Lendlease chair John Gillam won’t find life easy but history shows corporate boards are safe houses

New Lendlease chairman John Gillam. Illustration: Sturt Krygsman

As the annual meeting season begins, non-executive directors can relax knowing that, over the past 15 years on average, they are returned to the board with a 96 per cent vote in favour – which compares well with Vladimir Putin’s last election, when he received just 88 per cent.

Granted there are some outliers and the Perpetual board for one might not agree, but as far as sinecures go, from one view it’s not a bad one.

Some company chairs may also see the issue differently, having borne the brunt of reputation-busting attacks, but as the primary steward of shareholder capital they are meant to call the shots and wear the responsibility.

The way the text book reads, by the time the AGM comes around the personnel issues are settled and the big super funds seem to prefer backroom deals rather than grandstand votes.

Some proxy houses such as Ownership Matters only rarely recommend against directors, but shareholder aversion to voting out directors was shown clearly with this week’s Treasury Wine Estates vote in which ISS protested against John Mullen’s three listed company chair roles, but he received only a 15 per cent no vote.

The director textbook also isn’t always followed, as this week’s ham-fisted Lendlease handover from Michael Ulmer to John Gillam clearly showed.

It took five months from Ulmer’s announced decision to quit until Gillam was named as a replacement – enough time for several conspiracy theories to emerge.

Shareholders appeared happy both to see Ulmer go and with the May domestic-focused refresh strategy because since then the stock has outperformed by 9 per cent.

This compares with its year-to-date underperformance of 19 per cent, and over the past three years a 65 per cent underperformance.

There are clearly some issues to be sorted out at Lendlease, which has let hubris from its stellar past cloud woeful operating performance.

Gillam’s task is to ensure the new strategy is executed positively, that he has the best team for the job, and assuming the strategy is the best one trust will be restored, returns will be delivered and then with those boxes ticked fresh growth can be chased.

Chief executive Tony Lombardo is under fire as the person who led the company to the abyss, and his future will rest on the execution of the new strategy.

Like a football board, Lombardo will be publicly supported until the decision is made to sack him, but the priority for Gillam is getting the new strategy executed, and then comes culture renewal by looking at where things went wrong and how to fix them.

Board renewal is also high on the agenda, with a couple of likely lads in former bank CFOs David Craig (CBA) and Phil Coffee (Westpac) overdue to depart, having served eight and seven years respectively.

Another former banker in Elizabeth Proust has served six years.

Gillam started in business in the late 1980s in the KPMG insolvency division in Perth at the feet of some of the masters in the game, including then KPMG chair and ironically long-time Lendlease chair David Crawford, his KPMG successor Lindsay Maxsted and Tony McGrath.

Gillam helped clean up the bull market excesses of Alan Bond et al, before joining a start-up with Simon Lee, Medical Corporation Australia, and then his storeyed career at Wesfarmers.

He has clear ideas about how boards should operate with oft-repeated lines like, “brains in and fingers out” and “leave your ego at the door and bring your intellect”, and is also a believer in corporate constructive stability. If pursued, it suggests Lendlease is in good hands and he will have no hesitation in playing the role of a decisive change agent if he is not satisfied that the team in place is not the right one to execute the strategy.

Richard Dammery is in a different position as chair at WiseTech, facing the publication of the private life of founder Richard White.

Dammery is making it known he has the issues on centre stage, but the chance of him showing White the door, or putting him on even temporary leave, are zero given the man in question as founder and operator owns a third of the company.

Habitat investment

Rob Hart and his biodiversity team at Upscale Farm Management has now raised $7m in their Koala Farmland Fund No.2, which will be used to buy land to build nature-friendly habitats.

The fund is open until the end of next month with the hope of raising up to $10m, building on the $6.5m raised in 2021.

The properties in southern Queensland sell offsets to the likes of Stockland and Lendlease, with the idea being if their home development communities raze “x” trees and destroy habitat, they buy offsets from Hart.

That’s the theory.

Separately Green Collar has taken its NaturePlus reef credits up the scale a notch, with ­Accounting for Nature taking on the role of independent administrator of the biodiversity standard.

Green Collar’s James Schultz said in a statement: “In handing the standard over to Accounting for Nature, we are placing it in the hands of an independent and scientifically credible organisation that has, over the last 20 years, earned the trust of landholders, governments, corporates, investors and environmental stakeholders.”

Australia-based not-for-profit Accounting for Nature has established a globally recognised accounting standard for measuring and valuing nature.

ACCC’s Qatar Airways talks

The ACCC is talking with Qatar Airways about the airline group’s proposed equity investment and wet lease deal with Virgin Australia, but so far no official notification of the pending deal has made it to the regulator’s mergers register.

FIRB won’t decide on the deal until the ACCC has opined, but the regulator could always grant an interim authorisation to speed up the process.

What is not known is whether the wet lease deal is contingent on the equity investment.

Qantas and others are opposing a long-term lease deal and say any arrangement in which Qatar uses its crew and planes to make “Virgin” flights should have a set time period, like its two-year deal with Finnair.

The ACCC will decide by November 7 whether to clear the Sigma-Chemist Warehouse deal, but the odds suggest the deal will be passed subject to some retail chemist shop sales and its undertaking to treat Sigma pharmacies and wholesale customers on equal terms.

Given the family-based CW franchise set up with tight controls, the ACCC was concerned to ensure the expanded family and its customers will get open access.

MLex Market Insight noted a classic example of how life changes under mandatory merger notification with graphic design software house Canva called in to explain its $120m acquisition of content production house Leonardo AI.

The ACCC met with the company in August and said there were no further questions, so nothing has appeared on the ACCC regulator’s register and the deal was quietly waved through.

When the new proposed law comes into effect, Canva will have to notify such deals and the ACCC will have to explain why it waved it through.

Assistant Treasurer Stephen Jones grabbed the spotlight this week confiding the government would introduce unfair trading rules by March next year.

That makes it seven years after the measure was floated by then ACCC boss Rod Sims and six years after formally requested in the ACCC digital platform report.

Jones has yet to say when he plans to ramp up digital platform enforcement, approved in concept last December and formally requested three years ago.