Fletcher chairman in firing line
Investors may be militant at annual meeting
Sir Ralph Norris must achieve three things to retain shareholder confidence in Fletcher Building and himself as chairman. First, he must unveil credible financial guidance for the 2018 financial year which the market accepts is likely to stick.
Second, he must announce a firstclass chief executive who has an inclusive leadership style and the management breadth to take a complex company forward.
Third, he must present a calm exterior as he explains the rationale behind the changes at director level, outlines new governance at the top of the vital audit and risk committee, and (without prostrating himself) delivers a public mea culpa to shareholders for the debacle at Fletcher’s construction arm.
All this without showing any signs of prickliness at having his commercial acumen impugned — as it surely will be.
Fittingly, Fletcher Building has chosen the Auckland War Memorial Museum as the venue for its annual shareholder meeting this morning.
Shareholders who have received a nil return in the 2017 year — on top of a history of under-performance by the company in the past five years — may well be of a militant mind.
Sir Ralph has already fronted up to analyst and press briefings on two previous occasions this year.
He has been subject to grillings. But this time it is the shareholders’ turn.
The NZ Shareholders Association has indicated it will come armed with proxies. It is expected to vote its undirected proxies in favour of former PwC chairman Bruce Hassall (who will be the new chair of the audit committee) when he comes up for election as a director.
It would have voted against previous committee chairman John Judge’s re-election as a director. But Judge is stepping down. Instead, it will aim its proxy volley at fellow committee member Cecilia Tarrant who is standing for re-election to the board.
There is an element of symbolism to the association’s campaign. But much will depend on the announcement of the new guidance.
The trading halt — which was imposed on Fletcher Building shares on the NZX and ASX yesterday — was due to be lifted this morning with the announcement of guidance for the 2018 financial year.
The Fletcher board has met to confirm the guidance and also the new chief executive who will take the place of Mark Adamson who resigned at the time of the last earnings downgrade.
The company yesterday also confirmed that it was reviewing the financial performance of its Building + Interiors (B+I) business unit, which is being informed by the independent KPMG review of the two largest B+I projects, and the impact of that financial performance on earnings guidance for the 2018 financial year.
While much of the public focus has been on the trouble at the construction arm it has to be said that a review of its broader performance, and the returns on other divisions, is also long overdue.
A task for the new chief executive, perhaps?