Owners lose $2bn, MD Gets Paid $2m
Owners lose $2bn, MD Gets Paid $2m
Sifting through these troubled property trusts is depressing me. Not because they’ve lost so much money, nor because they are so unloved. This is depressing me because some of the leadership behaviour leaves a lot to be desired.
Peter Hurley is Managing Director of Valad Property Group. He’s has been in the role since 1997 (joint MD up until 2004) and has overseen the destruction of at least $2.1bn of shareholder wealth. Valad has $2.5bn in contributed equity which is now worth, according to the accountants, $381m. The market attributes a value of $144m.
People may be incompetent, overly enthusiastic or victims of circumstance. None of those are reasons to dislike someone. But I expect those in charge when investors lose a fortune to at least show some contrition.
Peter Hurley's cash salary in 2010 was $689,677. If I were Managing Director of Valad and had overseen such a disaster, I’d be working for next to nothing while I tried to recoup some value.
That, I realise, is expecting too much. Hurley takes the prize, though, for putting his hand out for an additional $940,000 retention payment. A retention payment!
Another $940,000 retention payment, relating to the 2009 financial year, was also disclosed in this year’s annual report that wasn’t included in last year’s.
So Valad has paid Peter Hurley, the man who has overseen more than $2bn in losses, $1.84m of additional cash just to ensure he hangs around. That’s on top of an already absurd salary and in contravention of shareholders' wishes. Indeed, at the 2008 AGM, 76% of votes cast were against the the remuneration report that gave rise to these payments.
Working in the finance industry for many years, I have become somewhat impervious to disappointing human behaviour. Analysing the behaviour of Valad's board and management team, however, still makes my stomach churn.
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Very disturbing behaviour. Two questions 1/ why would the board approve it? and 2/ why would the board retain a CEO who had performed so ruinously?
Do you think he has enough to buy a razor?
Big salary, shabby look.
Thank you for drawing our attention to this absurd executive behaviour that seems all too common. I believe your exposure of such to subscribers is potentially a powerful "name and shame" exercise that might cause boards to think carefully before approving such payouts.
Better yet, the Intelligent Investor might set up a public "name and shame" webspace to which such payments might be posted for all to see. If well supported by readers, it may make a difference and could be good advertising for the II - provided you don;t get sued in the process so some moderating would be needed.
I'm used to this c***p behaviour but it will not stop until the Government give some teeth via legislation to the rejection of the remuneration report at an AGM by shareholders. Thus forcing a more acceptable outcome to situation set out in the article about Valad
To be honest I don't think it would provide value for money as a business expense.
I see much more TII adverts on stock broking websites that are much more effective.
These kind of stories are much more suited to sites like this on rare occasions to promote discussion - only it's preaching to the converted. Nobody reading this will be shocked. We have heard it all before and nothing will ever change.
Feel free to provide examples that prove me wrong but I doubt there has ever been a case of management being sacked unless there is a clear dominant shareholder who is pissed off. Small shareholders are just too apathetic to make a difference, and the super gods only care about funds under management, not performance (they would rather keep their exclusive deals with shit management than vote in good management).
Perhaps it should be renamed Vlad Property Group - Vlad the impaler of shareholders.
Perhaps you should email a link to this blogpost to Valad's IR department, with a few of the TII's journalist contacts cc'ed in.
As an aside, I noticed that the chairman of Valad is also on the board of one of your favourite stocks of recent times: MAP Group.
He looks really happy in that pic..
I had a random thought last week that the government could setup a "myDirector" website, modelled on that of "mySchool".
Investors would be able to evaluate directors across the broad spectrum that directors should delvier on. It would also allow investors to compare director remunerations across different industries, geographical location, customer base, small cap/large cap etc.
It would prove interesting, if not scary for some.......
I personally have a list of people who are not to be trusted.
I won't put it here, publishing it would probably get me sued for defamation.
But there are some big names on that list (some have moved on to be pollies, some have gone back to their former stockbroking professions, and some are still out there being directors).
These people have either personally seen a destruction of value of investments I owned, or have ruined companies I have worked for.
Everyone should build their list. And then heed Buffetts advice about an excellent company with poor management. When you know poor management, note it in your little black book and then check the directors and managers of anything you want to invest in. If you find one of your black marks, reconsider the investment. That does not mean walk away, that means reconsider - go in with your eyes open knowing the calibre of the people running the show.
Looks like Hurley might finally be done. Lets hope the Board don't provide him with a parting-gift as well...Unfortunately it is all too little too late for investors
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