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Investor ire at Goodman boardADELE FERGUSON
November 22, 2009 .
THE Goodman group chairman, Ian Ferrier, and one other director could be expelled from the board as part of a campaign to drive home investor anger at its huge dilution, relative underperformance and poor judgment of the board in the past 18 months.

The influential proxy advisory firm RiskMetrics has issued a report recommending Goodman shareholders vote against the reappointment of Mr Ferrier four months after he took on the role.

It has also targeted a non-executive director, Jim Sloman, at the company's annual general meeting on November 30 to make existing directors take responsibility for the poor state of the company.

Since July 2007, Goodman has suffered huge losses, even bigger write-downs, burgeoning debt problems, a series of capital raisings, a highly dilutive bail-out by Macquarie Group and the Chinese company CIC. Goodman's share price has underperformed the listed property trust index by 28 per cent.

Mr Ferrier told BusinessDay he was aware of the various RiskMetrics recommendations, which include voting against his re-election in the interests of board accountability given the performance of the Goodman Group in the past two years.

"If I was a shareholder, I would be disappointed with the past couple of years but I could say what RiskMetrics is saying is inappropriate,'' he said. ''We did a very good job to counter a very difficult environment and the consequence of this was if you are a shareholder, it has been an awkward time," he said.

RiskMetrics questioned Mr Ferrier's ability to fulfil his fiduciary responsibilities given his extensive board positions, including directorships of Reckon and Energy One and chairs of Australian Vintage and Invocare.

A key concern raised in the report was the judgment of the board when it decided to pay a $264 million distribution payment to shareholders in February, at the height of the global meltdown, when its operating profit was almost $50 million less than the payout, and the group faced a $460 million debt refinancing commitment three months later.

It was a decision that would cost investors dearly. On May 19, unable to repay its debts, the company was forced to enter a short-term $300 million finance facility with Macquarie and MSSits (a Bermuda domiciled associate of Macquarie).

In June, it did a similar deal with Chinese state-owned investment institution CIC, which committed $200 million and resulted in the dilution of existing shareholders by a huge 24 per cent. Goodman was then forced in August to go to the market and raise $1.3 billion in fresh equity, partly to repay the short-term Macquarie-CIC facility.

RiskMetrics recommended shareholders vote against the re-election of Mr Ferrier on the basis he has been a director for six years, acting chairman since November 2008 and chairman since July 2.

Its report also recommends investors vote against the issue of 8 million long-term performance rights at zero exercise price to the chief executive, Greg Goodman, who recently triggered a rout of the share price when he notified the market he had dumped most of the Goodman family's shares in an off-market transaction. A spokesman for Mr Goodman said he was unable to comment.