If I were advising RHG CEO Glenn Goddard on how to respond to our meeting requisition, the plan of attack would be simple: focus on their inexperience and make them out to be ‘corporate raiders’. We haven’t heard anything about inexperience, yet, but it will come.
The first salvo about capital allocation has already been fired, however. Goddard was quoted in this morning’s Australian as saying ‘These guys [us] are saying let’s cut this pie up, but what we have said is that this pie isn’t baked yet. Let’s wait until there’s more certainty.’ To be clear, we’ve gone to some lengths to point out that our strategy is not necessarily to return all the cash to shareholders immediately. If it takes 12 months, or two years, that is something we are perfectly comfortable with.
But we need a board that is genuinely representative of the company’s diverse shareholder base. And we need it now. That way, when those decisions about capital allocation are made, they’ll be made in the interests of all shareholders. On ABC’s Lateline Business last night, Goddard was quite clear that the company has been looking at acqusitions during the past three months. There’s no point changing the board after the damage has been done.
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{ 10 comments… read them below or add one }
I thought that that Lateline process was an advertorial for the existing board. It seemed to push that they had told everything. They also seemed (I could be wrong) to imply that the 4 current directors owned 25% and as such they made no mention that one of them the one up for removal has in fact sold out. The bit from the 7% shareholder did not help as he just seemed to have caught part of the argument.
I must say after the results how can they do such an about turn and be preaching about what good health they are in and that they have reported such a huge profit etc etc. The results seemed to caution the risks far more than what had been banked already.
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Goddard’s belated announcement of company strategy can be used against them – why only when a meeting has been called by minority shareholders have they only released further details of what they’ve been planning?
We can focus on giving them enough rope to hang themselves. Every action and announcement they commit to from after the meeting requisition that is different from what existed before can be used to make a case to existing shareholders that this is a reactive board, not a proactive one.
However, the more shareholders know if Intelligent Investor, the more will come to this site and read the comments, making their own judgment. Let us continue to promote this website and draw as much attention to Intelligent Investor as possible, because people will naturally be curious, learn more about Steven and Greg, and come here.
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Expect the RHG board to carefully pull off a subtle publicity stunt to pull the wool over shareholders eyes and leave them in two minds about what to vote for during the General Meeting.
Goddard says: “We aren’t throwing capital around left, right and centre, we need it to support the business”
I says: “The only support I’ll give to the business is when it returns my capital!”
Goddard says: “These guys are saying let’s cut this pie up, but what we have said is that this pie isn’t baked yet. Let’s wait until there’s more certainty.”
I says: “Yes , I want my slice and eat it now! The only thing I’m certain of is RHG’s bank balance!”
Do I sound greedy? Then that’s the boards problem!
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I did not buy RHG (RAMS) as a speculative stock. The directors’ recent actions have put stable assets (cash) at risk for insufficient likely gain. I do not want to see my assets frittered away by continued risky gambles with my money.
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I am very concerned about the strategy (lack of) of the board of RHG. I was a great supporter of RHG when they were still in the Mortgage Origination business with a good team & products and was exactly what the big four banks needed to keep the playing field even. Now that everything has gone sour and they are in run off it looks like they have forgotten everyone but themselves. Rams recently sold off a large parcel of loans (which had been originated by hard working Brokers) to NAB who then gave them to their inhouse broking firm who “refinanced” each and every loan. This then froze out all the brokers (whose clients they were) and left then with no income from those loans. It was the brokers that took this company to where it got to and they spat on them. As a share holder I am disgusted and now see that they are treating me and fellow share holders no differently. Nice fat little wallets from the directors fees, to soften there butts as they sit around all day. Congratulations Stephen I am with you and you will get my vote. You have more to lose by doing us wrong than those fat wallets we currently have on the board. Go get em with my blessing
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Congratulations Steve on your efforts on members’ behalf.
We support you 100%.
It’s a pity the Directors didn’t have the sense to at least declare a modest dividend.
Such foresight could have at least muted some of the current criticism and added more credibility to their decision to retain cash for perceived longer-term investment opportunities, to (hopefully) increase future returns.
Clearly the Board does not understand the importance of the need to balance shareholders interests (entitlement to some actual short-term benefits) with their own longer term plans (with an uncertain outcome).
Hopefully if we can help elect new Directors this situation can be rectified.
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To get the agenda items (election of alternative directors and sacking of existing one) through, what % of votes is required? Is it just a straight 50%?
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It’s good to see some action to hold directors to account rather than just allowing them to treat the company as their own personal little kingdom. You have the support of my 94,000 shares.
All I wish now is for people to stand up against boards who place large slabs of shares with “sophisticated investors” and the like at a great discount while the investors who have supported the company get nothing except their shares diluted. It seems to me it’s about time there was a law giving existing shareholders, both individual and institutional, the first option to purchase.
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The latest ASX announcements asking for your CVs certainly seems to be a veiled dig at your relative inexperience. They must be reading this website!
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I am interested in “the pie has not been baked yet”. The word souffle has been studiously avoided. Talk of acquisitions is generally classic gallows speak when mediocre boards get their hands on excess funds, however, is it worth remembering that this board can create a successful second tier mortgage business. They were simply early victims of the GFC. What might be our attitude when the non compete clause with Westpac expires. There are already significant rumblings at Government level about the share of this market now enjoyed by the big four banks. It’s clear the board needs a wake up call. I attended the first AGM after the meltdown and was gobsmacked but what appeared to me to be Mr. Kinghorn’s indifference to the plight of the room. I note today, a notice was served for the issue of six million shares at 10c upon the exercise of a an employee option. Someone has cleaned up $3 million while we await even a small dividend. Is the executive still being remunerated at post crash levels. How deeply can they get involved in the run off of a mortgage book?
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