’s $38m worth of shares and Simplicity Living’s status as a building product customer, acknowledged the board had been refreshed, and changes were being announced.

Fletcher Building has announced it has received inquiries from parties interested in parts of its business.

But while there had been lots of fine words and good intentions, five years ago he met with the then-chair and chief executive to discuss Fletcher’s performance, he said.

“Lots of what we were told back then did not come through, the company continued to under perform, so we’re sceptical. Yes, these are new people in the roles now, but they need to get a bullet-proof plan in place.”

Despite the talk of a turnaround, the big plan looked increasingly like being forced to sell the crown jewels of the company at a discounted price in a market downturn, he said.

“So far, the promised changes are not being reflected in the share price or what we are seeing as a customer of the business. The proof of change will be in the pudding. On behalf of all shareholders, we say ‘show us the money’.”

Stubbs said if Fletcher had performed at market, New Zealand would be $2 billion richer but instead it was $2b poorer as the company had constantly failed to deliver.

Now, it looked a bit like an oil tanker sinking, he said, and it needed to be turned around, but that would be a very difficult job.

“We would very much like to see them — the board, the company — succeed, but they are sailing against the tide of history.”

Fletcher Building was approached for comment, and a spokesperson said the company held regular meetings with its shareholders to hear their perspectives.

“These discussions are part of our ongoing commitment to transparency and engagement. We appreciate all feedback and consider it as appropriate.”

Recently, Fletcher Building announced on the NZX that it had received “ongoing inbound inquiries from parties interested in its businesses”, but it has said no decisions have been made to sell any of its businesses.