Shareholders' groups call for Fletcher chair to quit amid GIB crisis

Source: 1News

There are calls for the board chair of Fletcher Building to go, and the entire board be put up for re-election, in the wake of New Zealand's GIB supply crisis.

Simplicity Living, which holds around $35 million worth of Fletcher shares, and the Shareholders Association, are also calling for an external review of the culture and risk practices at the company, which through its Winstone Wallboards subsidiary holds a 94% stranglehold on plasterboard supply in New Zealand.

The GIB shortage has caused major delays in the construction industry, with builders speaking of their inability to source product and major delays on projects.

Simplicity, the Shareholders Association and Fletcher chief executive Ross Taylor held a please-explain meeting in Auckland on Friday, after which Shareholders Association's Oliver Mander said Fletcher showed a lack of humility and did not apologise for its role in the situation.

Read more: Shareholders' 'concerns' remain after Fletcher GIB crisis meeting

Concerns were raised about the company's ability to spot and deal with risk.

Late last week, Winstone Wallboards said it would be able to supply merchant customers with one million square metres of extra plasterboard from July through to September, and on Friday Taylor told 1News the company should have thought harder about establishing an emergency pool of products.

It said it was doing all it can to maximise production.

Simplicity and the Shareholders Association weren't satisfied with what they heard however, on Monday calling for board chair Bruce Hassall to resign immediately, and board to make themselves eligible for re-election at the company's annual shareholders meeting later in the year.

"We note that the board is light on relevant building sector experience," it said in a letter to Hassall.

"Fletcher Building has, and must maintain, a social license to operate. It has an obligation to customers and stakeholders to maintain supply and competitive pricing to ensure the overall health of the building sector. It is failing in this, and we question the sustainability of the business model to deliver long-term performance for the company."

The letter stated the chair received over $344,000 in directors fees last year, with the lowest-paid director getting over $170,000, something which did not reflect the share price performance or customer satisfaction levels.

It also called for an independent review into the culture and conduct at the company, and an independent risk and assurance review.

"We believe that once implemented, these recommendations will set Fletcher Building on a new path, focused on delighting its customers and all other stakeholders with a board equipped for the task."

In response to the call for sweeping changes, a Fletcher Building spokesperson said the company would engage with Simplicity Living and the Shareholders Association directly.

"Both the board and management understand and sympathise with the difficulties our customers are facing," the spokesperson said.

"Fletcher Building acknowledges the communication from Simplicity and the NZSA following the meeting which took place on Friday. We will continue to engage with both parties directly.

"We remain singularly focused on running our plants around the clock, maximising our local production of plasterboard, continuing to source product offshore and distributing it across New Zealand to our customers as fast as possible."