What now ?, page-13

Re assessment of what is good management.

For me the key roles are CEO, Chair and CFO. In some companies the Sales leader.

In these roles I look for a record of delivery - including in previous coys. This is not only measured by profits but communicating clearly the plan, the timeframes and reporting on progress honestly. Not everything will go smoothly. Sometimes greater insight is derived from how they manage the bumps. Andrew Cole is a classic with a clear strategic plan to extend resource, detailed plans on mine development and reporting progress against plan. A clear plan usually means they can move quickly and respond to changes. This is not just something for me - the large investment houses like a clear story - their investment decisions ultimately are a big influencer on share price.

Critical is leadership ability to manage money. Some companies/ boards focus on capital management that is fine I am more interested in approach and process to manage operational profitability - understanding the context for their key inputs and the market for their products. This is especially significant in mining where there is large up front exploration and development costs, multiple inputs, longer time frames, and international product pricing. If possible you want to own mines in the lower quartile costs - no matter how exciting the current commodity price is.

There are many companies that spend a lot of money when they are making money rather than manage costs, look for opportunities to reduce structural cost and invest in R&D and growth. You will see a lot of criticism on Hot Copper when senior managers and / or directors reward themselves richly when companies are not performing. Whether this criticism is justified or not in many cases this is a distraction from the real issue - failure to manage costs of production, marketing .... Spending money where it is not generating income streams into the future.

Good leaders (company execs and boards) always have an eye to managing costs, to improving margins ... they have systems to ensure discipline on investment decisions and hold managers throughout the company accountable. It is remarkable and sad how many companies count what is happening without any ongoing systems for comparison with competitors, or reducing costs.... As an investor you don't want a company run by marshals observing what is happening and telling you about it in a flashy presentation. You want entrepreneurs and active managers.

Ultimately Great leaders attract good people to the company or build skills of existing teams. It is difficult to see inside companies to get insights in this regard. Beware of the leaders that talk up their team but you see constant movement of people 'taking up other opportunities'.

Lastly, where you see a good leader follow them. I will be following Andrew Cole. I can't see him operating in the bowels of BHP. In my humble opinion there are many examples to indicate BHP have been too big, too slow, their decision making is layered and across many years investment decisions have not been good.

Agree the fundamentals have to be there.

All my opinion. I apologise for the length of this reply - I didn't have time to provide a more concise answer.