Lemme pull on yer coat about something – Rob Campbell
Public accountability for directors is too low, especially for listed companies, boardroom veteran Rob Campbell says.
The Guinness Peat Group chairman picks on his investment holding company, approaching the end of a major asset sell-down, to explain why boards need to be more open about the strategic decisions they face.
Mr Campbell thinks GPG could have done a better job to explain to its shareholders the strategic choices the one-time corporate raider has faced as it liquidates its investment portfolio, leaving just UK-based thread and zip making subsidiary Coats.
The wind-down is set to be finished by the second half of this year, when the firm will be rebranded as Coats and shareholders will get a cash return when the subsidiary can operate independently.
“I don’t think many of our smaller shareholders know the issues or understand the choice they are offered – take the cash and go, or stay invested in a global company,” Mr Campbell says.
GPG’s board had tried to improve the visibility of the risks and opportunities with the transitions to Coats – which Mr Campbell is adamant should not be seen as an orphan of GPG – and released information about how to understand GPG’s transition ahead of its full-year announcement.
So he was disappointed when reports last month focused on the loss of £3 million in the year to December 31, compared to a profit of £1 million a year earlier.
This failure of GPG to walk the talk about shareholder communication drove the point about boardroom transparency home to him.
“I don’t think we communicated that well on that. The information was perhaps too dense or not well enough directed,” he says.
Perhaps the media is to blame too
“Media reports focus on whether a company’s profits are or down, and want to know what directors are doing and when, but don’t seem to engage on the complexity of the decisions,” Mr Campbell says.
In that sense, while newspapers were records of decisions and disasters, they did not contribute to a healthy understanding of how businesses operate.
“The nature of business is day-by-day decisions, not once-a-year decisions that can be announced at the annual meeting.
“And there’s no point in pretending there’s certainty on the board when there’s not.”
He says public accountability in the media for directors is too low, especially for public companies.
Corporate boards operating in a cocoon
Mr Campbell’s concerns about boardroom transparency are not a reference to the post-GFC collapse of the finance company sector.
“Yes, we have beefed up the regulatory watchdogs with the Financial Markets Authority and introduced a tougher legal structure for financial advisers.
“But regulation is only part of the scene. The real meat and drink of business is what goes on in the marketplace day by day.”
And that is where Mr Campbell says corporate boards tend to operate within a cocoon.
“There’s no real transparency on the big strategic issues about what they are doing. Either they don’t have debates, which would be bad in itself, or they do but they are hidden.”
The business community in general would benefit if there was more discussion about the strategic choices facing directors, including disclosure of the trade-offs associated with each option.
Mr Campbell suggests, for example, that NZX-listed Summerset Holdings, of which he is also the chairman, might do more to communicate the decisions that need to made in the sector by Summerset and other players, such as the trend towards building more apartments rather than stand-alone dwellings, the role of care facilities and the training, pay and other issues associated with the business.
“We and others could have spoken more openly about these strategic choices – that they could go this way or that – and outline the implications either way.
“Private business will provide many of these services going forward and the way this is done will have implications for investors, customers and taxpayers which are not widely discussed,” Mr Campbell says.
“By and large, an investor who understands the big business issues is a better investor for the company and for themselves."
He disagreed this sort of open communication would see the company’s leadership give away their power.
“It’s not a matter of letting trade secrets go, but it would be helpful if these issues were out there and debated more.
“Boards are not open enough in my opinion and they are too protective about their major strategic choices."
GPG’s NZX-listed shares are trading at 59c.
ROB CAMPBELL'S DIRECTORSHIPS
Former unionist-turned professional director Rob Campbell commands an impressive list of directorships.
He resigned from the board of Ports of Auckland during its industrial dispute last year and left the board of ACC soon after.
His current boardroom seats include:
• Guiness Peat Group (chairman)
• Turners and Growers
• Summerset Group (chairman)
• Murray and Co – investment bankers
• Silverfirm Co-Investment Partners (investment committee member)