Tin hats off to shareholders' hero

Bruce Sheppard says he learned New Zealand's corporate leadership was 'greedy, grasping and self-serving but frightened when challenged'. Photo / Sarah Ivey

Shareholder activist Bruce Sheppard has stepped down as chairman of the Shareholders Association, reflecting on more than nine years with the organisation.

Sheppard, who spoke to a packed audience of several hundred members, told of how the concept of the association was born 12 years ago with his first battle against Sir Ron Brierley's Brierley Investments.

"That's when the tin hat came in - it wasn't pre-planned. Brierley just seemed an auspicious occasion to wear a tin hat."

It was November 11, 1998 - 80 years since the end of World War I and just over two years until the association would be officially founded in February 2001.

Sheppard went into the meeting wanting to get two minutes' silence. Not for the thousands of men and women who died during the war, he said, but for the 120,000 shareholders in Brierley that had "just been dicked".

"Brierley caused more casualties than the Kaiser and cost them more than the war."

Sheppard said the two minutes' silence totally derailed the meeting.

Afterwards he engaged Sir Selwyn Cushing to fight the cause.

"He's probably the father of this association and I'm probably the mother. He taught me a lot about corporate New Zealand."

Sheppard said he learned New Zealand's corporate leadership was "greedy, grasping and self-serving but frightened when challenged".

That was the birth event but the cause was to build the capital markets, Sheppard said. One of the first challenges was Telecom, where Sheppard wanted to put forward a motion.

Under the listing rules companies have to accept up to 1000 words proposing a motion and pay to have it printed and distributed to shareholders.

It had five recommendations and the board rejected every single one. Sheppard's big push was to get share options dropped. The motion was lost but Telecom no longer has share options. He did not win but he got 23 per cent of the vote. "I was astounded."

Sheppard then took on Tower after it was demutualised over its directors' fees.

"They were the worst pigs in the trough I have ever seen." So he researched the listing rules and submitted a complaint.

"We won that."

Sheppard wanted to take it further - he wanted the directors to pay back the money and be bankrupted. He was told to take the victory and move on.

But he says it changed the way boards pay themselves. It also changed the way boards thought about their owners.

"Some of those battles seem really small but they have been drops in a bucket."

Sheppard said that during his time the association had stopped a number of "dirty tricks" involving shareholder voting.

Fletcher Forests was convinced to stop using its American depositary receipts to vote and the standard proxy form was also changed.

The form used to allow the chairman to vote for anyone who did not vote automatically but now shareholders can abstain or give their permission for the chair to vote for them.

Sheppard said that during his time he had helped to redefine remuneration for directors and emphasised to shareholders that they have power.

"We have achieved a number of regulatory reforms, changed the way directors think. I'd like to think the last 10 years hasn't been a waste of time.

"This year we have managed to get capital markets to the top of the political agenda for the first time in 25 years."

Speaking after Sheppard, Commerce Minister Simon Power apologised for stealing him away to sit on the Financial Markets Authority's establishment board.

"When thinking about the board, Bruce's name popped into my head early on. He kept ringing me. My staff said, 'Stop giving out your personal numbers'."

Power said Sheppard was just the kind of shareholder advocate the board needed to help restore investor confidence.