Crikey’s 2008 Business Achiever Awards

It has been a banner year for business and leaders, with competition for Crikey’s 2008 Business Achiever Awards more intense than ever. Congratulations to those blessed executives and business types who shone out in a year brimming with incompetence and greed of the highest order.

Broking Analyst of the year: One of the most competitive fields, with literally hundreds of analysts coming up with calls which were ambitious or simply wrong. Few surpassed Austock senior analyst Amanda Miller, who on 26 February 2008 recommended ABC Leaning Centres as a “strong buy” with a price target of $8.17. As the note was being issued, ABC shares were falling to $1.15 (the company has since been placed in administration).

We would never suggest that Miller’s bullishness had anything to do with the fact that Austock was ABC’s long-time house broker (Austock earned more than $26 million in fees in 2006), or that Austock chairman Bill Bessemer was a former director of ABC, or that the Australian Education Trust’s (which is managed by Austock) only real assets are properties leased to ABC, or that another fund managed by Austock has a major holding in AEU units.

Litigator of the year: To former City Pacific boss Phil Sullivan, who took legal action against Fairfax journalist Michael West for questioning the performance of City Pacific. Perhaps Sullivan hadn’t spoken to City Pacific’s finance division — at the same time as it briefed lawyers regarding a defamation action CIY was restating its accounts — its share price dropping $4 to $1 (they are now trading at $0.06). CIY shares were suspended the following day after one of its banks demanded repayment of a secured $240 million facility.

Sullivan also gets a nod for ironic comment of the year, telling the Financial Review in September that “the Gold Coast is a pretty resilient area.” City Pacific is capitalised at $11 million, down from more than $800 million last year.

Shareholder’s friend of the year: To “Big Bad Bustling” Barry Cusack, erstwhile chairman of OZ Minerals. Cusack is an old fashioned mining type, not one to concern himself with irrelevant concepts. Cusack and good friend, Owen “Stronger Forever” Hegarty, led the once great Oxiana into an ill-fated merger with zinc and lead miner Zinifex. Sadly for Cusack (and even more sadly for its shareholders), the zinc price fell off a cliff shortly after the merger and around $10.3 billion in market capitalisation evaporated (pre-merger, the companies were valued at $12 billion).

Despite implementing the most ill-conceived merger in years, Cusack and the Oxiana board felt it appropriate to make an ex-gratia payment to Hegarty of $10.66 million — much of which was for options which were completely worthless. After shareholders rejected that, Big Bad Barry gave shareholders the one finger salute and paid Hegarty $8.35 million anyway.

The Alan Bond special achievement award for services to the insolvency industry: To Elizabeth Nosworthy for her non-executive efforts in helping to prop up Australia’s insolvency practitioners. In the words of another well known Lizzie, 2008 was an annus horribilis for the former Brisbane lawyer. Of the four companies which Nosworthy oversees, one is in administration, two others are teetering, while the fourth’s share price is trading at an all-time low.

Focus of the Year: On 4 January 2008, polo player, lawyer and failed fund manager Michael King resigned from the board of hedge fund manager HFA. At the time, HFA claimed that King’s resignation from the HFA board was to allow him to “focus entirely on MFS.” 15 days after he focused all of his attention on MFS, it was suspended from the ASX, never to trade again. Two days later, King resigned from MFS to concentrate on more worthy pursuits like tending to his ponies.

Predictions of the Year: To ABC boss, Eddy Groves, for claiming on 25 February that “no, I haven’t sold any stock [and] I have margin lending, but [the margin calls] are a long way off the mark from where they think it is.” A few hours later, Eddy was margin-called out of several million shares, causing ABC to slump to $1.15. The following week, Groves’ entire stake (once worth more than $300 million) was promptly sold by his margin lender, Citigroup. ABC is now in the hands of administrators.

Free Marketer of the Year: To Scott Talbott, senior vice president for government affairs at the United States Financial Round Table (a trade group representing large US businesses). In October, after the US government spent US$700 billion bailing out its largest financial companies, Talbott claimed “it is not appropriate for government to be setting the salaries of executives.”

However, Talbott had no problems with the bail out itself, implying that he isn’t opposed to governments actually paying banker salaries, just setting them.

The Andrew Forrest award for charitable donor of the year: To the directors of construction company Leighton Holdings who thought it apt to not only pay CEO Wal King one of the largest fixed and cash bonus remuneration packages in Australia but to also round it up to the nearest million. King is entitled to receive 1.5% of the company’s profit, which last year entitled the aging executive to $5.6 million.

Apparently, that wasn’t enough for Wal so the board elected to “round it up” to an even $6 million. At Leighton, charity clearly begins at the boardroom.

Regulator of the Year: To the Australian Securities Exchange, which despite multiple warnings failed to do anything substantial to curb insider trading, disclose short-selling or provide investors with information about management agreements with infrastructure satellites. Such was the ASX’s intransigence that almost a quarter of shareholders supported Stephen Mayne’s tilt for the board in September.

Outgoing ASX chairman and close friend of John Howard, Maurice Newman, did his best to defend the ASX, choosing to attack the media and corporate governance advisers while staunchly defending the ASX’s proud record policing insider trading. Sadly for Maurice, his timing wasn’t ideal — the following day, Babcock & Brown shares leapt 50% on unsubstantiated takeover rumours.

Resume of the year: To the executive chairman of Mintails Bryan Frost after the company’s 2008 Annual Report happily informed shareholders that “over the past 35 years [Frost] has been involved in a number of public companies … and possesses extensive experience in financial engineering.” In the light of the collapse of financial engineers MFS, Babcock, Allco and Centro — claiming to be an expert in financial engineering is much like … well ….

Sadly, despite Frost’s skills, Mintails managed to rack up $36 million in “foreign exchange losses”, alleviated only by an upwards revaluation of $50 million due to a, convenient “revaluation of mineral resources.” Sadly, one thing that you can’t engineer is cash — this year, Mintails saw $12 million walk out the door following a $13 million outflow in 2006/07.

Carl Lewis award for quickest dash: To former Allco Board member and Related Party Committee member, Barbara Ward. Ward was one of three ‘independent’ Allco directors who, in their wisdom, thought it was a good idea to spend $260 million to purchase 80% of property funds manager Rubicon (which was a related party of Allco). The acquisition was partly cash, which meant Allco executive chairman David Coe (who had a large shareholding in Rubicon) received $16 odd million and Gordon Fell (Rubicon founder and an Allco director), took home a very handy $28 million.

A few days later Fell’s wife purchased a $28 million harbourside mansion. A few months later Allco and Rubicon slid into receivership. However, Ward didn’t wait around to survey the damage — less than a month after signing off on the transaction she resigned from Allco and was later appointed to the Qantas board despite copping a 42% protest vote from shareholders.

Corporate Governance advocate of the year: To Rupert Murdoch for services to executive pay. In an interview with Glenda Korporaal in The Australian Magazine, Murdoch claimed that he “wouldn’t defend some of [the] obscene payments that have been made [to executives] in the past 12 months.” Few missed the irony in Murdoch’s comments, given that he is the highest paid executive of all ASX-listed companies. Since 2006 Murdoch has collected more than $86 million in remuneration from NewsCorp shareholders. During that time, NewsCorp shares have lost more than half of their value. The company also undertook a debt-funded acquisition of the Wall Street Journal months before media stocks plummeted.