After $369,895 loss, Southern Phone directors may get raise

A move by Southern Phone Company to increase its combined annual payout to directors from $100,000 to $150,000 has been described as "unconscionable".Kiama councillor Monique Dare-Ward said given the company had suffered a $369,895 loss in 2008-09, its six directors did not deserve the raise."More likely it should be a 50 per cent reduction if you look at the equity of their performance," she told a meeting of Kiama council."To be handing out this kind of reward is not warranted, in fact it would be unconscionable."Southern Phone general manager Phil Herrick countered that the annual loss was planned, while the increase in directors' fees had been recommended by an independent remuneration specialist.Kiama council is one of 41 local government bodies, including Wollongong, Shellharbour and Shoalhaven City councils, which are shareholders in the unlisted, community-owned company.Southern Phone was established in 2002 with Federal Government support, with the aim of improving telecommunications services in regional Australia following the first stage of the sale of Telstra.Only councils can be shareholders, ensuring all profits are returned to the community.Each council is limited to two shares each at $1 per share. In the past 12 months, this resulted in a dividend of $1477.The proposal to increase the maximum aggregate payable to its six non-executive directors - chairman Bill Hilzinger, former Wollongong council general manager Rod Oxley, Darral Ashton, Brian Johns, Greg Malavey and Andrew Riley - to no more than $150,000 (which would be split between the six), will be put to the company's annual general meeting on November 9.Cr Dare-Ward said that, given the present economic climate and the company's annual loss, the increase was not justified.The council agreed, unanimously voting to oppose the move while sending a councillor to the AGM to personally convey its concern.Mr Herrick said that the company had knowingly put its finances in the red, the move recognised as a "common business strategy" designed to encourage further growth and profit.He said the company was in such a strong financial position it decided last November to invest heavily in marketing to acquire more customers.This had paid dividends, the company increasing its mobile base by 120 per cent, fixed lines by 43 per cent and internet by 87 per cent, resulting in total company revenue of $20.5 million.Mr Herrick said an independent review recommended the fees increase, based on comparisons with other companies. "Have a look at similar companies, quite often you'll see the chairman alone receives $150,000. Then the directors are paid $30,000 to $50,000 each," he said."The board is not at all paid what they get in Pitt St."Mr Oxley was contacted for a response and referred the Mercury to Mr Hilzinger as the chairman, who did not return our calls.