tim poole gets the boot?, page-9

Rowsthorn mate Poole wrong pick for Asciano chairmanship

John Durie | September 03, 2009
Article from: The Australian

INVESTORS in Asciano are trading fundamentally uninformed, thanks to a corporate governance structure that was a bull-market creation long past its use-by date.

Speculation in the press this morning suggests chair Tim Poole will be sacked and replaced by the highly respected Malcolm Broomhead.

Any such move would be welcomed, along with further respected directors, but somehow you just get the feeling this is a company being made up on the run.

Poole has long been a friend of chief executive Mark Rowsthorn, and the two have a close interest in horse racing.

Any changes are now not expected until early next week.

Clearly, in retrospect he was the wrong guy to have as chairman and his replacement will be an acknowledgement he was the wrong guy for the job and, arguably, too inexperienced to be a chair, given his lack of other board experience.

Corporate governance is one of the subjects that people treat as of academic interest, but if ever there was a practical example of what happens when it is abused, it is Asciano.

It should be noted that a Goldman Sachs research note out today shows companies with good governance have outperformed the market by 17.6 per cent over the last eight years, and those with good board skills have outperformed by 31.1 per cent.

The next Asciano annual meeting faces almost certain defeat of its remuneration report, due to excessive termination payments to departing executives and the increased bonus for Rowsthorn, in a year when the company flirted with financial ruin as it attempted to over-finesse a restructuring that eventually cost shareholders big time.

Rowsthorn rates as one of the best transport operators in the country, but as a public company executive he too is untested, yet the company was spun off from Toll with an untested chair and chief executive.

Its $2 billion recapitalisation earlier this year saved the company, and to be fair the debt-load was a function of a bull-market structure unleashed at the wrong time.

Granted, this is easy to say in hindsight, but the reality is the company is a showcase for what goes wrong when good governance is ignored.

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