Paul McBeth is the editor of The Bottom Line and Curious News, having worked at BusinessDesk for 15 years, two of which were under NZME ownership. He was a director and shareholder of BusinessDesk’s publisher, Content Ltd, when it was sold to NZME, and has been a shareholder of Bremworth since January 2024. He’s been a member of the NZ Shareholders’ Association since February 2024.
That was unexpected. Not one, but two grassroots shareholder rebellions unfolding in public.
The shareholder-led bids to oust the respective boards at carpetmaker Bremworth and media group NZME are a good reminder to directors about who they ultimately answer to.
Sure, they might be disruptive, but let’s be honest – both companies are grappling with major issues after peaking in vastly different eras.
In the case of Bremworth, it’s had a torrid decade-and-a-half as cheap synthetics and New Zealand’s inability to keep Merino wool in the hearts and minds of global consumers led to a lot of red ink, restructurings and strategy resets.
Shareholders have been antsy for years and when things would start to turn around for the poor old carpetmaker it would get knocked back down by something outside its control. Tub-thumping indeed.
The business is on the block, and what’s at stake is who controls the sale process without blowing the cool $42 million sitting in the kitty after wrapping up its Cyclone Gabrielle insurance claim.
Both the existing board, chaired by George Adams, and the rebels’ nominees, led by Rob Hewett, are full of old hands who know what they’re doing, and there are some on the sidelines shaking their heads wondering why they can’t all get along given everyone wants the same thing.
A beating heart
That might be true in a cool rational sense, but business isn’t a simple spreadsheet.
It’s all about ego, personalities and people.
Bremworth’s shareholders want to feel heard and it’s hard to see them backing down without a special meeting being called, even if the existing board members manage to hold on to their chairs.
And while some feel the board is dragging its toes in calling a meeting, they’ve made themselves readily available to media and seem open to sitting around a table to nut out a deal.
Meanwhile, NZME is more of an information void as Canadian expat Jim Grenon leads a near-majority of voting rights – including the 10% or so he holds in his own right – in seeking to sweep the media company’s board, fresh from a fairly triumphant announcement that investment bankers Jarden are working on spinning out OneRoof to extract the greatest shareholder value.
The handwringing has been heavy about what the dissidents are planning, with The Australian’s DataRoom playing the proxy role in touting a tighter editorial line more akin to NewstalkZB’s profitable focus on the more conservative end of the audience.
Some of the fears about editorial influence akin to what we’re seeing by vanity billionaire owners internationally seem overwrought, given Grenon’s TOM Capital has made its money by turning around distressed businesses and the billionaire hasn’t just bought it outright – fiduciary duties to minority shareholders are actually a thing
And to be fair, the NZME board, chaired by Barbara Chapman, has been just as tight-lipped about the looming ouster.
It was telling that Grenon’s draft letter didn’t accidentally find itself landing on veteran Shayne Currie’s desk for another exclusive in his must-read Media Insider column for industry tragics.
Fever pitch
Both meetings will be tense affairs and it’s hard to see cool heads prevailing as people fight for their jobs and reputations.
If anything, these two movements are indicative of the mood of the AGM.
Directors who freely speak their minds seem to have become an endangered species.
The fact that the likes of Michael Stiassny and Grant Baker stand out is an indictment on how risk averse our corporate governors have become. And even if shareholders don’t agree, they tend to appreciate their frank assessments.
Shareholder engagement should be encouraged and annual meetings – and extraordinary ones – should be forums for debate and enlightenment, with the occasional meandering sidebar for everyone to roll their eyes.
Straight-talking economist Cameron Bagrie captured it well in his weekly BusinessDesk column bemoaning the seemingly wilful blindness to vast wealth destruction with nary a word of complaint.
He’s not alone.
Speaking truth to power
Simplicity’s bombastic founder Sam Stubbs, Blackbull Research’s enfant terrible Eden Bradfield and serial shareholder activist Mike Daniel are happy to point out when the emperor is strolling down main street in the buff, and the New Zealand Shareholders’ Association still takes strident views when it feels retail investors aren’t getting a fair go, even if it doesn’t don Bruce Sheppard’s old Viking helmet.
And perhaps that characterisation is a little unfair of the broader investment community.
Craigs Investment Partners’ investment director Mark Lister didn’t pull any punches in his assessment of Spark New Zealand’s board, saying they should be ashamed of how poorly the company’s been performing without fronting up and defending its bad decisions.
But it does raise the question of what consequences our captains of industry face for making poor calls with other people’s money.
If the Bremworth and NZME movements are anything to go by, shareholders have had a gutsful of that being some extra time with the family and tending the garden with a golden handshake to tide them through.
And that means it’s time for some serious succession planning around the boardroom table for more than a few of our biggest corporates.
Image from Stefano Pollio on Unsplash.
