Reece appoints Peter Wilson as executive chair, following Alan Wilson’s retirement
The highly-profitable plumbing giant has appointed Peter Wilson as its next executive chair, following in the footsteps of his legendary father.
It is known as LVMH Moet Hennessy Louis Vuitton, run by Bernard Jean Etienne Arnault, better known as one of the wealthiest people in the world.
The world’s largest luxury goods company operates many worlds away from the humble Australian plumbing and bathroom parts supplier started 103 years ago, known as Reece.
But the ethos of both is the same.
“There’s not many of our structures in this country where the company is public, but there is very large family ownership,” Reece chief executive Peter Wilson tells The Australian. “There are more of these examples in Europe and America, where they have multi-generational families running these really successful businesses.
“So we have a pretty rare opportunity to actually be like one of those unique European or American businesses that were started some generations ago. We’ve got a chance to do that here.”
That rationale underpins the landmark decision of the Reece board, announced to the Australian Securities Exchange on Monday, to anoint Peter Wilson as the next executive chairman of Reece, following in the footsteps of his legendary father Alan, who retired from the role last year.
Current acting chairman Tim Poole, who also chairs rail freight operator Aurizon, will now step into the role at Reece for a transition period before handing it permanently to Wilson when the family scion, his father and the board believe the time is right.
For now, Wilson will be deputy chairman and remain group CEO, the role he has held for the past 16 years.
“This allows time for me to continue to learn from Tim,” Wilson says. “We’ve got a very good working relationship and he is a mentor for me. It also allows us to get the board structure right. In the next year or two we are looking at adding some new directors to the board.”
There are now only six directors on the Reece board, including four from the Wilson family.
“We want to make sure that we get the right diversity and the right skill set that can really help us as we are now quite a big business, which is growing in America,” Wilson says.
The decision in theory thumbs its nose at modern corporate governance parlance. But so be it, and for good reason, according to Poole. Reece is now the nation’s biggest – and most profitable – bathroom and plumbing products supply retailer and biggest trade supplier.
“Alan was the executive chairman of Reece for 21 years. The increase in profitability, the return on capital and the shareholder value creation during that time has been pretty spectacular,” Poole says.
“So I think Reece has proved that its governance model is not a deterrent to generating very attractive returns for shareholders,” Poole adds.
He has been on the Reece board for seven years.
“In the time I’ve been involved in the company as one of the independent directors, I’ve always been encouraged by the family, and particularly Alan and Peter,” Poole says. “If there’s anything Reece is doing that has the potential to be a negative from a minority shareholder point of view – whether that’s institutional or retail – they want me to call it out, and they want to change it. The structure has worked very well for this company and I think it will work very well going forward.”
Reece traces its roots to 1919, when Harold Joseph Reece started selling hardware products from the back of a truck in Melbourne suburbia. Reece was listed on the ASX in 1954 and a decade later the Wilsons became majority owners.
The Wilson family, which owns 67.7 per cent of Reece, has not sold a single share in the company since it took control of Reece in 1969.
Peter Wilson believes there are fascinating parallels with the Arnault Family Group, the holding company of Bernard Arnault, which owns 63 per cent of the voting rights in LVMH.
But he stresses the Wilson family wanted to look outside the tent to the best potential candidates to succeed his father.
“It was a really thorough process. We looked at a number of candidates to become chairman of this company, and it got pretty close,” he says of the succession work, which has been going since September last year, when his father stepped down to become an executive director on the board
“With some of my recent trips overseas to Germany, and then also to the US and touching base with some of these families – multi-generational family businesses – really made us reflect. I’m at the age where this really makes sense for me to actually step into that executive chair role.”
In 2018, Reece made its biggest move offshore when it acquired MORSCO, one of the US’s biggest distributors of plumbing, heating and cooling products.
It was the largest and most difficult transaction in Reece’s history, for which it undertook a mammoth capital raising supported by the Wilson family.
Peter Wilson reckons the deal could not have been done without the family taking a long-term view on the American opportunity.
“One of the secrets of these businesses is culture,” he says.
“We’ve got a set of values and there is a big family part to that. That is ingrained into the business and is one of the reasons for our success.
“But the other bit is the humility part that ultimately allows you to focus long term. So we’ve got this very long-term philosophy that allowed us to be able to take that quite historic move into America. We’ve gone to the US for the next generation and we are just four years in. We wouldn’t have been able to do the US if we were a normal public company.”
Wilson, whose great-grandfather was a plumber, came into the business in 1993 at an important point in Reece’s history and took the firm to another level by organising and professionalising it, while maintaining the values of his father and grandfather.
He has long lived by his father’s one-liner mottos: stick to your knitting. Make hay while the sun shines. It’s not how you buy, it’s how you sell. Keep it simple. We must make sure we are on the right horse. Through hard work you can achieve anything. Live within your means. Be humble.
“I followed on from him as the CEO and I think I had a pretty good apprenticeship. I’ve done it my way, and I’ve done it very differently to how he did it,” he says.
“Because he’s been a big mentor, and the one I looked up to the most growing up, following on from him as executive chairman – when the time is right – is a big honour. But my way will be different to the way he did it and we’ll do it in a more modern way that also suits the long term.”
Alan Wilson continues to attend board meetings, which his son says is “like having the spiritual leader around”.
“He’s loved by the people. So when he’s out in the field, he’s your spiritual leader there. Even though my grandfather provided the capital, he really is the founder of the model,” he says.
“It is fantastic that we still have this very energetic 82-year-old who is going out to the stores.
“He absolutely loves it and they love him.”
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