Australia's no. 1 corporate parasite?

I see Orbital has received yet another handout — courtesy of Australian taxpayers (announcement 7 October 2014).

Is this company the greatest corporate parasite in Australia’s history? Forget the car industry — pound for pound, Ford and Holden had nothing on these guys.

And Orbital’s management shows all the classic signs of the ‘entitlement mentality’ that festers in people who get used to receiving government handouts.

You won’t find any trace of appreciation or gratitude in Orbital’s management. No ‘thank you taxpayers for your continued generous support’. These guys believe they’re entitled to every cent of the many, many millions of dollars they’ve been given (and blown) over the years.

But now they’re not content with just sucking blood out of taxpayers. They’re moving in on the company’s shareholders.
Orbital’s management has just cooked up a very dodgy ‘performance share rights’ scheme (announcement 2 September 2014).

You would think a company that respected its shareholders would link any management bonuses to increases in profits. Not Orbital. Its bonuses are linked to the company’s market capitalisation.

It’s as though management is admitting they see no profits ahead. So rather than do the honourable thing – that is, align their incentives with those of shareholders – they’ve pretty much done the opposite.

So here’s a prediction: Orbital will make some rights issues in the next year or two (for example, to raise the money they’re desperately going to need to pay back the holders of the convertible notes they’re intending to issue).

What this will mean is that even as the share price falls and non-participating shareholders get diluted, the company’s market capitalisation might nonetheless limp upwards enough to give management some nice fat bonuses.

And I notice Orbital has launched legal action to defend some patent that it’s just been sitting on (announcement 1 December 2014). They’re fighting this legal battle in an overseas jurisdiction and they’re up against some formidable opponents. They’ll need a lot of luck imo.

Orbital is a company that:

• is surviving on government handouts
• has a management team with an entitlement mentality
• has implemented a dodgy ‘incentive’ scheme for senior executives
• has had contract disputes with one of its most important customers (these were eventually resolved in the customer’s favour)
• regularly makes ASX announcements that don’t pass the laugh test
• is voluntarily involving itself in an overseas legal battle.

Orbital is drowning in a sea of negativity.

This company doesn’t need a bullet. It just needs governments to switch off the life support. Governments are responsible for turning Orbital into the parasite it’s become. Now they should do the right thing and let it go — just as they did last year with the car industry. The sooner they do, the better off the Australian community will be.