Deloitte Top 200: David Pilkington, Port of Tauranga wins Chairperson of the Year

David Pilkington is the Deloitte Top 200 2019 Chairperson of the Year.

David Pilkington describes his style as chair as having a focus on ensuring the board and management have a well understood joint strategy for the business, working together to develop the capability to achieve targets.

“This requires full engagement from the board which I encourage, and an open and frank relationship with the CEO and senior management team, with the right balance between challenge and support,” he says.

Pilkington — this year’s Hobson Leavy Executive Search Chairperson of the Year — is chair of the Port of Tauranga, Douglas Pharmaceuticals and investment firm Rangatira.

Until the end of November, he was also chair of Northport but has stepped down in line with a two-yearly rotational policy in place with its 50 per cent partner Marsden Maritime Holdings.

“Every entity he chairs has performed financially and grown consistently during his tenure,” says Deloitte Top 200 judge Cathy Quinn. “He is an inclusive chair and facilitates an environment to get the best out of people, and has been selected as the winner due to his track record of success as a chair over a long period.”

The judges add that he has developed chief executive talent and built constructive relationships with them — allowing them to do their job but also be guided by him.

Pilkington says his highlight over the last year has been overseeing the Port of Tauranga’s group net profit after tax (NPAT) exceed the $100 million milestone for the first time, as well as making big strides in its focus on sustainability having gained certification of its carbon emissions.

“The Port has set a short-term target of five per cent reduction in its Scope 1 emissions per cargo tonne and is targeting net zero emission by 2050,” he says.

The Port of Tauranga this year has seen exports and imports increase, handling an impressive 37 per cent of all containers in New Zealand and 30 per cent of the country’s cargo.

Despite the Port having a 6 per cent slip in profit after tax for the first quarter of the 2020 financial year, due in part to lower long volumes which dipped 5.2 per cent, it advised shareholders its full year guidance should see earnings between $96m and $101m — the same as the guidance provided last year.

“The Port of Tauranga’s success comes as a result of a co-ordinated investment strategy to become ‘big ship capable’ and at the same time entering into long-term agreements with its major cargo owners to provide services and support to commit to Tauranga as the major export port,” says Pilkington.

He says given the constraints and difficulties faced by the Ports of Auckland, Tauranga — and to some extent Northport — are able to provide an efficient and alternative gateway for the upper North Island.

“Port of Tauranga is ideally placed in a geographic sense to continue to grow,” he says.

“A recent study by an international consultant specialising in port operations identified that with further investment it would be possible to increase container handling capability to well in excess of the Port of Tauranga and Ports of Auckland’s current combined container volumes.”

Pilkington was also commended by the judges for being influential in his work with Douglas Pharmaceuticals.

As chair of the privately-owned company, Pilkington has worked with management following the passing of founder Sir Graeme Douglas two years ago.

“Graeme’s son Jeff has successfully taken up the reins and has increased the focus on the company’s new development pipeline — this is an exciting time for the business,” he says.

He has also been chair of diversified investment firm Rangatira since 2013.

Rangatira — whose investments include Polynesian Spa, Rainbow’s End Theme Park, and Mrs Higgins — operates a flexible investment management strategy that allows it to work alongside owners to maintain what it is that has made the company successful.

Pilkington says the investment firm has just passed its 82nd year since its establishment in 1937.

“Its success has been based on equity partnerships with successful SME owner operators who have reached a point with their businesses where they are either facing inter-generational succession or require new capital for growth,” he says.

“Unlike the traditional private equity company model with short-to-medium investment horizons, Rangatira is prepared to take a long-term view and is flexible depending on the founders' needs going forward.

“We see our equity investments as true partnerships.”

Finalist: Graeme Milne, Synlait

Graeme Milne, Chairperson of the Year finalist.

Graeme Milne says he is driven by the opportunity to grow New Zealand enterprise and develop and create value-added activities and jobs. “Satisfying, purposeful jobs. That’s the key thing for me,” he says.

The judges say Milne has been brave in taking on roles as chair of companies at an early stage and seeing them transform to become very successful.

“He is quick to give credit to others but his strategic thinking and calm manner under pressure have been key factors in the success of companies he has been involved with,” says judge Cathy Quinn.

Milne has an impressive resume. He is chair of Synlait Milk, nutrient and fertiliser company TerraCare, forestry services firm PF Olsen, Rimanui Farms and plastics company Pro Form. He describes his style as supportive of the executive and consultative with the directors, seeking consensus and ensuring the focus is on strategy. “Not wanting to necessarily be the spokesperson — that is more for the CEO,” Milne adds.

Milne has been chair of Synlait since 2004 — initially at Synlait Ltd, the predecessor of Synlait Milk.

He indicated at last year’s AGM he wouldn’t stand again, saying it had been great to be part of an exciting company for such a long stint.

As chair at Synlait he has presided over rapid progress. He says the fact he has always been keen on the land and has a background as a sheep and beef farmer and in the dairy industry has helped in terms of knowing what works and what doesn’t.

Since listing on the NZX in 2013, Synlait has grown at 15-20 per cent a year. Milne attributes this exceptional growth to it having been built into Synlait’s culture to always look strategically for the next step.

“If anything, we’re probably stepping a bit faster than we can digest at times. That’s what we have to be careful of — there are always more ideas than the ability to execute on them.”

He says Synlait is a talent magnet, and headed for 1000 staff: “You have to be careful you don’t disappoint really capable people when they get into the company, if systems have to catch up and all the rest of it. The key is not to trip over.”

This year Synlait acquired South Island-based cheese manufacturer Talbot Forest Cheese, and recently announced its intention to buy Christchurch-based dairy company Dairyworks for $112 million.

But Milne says his highlight over the past year has been getting Synlait’s Pokeno processing plant commissioned and running. The move into Waikato away from its Canterbury base has seen it sign up its first farmers in the region.

“To establish a completely greenfield operation, and have North Island farmers have faith in us and shift to us from their previous supplier — there is still a way to go, but it is running very smoothly,” he says.

“Synlait is a real growth story — startup from an idea,” he says. “And I don’t really want to leave, but you can’t stay forever.”

Finalist: Pip Dunphy, Transpower

Pip Dunphy, Chairperson of the Year finalist.

Pip Dunphy is a highly regarded professional director, having worked across a broad range of companies as a non-executive director over the past 12 years.

Deloitte Top 200 judge Cathy Quinn says Dunphy is a strong, courageous chair “who has been willing to stand her ground in tough circumstances to hold to what she believes is right.”

Dunphy says it is important the boards she leads operate as one team with management: “That is a philosophical preference for me.”

Her current governance roles include chair of Transpower, Abano Healthcare, First Gas, and director of the Fonterra Shareholders' Fund.

The judges say Dunphy brings strong finance skills to all her governance roles — derived from her experience working in capital markets, banking, finance and investment management. She has had executive positions in Goldman Sachs JBWere, BNZ and Bankers Trust.

Dunphy says she encourages any director starting off to gain experience across a diverse range of industries: “I’ve been fortunate to have the range of opportunities I have had.

“Beyond that, I think the selection is really about the people you are working with. Initially it was the opportunity to work with people I respected as chairs and learn from them.”

State-owned transmission company Transpower, a natural monopoly, is regulated by the Commerce Commission and Electricity Authority. Dunphy says this provides a very interesting perspective. “You always have to be mindful in that environment of your regulators and your obligations to your customers. In terms of the position in the industry that Transpower holds, that is always front of mind.”

She was previous chair of state-owned enterprise Solid Energy, resigning in 2015, disagreeing with then-Finance Minister Bill English over whether the company, debt-laden from unrealised expansion plans, was salvageable. Following her departure it went on to being placed into voluntary administration.

She says Solid Energy provides the best illustration of the challenges of being an SOE director. “The Solid Energy experience was, to me, a question around judgement and decision making around going concern, which I feel very strongly is a director’s prerogative,” she says.

“It is really important for the shareholder of an SOE to respect the role of directors, and similarly for directors to be understanding of the shareholders,” she says.

Dunphy says in chairing her diverse portfolio she has had a number of highlights over the past year:

“For Transpower it was the finalisation of our regulatory allowances and quality standards for our Individual Price Path (IPP) for the 2020-2025 period with relatively modest adjustments by the Commerce Commission in the process; for First Gas it was the highly commendable execution of the repairs to the Maui pipeline to repair damage; and for Abano it was finalising the expression of interest process which resulted in a take-over offer by way of a scheme of arrangement.”