Putting together a CV to send over to RHG has been an interesting exercise. I haven’t applied for a job since my application to Macquarie more than a decade ago, and thought I’d never have to do it again.
It contains all the usual stuff: education, work experience, skills and interests. And irrespective of what I write, as Rebecca Urban put it in today’s Australian, ‘don’t hold your breath’ for the incumbent board’s support. But it’s an interesting exercise nonetheless. What do you, as a minority shareholder, want to see in the person representing you on the board?
For that matter, what are the qualities you want to see in any independent director? Of course, you’ll think of things like ‘someone who is prepared to act in my interests’, but what does that actually mean? How is any one person going to be able to act in the interests of all shareholders when all shareholders have different interests? If you were looking through the resume of someone you don’t already know, what skills and qualities would you expect to see? What is it about a person that leads you to believe that they’re going to do the best thing by you?
Obviously Greg and I aren’t going to tick all of the boxes. But I’ll be interested to see what it is that makes for the perfect director.
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{ 11 comments… read them below or add one }
Especially for a financing company directorship, the following (after the general education, experience etc.) would seem important to me:
Return on Investment Experience – growth of your portfolio (be it real estate, shares, or other) – this shows due diligence / research before placing your money where your mouth is.
Honesty – to ensure that all things are above board.
Business Experience – Having run your own company, and the growth or otherwise of that or other companies in your directorship.
Interest in the company – a sizable proportion of a company – shows you have a genuine desire to maximise returns for yourself in share portfolio.
Your vision for the company – as well as your vision for other companies in your experience – shows forward thinking, passion. This is also where your share holding would show you want either quick return to break up the comany (which I hope is not your vision), or long term growth (company share price increase) and mid term returns (dividends) would become apparent. It would also determine whether your vision aligns with other director / company vision or clashes.
Good luck with the CV’s – something I would hate to do again, after only 3 years of running my own company.
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An independent director should be able to present all the facts to shareholders clearly and without prejudice. In other words, he/she puts forward the evidence then shapes the conclusion, not vice versa. They are the sort of people who have the chutzpah to say “Right now, my business is overvalued” or “I was wrong, here’s why”. Such a person would be someone who is prepared to act in my interests by giving me the information I need to make my decisions. I generally repay them back with the authority to act on my behalf too. As a shareholder, I don’t need to steer the car, I just need to know where I’m going and what’s happening.
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I’ve got a few suggestions about acting in the interests of shareholders.
1. Stop the company making any silly diworsifications.
2. Ensure shareholders get a decent return on their investment, either through dividends, or share price growth or both.
3. Ensure that the company makes the best use of the cash and assets it holds.
4. Be prepared to vote against other directors, if you feel the wrong decision is being made.
5. Uphold corporate values as recommended by ASX principles and recommendations.
The skills and qualities that might show this would be:-
Integrity and Honesty
Past experiences that show you are prepared to take a stand
Personal references from other people of note…..
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A resume is just words on paper. Having been on boards both here and in the US, I ‘ve found the most effective members are those that have, in addition to a first rate business acumen, a tangible, identifiable record of integrity. During face to face interviews, I would always ask a candidate what their proudest moment was in their business career. If the answer was along the lines of “I was responsible for the biggest deal ever….blah, blah, blah” I became sceptical. If the answer was achieving a common goal involving more “we” than “i”, they went immediately to my short list. Though I’ve never met you guys, the responses I ‘ve read in your “Ask the Experts” sessions and the tone of your analysis, gives me that tangible sense of integrity I’m looking for. It’s a commodity that the RHG, or any board, can never have enough of. Good luck with your campaign.
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List of desirable qualities:
1. Honesty
2. Your best efforts to increase shareholder value.
Not a long list is it?
And yet so rare.
Almost everything else can be bought, hired, manufactured, outsourced or circumvented, but without these qualities directors can truly only serve themselves.
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Assuming we are successful in electing Greg & Steve (and not re-electing Coe) the board will be 2:3 (new:old). I read the board charter and in 6.2 it says “Directors are committed to collective decision making”. Am I right in assuming that the outcome would probably be a compromise and a quite smaller dividend payout? What happens if they can’t reach an agreement?
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Without citing a specific list of characteristics and traits I believe would make a good manager/director, I instead refer you to a book I’m sure you are familiar with…The Essays of Warren Buffett by Lawrence Cunningham, particularly the section on Corporate Governance principals (which interestingly is Section 1 of the book!)
Best of luck Steve / Greg
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I agree with most of all the preceding comments. However depending on your vision for the company, which I would definitely like to see on a resume of a director. I would also like to see your vision for the people working in the company. Its fine as a shareholder to expect return on investment but frankly I am more proud of my investment if it also creates a great organisation. What are your plans to motivate and invigorate the current staff to greater achievements, how do you intend rebuilding the organisations culture which may currently be resigned to “a slow death” due to loan book runnoff and previous lack of vision. How will you attempt to grow the organisations skills again.
Of course if your vision is short term return and company liquidation then the words above clearly wont resonate. However I would like to know that as well since that affects my vote and my goals for the investment.
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The characeristics that I would like to see in a director include:
(1) Track record of success in a relevant field that complements experience of other directors, together with the ability and willingness to contibute to a company develpment (or wind down) strategy
(2) Commitment to communicate effectively with shareholders
(3) Integrity and honesty, seriously taking into account the interests of all shareholders (not just interests of a major shareholder)
(4) Resolve to have a open mind and work in consensus with other directors and company management (no huge egos or preconceived notions)
Based on recent history, I dont think David Coe would pass muster on items 1, 2 or 3 .
PS.
For what its worth, although I’m not happy with the performance of the current board in terms of communication I don’t think that the current policy of retaining profits is neccessarily a bad thing at this time. However by the end of this financial year, the argument for retaining profit to support financing will no longer be valid as the loan portfolio will have dropped from $7b to $2b (I seem to recall?). By this time it will be essential to develop a medium term strategy which will hopefully return the majority of retained profit and franking credits to existng shareholders. Any major future growth strategy or change in company risk profile should be subject to a prospectus and new capital raising as the board have no real manadate to spend major capital after the disaster of the float. Perhaps Kinghorn may wish to take the firm private at some stage ( at a fair price) and neatly end RHG in the next few years??
Keep up the good work!
Cheers.
Paul
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A bit scary here, isn’t it. The CV isn’t now just for the Manager / CEO to employ – it is the fellow shareholders who are going to vote on these qualities. I am only glad I am not doing something like this. Best of luck Steve and Greg, and look forward to your successful election to the board. Look forward to seeing your vision for the company.
By the way – who is driving the price up of RHG? Please, all fellow sharholders, if we are looking for long term growth, we don’t want the shares going to the existing board votes. Tempting though it is to sell, I am in for the long haul – hope everyone else is also.
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I’d like my ideal board member/s to possess the following:
1. Demonstrated business acumen – An ability to and experience in analyzing different kinds of businesses. Further it would be idea if they had experience at running a similar kind of business.
2. Independent-mindedness – Board members need to be able to act independent of management trends and limit the opportunity for group think, so that they are able to pursue the genuinely good opportunities as they arise.
3. Long term orientation – Board members need to be concerned with the genuine long term profitability of the company – rather than pleasing the market.
4. Interests that are aligned with shareholders, preferably through personally having a high percentage of their net worth invested in the company.
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