Wal King is surely one of Australia’s most successful CEOs. When he took charge at Leighton Holdings 23 years ago, the company’s share price was less than $0.90 and it earned $6.7m after tax in the previous year. Today, the share price is $33 (a compound annual return of 18% p.a., not including dividends) and the company earned $612m last financial year.
It’s hard to believe shareholders don’t want this bloke on the board. Street Talk reports today that ‘shareholders and corporate governance types are not sanguine about the suggestion that King is negotiating to take a board seat at Leighton after he steps down’.
Apparently they don’t like the fact that former CFO Dieter Adamsas already has a seat and that ‘King has been at war with elements of the board for much of the year’.
It’s plain ridiculous that you would not want a person of his calibre and experience as a sounding board. He doesn’t own a substantial portion of the company’s shares, so no one could feel their job is under threat. If they don’t like two former employees on the board, then get rid of Adamsas.
And if it’s Hochtief’s representatives that King has been fighting with, all the more reason to keep him around. If there’s a risk for minority shareholders, it’s that this German construction company uses its 55% stake to short-change minority shareholders. One thing is for sure, if I were a Leighton shareholder, I wouldn’t want him sitting on the board of a competitor.
As an aside, the Fin also quoted Jason Beddow, CEO of Argo Investments, saying he thinks a fresh start could benefit Leighton because ‘Wal told the analysts nothing. He didn’t really pander to the investment community’. Jason might want to look at the company’s record and ask himself whether all this pandering does anyone any good.
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Forager Funds is a boutique fund manager specialising in a value investing approach. We offer an ASX listed Australian Shares Fund as well as an International Shares Fund both aimed at delivering returns for long term investors.