So who’s top of the pops when it comes to Australian CEOs? According to our straw poll of almost 1,000 very wise Forager clients, Wesfarmers’ CEO Richard Goyder is king of the hill. Telstra’s David Thodey was a distant second, closely followed by CSL’s Brian MacNamee and Westpac’s former chief. Here’s the full list:
|2||David Thodey||51||Telstra (former)|
|3||Brian McNamee||42||CSL (former)|
|4||Gail Kelly||40||Westpac (former)|
|5||Graham Turner||33||Flight Centre|
|7||Kerr Neilson||26||Platinum Asset Management|
|8||Nicholas Moore||23||Macquarie Grouop|
|10||Kerrie Mather||12||Sydney Airport|
Do you agree? The most interesting thing about this list is that they are all CEOs of companies where the share price has risen in recent times. When asked to name the best CEO in Australia, you immediately think of the one who has made you the most money.
Perhaps the most skilled CEOs make the most money for shareholders. But perhaps it’s actually the share price that is driving our impression of the CEO?
Two years ago, Monadelphous CEO Rob Velletri would have surely made the list. He’s definitely in my top 10. Has he done something wrong? Has he morphed from good CEO to bad CEO? I don’t think so. The world in which he operates just got a hell of a lot more difficult.
Beyond a certain size of say, 1,000 employees or more, I reckon the individual is less important that the business itself. Obviously they can stuff things up with a stupid acquisition or an offshore expansion, but in general the type of ship and the seas on which it sails are far more important than the captain steering it.
Take British Bank RBS for example. The bank had grown from a minnow in the early 90s to be the world’s largest bank by 2007. The Scots were back at the helm of global banking and the CEO who got them there, Fred Goodwin, was a hero in Edinburgh.
By 2009 he was a pariah. Books such as Iain Martin’s Making It Happen: Fred Goodwin, RBS and the men who blew up the British economy lay the blame for a global financial crisis at the feet of one person: Fred “The Shred” Goodwin.
Goodwin’s successor, Stephen Hester, had a much more nuanced view of the situation. Towards the end of Martin’s book Hester reflected on his own imminent departure and the era of Goodwin before him:
Individuals are never really as important as they’re made out to be. Whether in good times or bad times. I’ve said to you before, I don’t think [RBS CEO] Fred Goodwin was as bad as he’s subsequently made out to be, and he wasn’t as good as he was made out to be at the peak of his reputation. And the same will be true of me. I think life will go on remarkably quickly. Pages get turned. That’s just how the world works.
And I think that is true of most large corporates. There are exceptions. Don Meij has done something truly extraordinary with Dominos. You could argue that, as an investment company, Wesfarmers’ CEO is more important than most. And all of the CEOs on the list above are undoubtedly exceptionally capable operators. But the main reason they are on this list is because they were in the right place at the right time. As investors, that is worth remembering.
P.S. Much of the same can be said about fund managers. The media love to idolise and lionise. Most of them are just human.