The Australian Financial Review’s editorial last Saturday castigated public company boards for failing to act in the best interests of shareholders. The AFR cited the examples of Coates Hire (which recently rejected a $6.29 offer from Carlyle and National Hire) and Orica (which spurned private equity foray earlier this year) as targets for criticism.

The AFR claimed that when an offer is submitted, “the obligation is on the board to either put the deal before the company’s owners, or explain why it falls short of the true value to be achieved by keeping their strategy in place”.

While the AFR is to be praised to putting the spotlight on director’s duties to shareholders, unfortunately, they are focussing on the wrong directors. Long-term Coates shareholders would have great reason to be pleased with the performance of Coates, with the company generating 26.7 percent total shareholders returns in the past five years.

Orica shareholders have fared even better, collecting an annual return of 29.6 percent since 2002. As a comparison, the market will generally provide shareholders with a return of around 12 percent, and the greatest of them all, Warren Buffett’s Berkshire Hathaway, has a long-term return of 21.4 percent.

When a board and a management team have a solid track record of delivering strong growth to shareholders, they should not be criticised for spurning debt-laden takeover bids pitched at a slight premium to the prevailing share price. Instead of picking on Orica and Coates, the AFR should be focussing on boards that have really failed to act in the interests of shareholders.

One example (and a Crikey favourite) has been the board of Consolidated Minerals. The ConsMin board wholeheartedly endorsed a low-ball bid from Brian Gilbertson’s Pallinghurst group. Even when the price of manganese skyrocketed, the ConsMin board stubbornly stuck by its flawed recommendation.

Fortunately for ConsMin shareholders, and no thanks to its board, ConsMin has recently traded at $4.30 per share – a jaw-dropping 88 percent higher than what the board were prepared to sell a controlling stake in the company for.

To put the ConsMin board’s decision in context, imagine if your real estate agent recommended that you sell your house to a guy who knocked on your door for $500,000, only to have someone else make an offer of $950,000 a couple of months later.

Let’s not forget the sorry tale of MIM, and its foresight-challenged directors who felt it in shareholders best interests to recommend the sale of the company to shrewd Swiss-based firm, Xstrata just before a commodities boom. Based on the board’s recommendation (except for CEO, Vince Gauci), shareholders narrowly approved the scheme of arrangement. The sale cost shareholders billions (before it took over MIM, Xstrata was worth around $3 billion, it is now capped at almost $70 billion).

The AFR was right in one sense. Company boards should consider shareholders when making decisions. But the shareholders who should be in the forefront of directors’ minds are long-term holders, not hedge funds who have been on the share register for a month.