Investors' champion takes chair

By CHRIS DANIELS AND ELLEN READ

Bruce Sheppard, scourge of the arrogant company chairman, is this time up in front of the crowd running a meeting himself.

This sight greeted the members of the New Zealand Shareholders Association at an Auckland motel yesterday, as they gathered to see the tables turned at their first annual meeting.

Any undercover company chairman or chief executive hoping to see the hound become a hare would have been disappointed, however, as Sheppard took the microphone and reminded the gathered audience that he knew all the tricks.

The meeting would be run in the time-honoured fashion of a public company, he said - with all contentious business left till the very end, when all would be desperate for a cup of tea and biscuits.

Everyone would be tired and sleepy by the time anything worth while came up for discussion.

It was, unlike some of the annual shareholder meetings that Sheppard attends, a good natured and interesting gathering, with even a short interval for members to stretch their legs.

Guest speaker Commerce Minister Paul Swain used his speech to tell the meeting that there had not been enough protection for small shareholders in the past, and his Government was working to increase this.

He cited the successful introduction last year of the Takeovers Code as an achievement that was now widely accepted in the business community as a good thing.

Groups such as the Business Roundtable had convinced previous Governments that the Takeovers Code would be a bad thing, but he did not hear much opposition to it now, after one year in operation.

The Securities Markets and Institutions Bill, which is awaiting its second reading before Parliament, was also held out as an example of the Government helping small investors.

"We need more listings and more people to invest," said Swain.

There was risk, but if rules were fair and transparent and investors were treated equally, this would happen.

Joseph Healy, head of regional investment banking and private equity at ANZ Bank, who has written a yet-to-be published book, told the association that New Zealand's major listed companies were suffering from a long-term performance crisis.

Healy said few boards of directors and chief executives in this country had done a good job in creating meaningful and sustainable shareholder wealth.

Looking at them in terms of "economic value added", about 70 per cent of listed companies had in fact destroyed shareholder wealth in the past ten years.

One of Healy's big themes is the poor level and structure of executive pay in New Zealand companies. Executives were paid regardless of what value they had earned shareholders.

In coming months, the association plans to tackle Telecom, trying to force fuller disclosure of its remuneration strategies.

It will also focus much of its attention on the impending shareholder vote to approve the purchase by Fletcher Challenge Forests of the $1.3 billion Central North Island Forest.

Sheppard says the deal will mean a tripling of debt to buy more trees which will give the company only a 25 per cent increase in income.

A recent win claimed by the association has been due to its interest in IT Capital.

The battered technology investor did not renew the management contract of Philadelphia-based chief executive Jeff Dittus last October after a heated annual meeting, when shareholders criticised directors for failed investments, the amount they paid themselves and a balance sheet covered in red ink.

The association chose CDL Hotels' annual meeting in May last year as its first target in its war for a better deal for small investors.

Sheppard said the company's share price and liquidity had both improved after the association's questioning and involvement.

Since setting up in May last year, the Shareholders Association has grown to 270 members.

A branch has been established in Tauranga and there are plans for branches in Christchurch and Wellington.

NZ Shareholders' Association