You are largely correct; however, there are some good examples of success - check the profit and share price performance of 1300SMILES (ASX code ONT), which is a dental roll-up.
A Board more focussed on cost control and one which did not delay new recruitment of doctors for nearly 3 years would have prevented the disastrous performance of this company over the last 2 years. A Board that recruited the preceding CEO who did very little, if anything during his tenure, should have acted faster in replacing him.
Further, a Board that is not polluted with non-independent directors, which is not as captive to the financial interests of the doctor group, would work towards an agreed remuneration structure and the initiation of new strategies that would mitigate, and not destroy, the underlying profitability of the company.
Under the proposed changes to the corporations law, the doctors would unlikely be able to vote for the approval of the Remuneration report; this would allow two years of a no confidence vote to occur leading to a vote to spill the entire Board. Hopefully it gives them something to think about in the new year. It would make the 2013 AGM very interesting, if the company survives that long.
There is a real credibility issue in the market with the current leadership; it will be difficult for it to find additional financial support under the current Board composition given the destruction in shareholder wealth inflicted in 2010.
VGH Price at posting:
24.0¢ Sentiment: LT Sell Disclosure: Not Held
