AMP chairman Simon McKeon quit because of outside commitments

AMP chair Simon McKeon appears to have decided to quit after “performance issues” were raised by colleagues.

CSR boss Rob Sindel. Artwork: Sturt Krygsman.

AMP chair Simon McKeon appears to have decided to step down after “performance issues” were raised with him by colleagues, concerning the time being made available for the company.

All eyes today will be on the AMP annual meeting in Melbourne to see what if anything chair McKeon says to provide some clarity as to why he abruptly announced he would step down last month.

Given the company has closed the shutters since the statement, one might expect the retiring chair to give shareholders a better explanation today.

McKeon decided to leave after concerns were raised that he was spreading himself too thinly and would rather be concentrating on other work, like being chancellor at Monash University.

It is understood at least one board colleague raised with him the issue of how much time he was prepared to devote to the company.

The concerns were expressed several times, but this time McKeon decided to walk, to make the most of his other opportunities.

Knowing what happens inside boardrooms is impossible for an outsider, and indeed Macquarie director Patricia Cross confided at this week’s ACSI conference: “It’s sometimes hard enough to know what’s going on as an insider.”

This time around it was clearly McKeon’s decision to step down but the move also highlighted what some directors see as one of their most difficult tasks: getting rid of an underperforming colleague.

An industry has been created of consultants to work with boards on governance issues and, in particular, performance reviews.

Their task is to talk to directors about their jobs, their challenges and so on, and from that pinpoint problem areas or personnel the board should deal with.

Once a problem director is found, in theory that person would identify themselves and walk quietly, but sometimes the person refuses to walk.

This is why some directors see merit in the British system, where directors face an annual election that makes it easier for the board to ease out a recalcitrant.

On some occasions directors walk in protest, as Carolyn Hewson did at AMP back in 2001, upset the company was walking headfirst into what she saw as a disastrous deal in China, amid other governance issues.

The deal didn’t go ahead and Hewson’s departure sparked a revolution in the company, with Andrew Mohl eventually being installed as the chief executive.

The fact McKeon chaired yesterday’s pre-AGM board meeting and will preside at today’s annual meeting suggests there is not overwhelming acrimony around the table.

But the board clearly could not decide on or was not in a position to nominate a replacement, with the internal choice between Trevor Matthews and Catherine Brenner. John Palmer has delayed his scheduled retirement pending a replacement being found.

As of yesterday the board had yet to say who it would settle on to be next chair.

Being the chair of a financial services company can be time-consuming, and never more so than in the lead-up to the annual meeting, with a series of meetings and accounts for the various subsidiary companies.

Some say it is bordering on a full-time job, while others say it should take, on average, no more than two days a week, depending on what is happening and how your role is perceived.

McKeon represented the company when Prime Minister Malcolm Turnbull visited China on April 14 and 15.

Chief executive Craig “hard bastard” Meller was in the US on other business.

One of the confusing issues surrounding McKeon’s exit on April 26 was just why the board, in its notice of meeting dated March 22, stated clearly: “The board unanimously recommends shareholders vote in favour” of his re-election.

Yet just a month later, a statement was released saying he would step down after presiding over the AGM.

The only reason given was a “change in circumstances” which could mean — and has variously been interpreted as meaning — anything.

McKeon sits on the nomination and governance committee chaired by Catherine Brenner, along with Patricia Akopiantz.

The board had told shareholders it was going to conduct an external review this year, but one presumes that would have happened already, before the notice of meeting or towards the end of the year, not between the notice of meeting and the meeting.

The external review would have been a chance for any grievances to be aired but presumably Brenner would have canvassed opinion before the notice of the meeting was released.

The company has refused to provide any explanation for the move which has only served to excite more chatter about what happened.

Health and governance issues have been ruled out as reasons for the abrupt resignation.

Par for the course

A typographic error yesterday may have led to confusion over what it was like to be on the Wesfarmers board when Michael Chaney was CEO and golf (not gold!) was a given on board days.

Building value

CSR boss Rob Sindel stopped short of boasting a BHP-like 70 per cent increase in the value of his company but the manufacturing outfit is well and truly back in business and growing jobs.

Over the previous four years the headcount was down around 1000 to 3000 but the business now employs 3500, including the folk picked up last year in the fast-growing Boral brick joint venture.

Detached housing starts this year look like topping 221,000, up from 192,000, and well up from the 150,000 recorded at the bottom of the cycle back in 2013.

As an aside, BHP’s Andrew MacKenzie was extremely bullish at a Merrill Lynch conference in Miami earlier this week, boasting that through maximising his existing assets he had the potential to increase the company’s value by $70bn from its existing $98bn.

No time limit was given and the market took most of the figures in his speech as old news, so upside will come from commodity price rises as much as company performance.

Sindel said he would keep his foot on the accelerator with capital expenditure this year to be around $73m, same as last year but up from $56m the previous year.

Aerated concrete panels known as Hebel panels have taken off with the expansion of multi-dwelling apartments, and the company increased capacity by 30 per cent last year.

The Viridian glass business, which returned just 4.1 per cent against group returns of 20.7 per cent, is at least well above the negative 13.3 per cent in 2013, and the division is expanding into more commercial uses.

The 60 per cent-owned Boral brick joint venture known as PGH is flying with earnings hitting $37m and CSR’s share at $22.1m up from $18.6m the previous year.

Building products overall increased earnings by 28 per cent, excluding the $14.9m dividend being paid to Boral, and returns increased from 15 to 19.6 per cent.

Asbestos liabilities, having peaked in Australia a couple of years ago, are also falling in the US and the net cost to CSR last year was $27.6m, down from $31m.

It helps when the macro-economic conditions are working your way but CSR’s Sindel is reaping the benefits of past efforts.