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Contact Energy head gets pay rise

A decline in Contact Energy's financial performance last year did not prevent managing director David Baldwin from receiving a pay rise.

Wet weather, which pushed down wholesale electricity prices, and high levels of contracted gas purchases when electricity prices were low were reflected in Contact's lower underlying earnings and operating revenue for the year ended June.

Mr Baldwin received an increase in annual pay to $NZ1.2 million ($A917,887), from $NZ1.08 million ($A826,099) in 2009, according to Contact's annual report released on Tuesday.

One-third of his pay is fixed, with the rest dependent on whether the company met financial goals, along with health, safety and environment, and other strategic goals.

Despite the decline in profitability, Contact made progress on its projects during the year, and improved its health and safety performance.

The total directors' fee pool was $NZ1.5 million ($A1.15 million), with $NZ0.99 ($A.76)m paid out.

Contact did not give a forecast for the current financial year because of uncertainty over the market and rainfall.

However, chairman Grant King said the first half is likely to be similar to the same period last year due to high hydro inflows and high levels of contracted gas take.

Operating earnings in the second half are likely to improve as contracted gas levels decline, and the Ahuroa gas storage and Stratford gas-fired peaker plant come into operation.

"With the portfolio well on its way to restoring flexibility, geothermal development will become Contact's priority generation investment," Mr King said.

Shareholders had chosen to receive the equivalent of $69 million in shares rather than cash.

Contact issued about 14.87 million new ordinary shares under its profit distribution plan relating to the 2010 financial year final distribution of NZ14c per share.

Shareholders had the option to sell their shares back to Contact for about $NZ5.71 ($A4.37) per share, and the company said it had completed an off-market buy back of about 2.74 million shares.

That meant that in respect of the final distribution, 81.6 pe rcent of shares were being retained, with 18.4 per cent electing the buy-back option.

The result indicated strong investor support for the company's investment and growth strategy, Mr Baldwin said.

The power company had retained $NZ239 million ($A182.81 million) since its profit distribution plan began in March last year.

Contact would use the cash to invest in projects including the Stratford peaker plant, geothermal power stations in Te Mihi and Te Huka and two windfarm projects.