High profile real estate businessman Mike Pero may have to repay more than $1.5 million after giving himself a pay rise without the approval of the co-owner of his business.
Mr Pero is chief executive of Mike Pero Real Estate (MPRE) which was launched in 2011 and is half-owned by Mike Pero Marketing, and half-owned by Mike Pero Mortgages, which he is no longer a part of.
NZME reports Mike Pero Mortgages and Mike Pero Marketing agreed in 2011 that Mr Pero would be paid $200,000 a year for his executive role with the real estate operation.
Source: Twitter/Mike Pero
The mortgage and marketing companies were each able to appoint a director to the real estate company's board.
But at one stage when Mr Pero was the only person on the board he purported to pass directors' resolutions involving "some element of self interest", a High Court judge said in a decision.
Even after Mike Pero Mortgages appointed a director, Mr Pero purported to pass further resolutions.
"In particular, through the resolutions Mr Pero dramatically increased his own remuneration package, provided himself with a car allowance and also authorised an additional 'brand ambassador' payment to himself of $125,000 per annum," Justice Sarah Katz said in her decision.
"It is not open to Mr Pero to purport to unilaterally increase his own remuneration, in egregious breach [of] MPRE's constitution and the shareholders' agreement, and then seek to benefit from his own wrongful actions by arguing that he should be able to keep his ill-gotten gains under.
"Although a full accounting has yet to be provided by Mr Pero, MP Mortgages' estimates that he has arranged for MPRE to overpay him, in his capacity as an executive director of MPRE, by an amount in excess of $1.5 million."
The judge ordered that Mr Pero and Mike Pero Marketing pay MPRE all amounts received by them in excess of $200,000 a year for their services and that interest be paid on this sum.
Mr Pero told NZME today he had taken legal advice when changing his remuneration and had his position independently valued.
"I then based the adjustment to my remuneration on the findings of the independent report provided to me," he said.
"The same findings were cross checked (peer reviewed) two years later and considered appropriate by KPMG and relevant for my role.
"I feel the court has dismissed the findings of the independent experts."
He did not dispute the $1.5m estimate by Mike Pero Mortgages and said it represented "about five years of salary, bonuses, vehicle running costs and performance incentives".
If necessary, he had the ability to pay back the amount and said the case had no impact on the day to day business of Mike Pero Real Estate.
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