By Alastair Bull of NZPA

Auckland, Aug 17 NZPA - Fisher & Paykel Appliances' board raised some eyebrows today when it announced the appointment of a new director without an election.

At a meeting in Auckland today in which the unexpected resignation of chief executive John Bongard due to his having to deal with prostate cancer was announced, the biggest controversy came with the directorship appointment of Simon Botherway.

The company's notice of its annual shareholders' meeting (ASM) advised elections would be held for three directors -- John Gilks, who was offering himself for reappointment, and Tan Lixia and Zhou Yunjie from its new 20 percent Chinese shareholder Haier.

It also advised that director Norman Geary was not offering himself for re-election, but gave no indication of an intention to replace him.

But after Mr Gilks, Ms Tan and Mr Zhou were elected, chairman Gary Paykel announced the board had appointed Mr Botherway but that it would not ask him to stand for election until next year's meeting.

This did not go down well with Shareholders' Association chairman Bruce Sheppard, a shareholder in Fisher & Paykel.

"The natural inference in this is that you didn't trust shareholders to actually support your decision, or you think Simon's such a tosser that you only want to have him for 12 months so you can get rid of him," Mr Sheppard said.

"It really is offensive that you appoint directors after a meeting when you knew before the meeting and you should have brought it to us for the vote."

Also upset was shareholder Peter Tourman, whose requests for the number of independent and non-independent directors were declined by Mr Paykel before the election of the other directors.

Mr Paykel said directors were unanimous in wanting to appoint Mr Botherway, the former chairman of Brook Asset Management and a well known fund manager.

" The board adopted to a point Simon and you can have your say next ASM along with all the other shareholders."

Ms Tan and Mr Zhou were appointed in July as additional directors until today's meeting, when they could be offered for election, and were duly elected with widespread support today.

Mr Sheppard, who supported their election, nevertheless asked Ms Tan to ask Haier on her return if it would give an undertaking to not interfere in the appointment of directors to represent shareholders.

The meeting was largely supportive of the company, which celebrated its 75th anniversary in 2009 in a time of turbulence for the company and the wider economy.

This year the company has raised new capital, acquired Haier as a 20 percent cornerstone shareholder and is selling assets to pay down debt.

During the capital raising the company predicted normalised group earnings before interest and tax of $87.7 million for the 2010 financial year and a normalised net profit after tax of $32.8m in prospective financial information (PFI).

Today, Mr Bongard said in the four months to date the company had met the PFI revenue targets but sales in North America had been lower than expected.

"As at the end of July, appliances was behind on year-to-date PFI normalised Ebit due to margin pressure and increased product costs in the United States."

The finance business had started the year strongly and year-to-date it was above PFI normalised Ebit, he said.

"Overall the company is within approximately $1m of the group normalised net profit after tax as forecasted in the PFI."

Net debt levels at July 31, 2009 were $308m, which is approximately $30m better than the PFI target.

The company is not allowed to pay dividends until a $235m debt facility is repaid so a dividend is not expected to be paid in the 2010 financial year.

The North American market continued to be severely affected by the global slowdown and trading conditions were extremely difficult, Mr Bongard said.

Management was highly focused on reducing operating costs in North America as profitability there had been lower than expected.

The company's Elba brand is now being sold exclusively through Sears Outlet stores.

Commentaries have been positive about the US economy but the company remained guarded as to any form of recovery there in the near future.

F&P Appliances was more positive about China, and Mr Bongard said the possibility of F&P Appliances supplying production machinery to Haier was being investigated.

Haier had also undertaken to promote, distribute and service the F&P Appliances brand offering into the Chinese domestic market, which continued to grow at a spectacular rate.

Initially 30 models would be introduced to the Chinese market with first shipments expected by September.

"Without a partner of such high status as Haier a successful entry into the Chinese market would be almost impossible for F&P Appliances," Mr Bongard said.

F&P Appliances will also distribute Haier's appliances -- some of which were on display at the meeting -- in New Zealand from October, and in Australia from next year.

Mr Paykel also acknowledged the recent passing of Lady Joyce Fisher, wife of the company's late co-founder Sir Woolf Fisher .