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In the name of God, go

By Peter V O'Brien

Friday 28th February 2003

Text too small?
Tower chairman Colin Beyer's decision to stand down and forgo re-election as a director probably lessened the intensity of a shareholder stoush at the March 27 annual meeting.

There will still be noisy criticism directed at the board from people with informed gripes and others who are uninformed, love the sound of their voices and hope they are quoted in the daily media.

Mr Beyer can be presumed to have made considered decisions and he may have been under pressure from other people. Relinquishing the chairmanship was sensible because the annual meeting could have deteriorated into an oral brawl, to the detriment of consideration of bigger financial issues. Deciding against re-election was equally sensible, given the possibility of a humiliating defeat or a squeak-in. Both results would be divisive.

There was widespread disapproval in the financial community of Mr Beyer's attack on former chief executive James Boonzaier when presenting Tower's annual result on December 5. It lost some impact when related to the company's formal preliminary announcement to the Stock Exchange the same day.

Mr Beyer was quoted as saying: "The group's loss [$47.9 million] is a responsibility which must be carried by the board. Following a rigorous operational review, steps have been taken to address the underlying issues to ensure the business will move forward profitably."

Cynics might suggest one of those steps should be a board revamp. That seems about to happen, with two other directors, Sir Colin Maiden and Lindsay Cuming, deciding to step down and the probability Guinness Peat Group (GPG) will get two of the three positions now available through directors Tony Gibbs and Gary Weiss.

Calls for a total replacement of the Tower board were ridiculous. A company needs some continuity among its directors, irrespective of where blame lies for financial disasters; otherwise management has control until newcomers appreciate the nuances of the business.

The responsibilities and liabilities of directors were discussed here on November 8, four weeks before Mr Beyer's attack on Mr Boonzaier. Nothing changed in the intervening 12 weeks.

New Tower chairman Olaf O'Duill was the personification of subtlety when he suggested Sir Colin and Mr Cuming decided it was time to go, apparently because they were older than some other people. That summed up two key issues about directors: age and the time on the board, the latter also applicable to Mr Beyer.

The Tower board issue coincided with the Dominion Post's February 22 interview with Sir Wilson Whineray, a person who belies the rugby calumny that props have thick skulls to cover the little between their ears. He is retiring as Carter Holt Harvey chairman after 10 years.

Sir Wilson was quoted as saying all governance reports said 10 years was enough as a company chairman. The same comment would apply to directors who were unlikely ever to chair a company but many go on and on until compulsory retirement or suffering a collective shareholder boot.

There is potential to get comfy in the directorial role, with blurred relationships with fellow directors and management (often considered friends) and an assumption everything the board decides in right.

Tighter law and internal corporate rules have overcome the excesses of past years such as the former "noted" New Zealand director who reckoned he did no more than glance at board meeting papers, relying on the chairman and general manager to "do the right thing."

The 10-year rule, if exceeded, could lead to Cromwell's famous edict to the Long Parliament: "in the name of God, go."

Company directors should be aware they are liable to similar directives for poor performance. They have no excuse in the "I am serving the shareholders and can do better elsewhere, given the pitiful directors' fees paid here."

They took the job, knew the fees and should know the responsibilities as well as the kudos.

Those wider issues could be ignored at Tower's meeting. Mr O'Duill seems a good choice to calm the meeting.



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