Michael Parsell gets A$2.4 million in exit payment

Monday 31 October 2016 04:10 PM

Ex-Michael Hill chief Michael Parsell gets A$2.4 million in exit payment

By Fiona Rotherham

Oct. 31 (BusinessDesk) - Michael Hill International shareholders have voted to pay former chief executive Michael Parsell a termination and exit package amounting to A$2.4 million at today’s annual meeting in Brisbane.

Parsell stepped down in August after being CEO of the dual-listed jewellery company for the past 15 years, having joined it in 1981.

Director Rob Fyfe, who ran the meeting because chair Emma Hill was unable to make it in person, said Parsell had a remarkable career, rising from the shop floor in Whangarei to lead the group into Australia and North America, and most recently, in developing the Emma & Roe brand.

Shareholders were required to approve both a termination entitlement and an exit package to Parsell because of restrictions regarding benefits given to executives and managers under 2009 amendments to the Corporations Act.

Parsell’s employment contract with the company pre-dated the introduction of the restrictions on providing termination benefits under the act.

Under his contract, either party had to give one year’s notice and he was entitled upon retirement to an exit package equal to two years of his remuneration package. The 2016 annual report shows Parsell had a total remuneration package of A$1.65 million, of which 48 percent related to performance bonuses on top of his base salary of A$824,000.

When he retired in August this year, the company and Parsell agreed he wouldn’t serve out his year’s notice period and would be paid an amount in lieu of his remuneration package equal to the A$801,871 maximum allowed under a termination benefits exemption under the law, less tax.

The provision of an exit package in addition to proving the termination entitlement also contravenes the law, even though it was contractually agreed to prior to their introduction.

The board decided, given Parsell’s valuable, significant and long service to the group, to seek shareholder approval to provide termination benefits in place of the exit package he would otherwise have received.

Shareholders approved the Hill family paying Parsell A$801,871 in place of his exit package with the company matching that with another payment of A$801,871 less tax.

Phil Taylor, the company’s long standing chief financial officer, is acting CEO while an internal and external global search is undertaken for a new leader able to grow the company from A$500 million to A$1 billion in revenue, Fyfe said.

In an earlier resolution, shareholders also approved a long-term incentive plan, providing for the issue of share rights to key employees and directors to better align their interests with these of the company’s shareholders and to retain them with the company.

Under the plan, eligible participants may be granted share rights for no payment which vest if certain conditions are met. Any offers under the plan will be made under an ASIC Class order governing employee incentive schemes of listed companies which allows approval for the shares to be vested over a three year period providing they don’t exceed 5 percent of the total number of shares on offer.

Fyfe said since the company shifted its primary listing to the ASX this year and resolved a long-running dispute with the New Zealand tax authorities, “we have seen significant interest in the company from new Australian investors and a corresponding appreciation of the share price which acknowledges the underlying value of our business.”

The Hill family trust earlier this month sold 16 million shares to a number of unrelated parties for A$25.6 million (NZ$27.3m) to enhance the stock’s liquidity. It had owned 164.3 million shares, or 42.9 per cent of the jewellery chain, and now holds 38.9 per cent.

Founder Michael Hill said then the trust doesn't have any current plans to sell further shares, and Hill family interests still own 48.7 percent of the company.

Group sales for the first quarter of the year from all stores rose 6.8 percent to $A120.2 million compared to the same quarter in 2015 while same-store sales grew 2.8 percent to $A114 million in the three months.

Michael Hill shares are currently trading at $1.68 on the NZX and A$1.57 on the ASX.

(BusinessDesk)

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