Ryman Healthcare boss Simon Challies is praised for his style and performance in growing the company.

An excellent communicator albeit with a quietly confident manner, highly successful but without any arrogance, an affinity with those moving into quiet retirement but with a love of hard-rocking Shihad - Ryman Healthcare boss Simon Challies is the Herald Business Leader of the Year 2014.

Analysts and institutional investors are effusive about Christchurch-based Challies, who has been with the company for 15 years and chief executive for the last eight-and-a-half.

"Ryman has more than doubled in size under him, while successfully negotiating the global financial crisis and a housing downturn," said Forsyth Barr senior equity analyst and research director Jeremy Simpson. "Ryman's track record of meeting its growth targets under Simon Challies is unmatched in the New Zealand market in my view."

But investors say that for such a successful company, with a $4 billion market capitalisation, the third largest stock in the NZX50 and a target 15 per cent annual growth rate, they have never detected any arrogance.

Advertisement

"We like Simon's quietly spoken confidence in his team and strategy. He is an excellent communicator and has always been very good at describing his and the board's view of how to create shareholder value," one investor said.

Asked about his skills as a chief executive in a Herald video, Challies paid tribute to Ryman co-founders Kevin Hickman and John Ryder.

"I know I'm extremely fortunate," he said. "Kevin mentored me for a number of years and when I took over in 2006, he had a great team and a great strategy and just built the team up from there.

"It's giving people space to take charge of their own domain."

Stuart Williams of institutional and retail investor Nikko Asset Management also praised Challies.

"He's just the right combination of open and informative, trying to help people understand what the company does.

"He's consistent and he's even but what really stands out to me about him is that he has a genuine affinity with residents," Williams said.

"I don't think you could do that job without having a genuine care for people and that's not the case in every CEO I meet."

Advertisement

Stephen Montgomery from Aspiring Asset Management said Challies had many qualities.

"If you met Simon and you knew he was running the retirement village you were contemplating putting your mother or grandmother into, you would be very happy," he said.

While many companies pay lip-service to putting customers first, one investor says Challies actually does, "insisting that word of mouth is the most powerful marketing tool and that Ryman's success is built on delighting customers".

That is borne out by the fact that despite having the lowest deferred management fee in the sector (20 per cent vs 25 per cent for Summerset and 30 per cent for Metlifecare), not increasing weekly fees over the term of a resident's tenure - a measure recently adopted by Metlifecare - and discounting village units on initial sale, Ryman remains the most successful retirement village operator.

Just lately, Challies has really stuck his neck out, stepping up the growth strategy, and amassing a big Auckland landbank with five new development sites.

"Auckland's population aged 75-plus was 59,000 in 2006 but by 2031, it is projected to be 154,000," Challies said.

"The 75+ population has grown by 9000 in the last seven years, is expected to grow by 28,000 in the next eight, and 58,000 in the following 10. Our plan is to build 2200 units across our six new villages over the next five to seven years. That's 2200 new homes for the 28,000 extra people aged 75+ over that same period."

However, he acknowledges the role to be played by his rivals.

"It's going to take a lot more building than just us to accommodate the growing older population in Auckland."

In Melbourne, it is developing the Weary Dunlop village and has big plans there.

As for the drawbacks, critics have accused retirement businesses of exploiting the elderly, paying workers low wages and property development overkill.

But Nikko Asset Management's Williams defended people's choice to move into retirement villages and said it was wrong to question their motives.

"If you asked that question at a meeting of residents, you'd be boo-ed," Williams said.

Forsyth Barr's Simpson puts the business case.

"With the rapidly aging population in Australia and New Zealand there is increasing demand for retirement village accommodation and aged care, in particular Ryman's hospital and dementia facilities," Simpson said.

"Ryman remains very well positioned given its fully integrated villages, strong brand and track record."

Challies won this year's Deloitte Top 200 Executive of the Year.

And although the corporate image is well-polished he is also a bit of a hard rocker and rebel - a big fan of Kiwi band Shihad who rides his motorbike to work in Christchurch.

So it could well be that in his holidays, Challies will be humming Shihad's Home Again.

Simon Challies

•Ryman Healthcare chief executive.
•Originates from, and works in, Christchurch.
•Schooling: Prebbleton Primary, St Thomas of Canterbury College.
•Law and commerce graduate, University of Canterbury.
•Initially worked as a chartered accountant.
•Joined Ryman in 1999 as chief financial officer.
•Appointed chief executive in 2006 aged 36.
•Appointed managing director in 2010.
•Won 2014 Deloitte Top 200 CEO.
•Married to Tracey, teenage son Sam.

What you might not know about him

•Loves the YouTube video with village residents dancing to the popular song Happy by Pharrell Williams.
•Staff call him "the chief dissatisfaction officer" because his untiring interest in doing things differently.
•Has a memorable rhyming nickname: residents know him all over the country as Simon from Ryman.
•When he became CEO, Ryman co-founder Kevin Hickman told him the only condition was that he had to ditch his lime green Vespa motorbike.
•Challies used to wear a matching lime green helmet when he rode that bike.
•His 14-year-old son told him when he was nominated for this year's Deloitte award: "Don't worry Dad, you haven't got a show."
•Relies on his wife and son to keep him grounded.
•Says he's a success because of his tight-knit team who are as obsessive and passionate as he is.
•Has all the faces of that team on his cellphone and shows their images off to prove he's not alone.
•He enjoyed Totem by Cirque du Soleil when it came to Auckland this year.
Seeing Shihad perform live is one of his greatest pleasures.
•A rental car in Auckland later this year was a grunty, vivid orange Holden Commodore - talk about stand-out. "You can't miss me," he said.
•He's based in Christchurch and his former office was wrecked by earthquakes.

nzherald.co.nz
To see an interview with Simon Challies go to nzherald.co.nz/video