Chairman Phil Lough told the annual meeting the innovative approach would see directors' fees increased only if the company achieved a 20% or more increase on the previous year's reported net profit after tax.
"If we don't achieve the growth target, the directors' fees will remain unchanged. This approach provides transparency and aligns directors' remuneration with returns to shareholders. In addition, we are also developing an executive incentive scheme with share-price targets," he said.
Forsyth Barr broker Tom Bliss said shareholders of other companies had not reacted favourably to directors or executives proposing to increase their pay when performances had been lacklustre.
"The performance-based fee increase proposal should demonstrate to shareholders that Methven directors are confident of achieving targets by having incentives to succeed and thereby deserve to be rewarded accordingly if successful," he said.
If Methven hit its 20% target in the coming financial year, the figure would be slightly above Forsyth Barr's forecast of $7.7 million.
Forsyth Barr maintained an accumulate recommendation at current share price levels of $1.19 and a fair value of $1.90, Mr Bliss said.
"We continue to like the longer-term prospects for Methven, based around the water and energy conservation features of its proprietary showerware.
Methven has a robust balance sheet capable of sustaining bottom-of-the-cycle earnings." Mr Lough said the sustained economic slowdown had had a significant effect on the business.
However, through prudent management and steadfast determination, the company delivered a credible result.
"We're not delighted by any means but we are proud of what we've achieved in these tough conditions. We have repositioned the business for the current economic climate and are now poised for growth."
Directors were confident Methven could deliver continued earnings. But it was still imprudent to provide profit guidance on the level of growth the company might achieve, he said.
Group chief executive Rick Fala said the company was undeterred by the gloomy sentiment around the Australian housing market and the financial situation in Europe.
"We are bursting with new ideas and innovations. Investment in design and innovation continues to be a priority for the business, ensuring that Methven remains at the forefront of industry with products with a competitive edge."
With the world suffering from water-shortage stress, there were opportunities for Methven's proprietary technology, he said.
China represented a strong opportunity for growth. Following attendance at the world's largest kitchen and bathroom trade fair in Shanghai, and the appointment of two new distributors, Methven would be investing further in that market.
At a glance
• Performance-based fee increases for directors
• No profit guidance
• More investment into China
• Forsyth Barr maintains accumulate recommendation
