The shakeout of the Fletcher Building board is proceeding at a gentlemanly pace which will preserve exiting directors' reputations (as much as is possible) after one of the most disastrous episodes in recent corporate history.
The four new directors who take up their positions on September 1 will join a board that has already substantially de-risked the business through the appointment of new CEO Ross Taylor late last year and the adoption this week of a Taylor-led strategy that constrains operations to Australasia — including the sale of the Formica and Roof Tile Group to release funds to pay down debt — and the scuttling of former CEO Mark Adamson's head office empire-building in favour of putting the onus back on divisional chiefs to run their businesses in an appropriately incentivised manner.
The board changes will play out like this.
Chairman Sir Ralph Norris will stand down on September 1 in favour of a hand-picked successor.
As tipped by this columnist on the Larry Williams show this week, current Fletcher director Bruce Hassall will step up to become chairman when Norris departs.
Hassall is a cool and calculated player. The former chief executive of PwC in New Zealand joined the board in March 2017.
That was well after Fletcher signed its controversial contracts to build the International Convention Centre in Auckland and Christchurch's Justice Precinct.
But Hassall was in the ideal place to put his forensic skills to work when the first major cost overruns in Fletcher's portfolio occurred, and to ensure that brutal writedowns of that portfolio were exacted in February this year.
Hassall not only comes to the role with clean hands, but he has also served as chair of the company's audit and risk committee since John Judge stood down and is thus across the intimate details of the business.
It's notable that Norris is still the only Fletcher board member to take a direct reputational hit for the billion-dollar fiasco with the company's troubled vertical construction projects.
This is typical of his style.
As he told me this year, further destabilising the company at that stage was not a sensible option: "As you can imagine, when a company is in a state of flux people don't know what they are walking into."
The four new directors have long played in the top Kiwi corporate sandpit. They are sufficiently blooded to have a good handle on the risks associated with a Fletcher Building directorship.
But it's also true that a good deal of the risk has already been mitigated by Taylor, who impressed analysts and investors in Sydney this week with his "reset" of company strategy.
The new directors are Doug McKay, Cathy Quinn, Barbara Chapman and Rob McDonald.
McKay is well-versed in New Zealand governance circles.
Chapman, who retired as ASB CEO this year, recently joined the boards of Genesis Energy and NZME.
Quinn is a director of Tourism Holdings and former chair of MinterEllisonRuddWatts, where she continues to lead the M&A practice.
McDonald was the long-time chief financial officer at Air New Zealand and will this year take over from Norris as Contact Energy's chairman.
Also exiting the board on September 1 is Cecilia Tarrant, who was appointed in October 2011. Alan Jackson, who was appointed in September 2009, will step down by rotation at the company's ASM this year.
The continuing directors are: Hassall; Tony Carter, who also chairs Air New Zealand; and Xero chief executive Steve Vamos.
The Shareholders' Association has campaigned for Vamos to step down. The association has a point in arguing that Vamos' role as Xero CEO is itself sufficiently exacting for questions to be legitimately asked about the time he has to devote to Fletcher.
There is another point. Vamos was a member of the Fletcher Building audit and risk committee through the critical period when the construction projects were starting to blow out. If Tarrant — who was also a member of that committee — is to step down, why not Vamos?
The board will appoint an Australian director at a later date.
When it comes to detail, Taylor has announced the company will take restructuring charges of $85 million to $95m in its 2018 results as it moves to a decentralised operating model and will also write down the value of its Rocla and Roof Tile businesses.
There will be seven operating divisions instead of five, which will cut annual overheads by $30m.
At an operating level, Taylor has kept Fletcher's 2018 forecasts unchanged. Group earnings before interest and tax, excluding Building + Interiors and significant items, was reiterated at $680m-$720m.
In Sydney this week, Taylor revealed that he intends to discontinue the process of reporting in detail on each of the troubled construction projects.
But he also indicated that the company might not be out of the vertical construction business on a permanent basis.
First of all it has to work out its existing book.
But if there is an overall risk reweighting by the sector which results in a more sane contracting environment, Fletcher Building's cranes may still be seen around town in years to come.