NEW ZEALAND SHAREHOLDERS' ASSOCIATION ANNUAL AWARDS
Each year NZSA presents two awards to recognize the best and the worst in the New Zealand corporate world - one to the highest performing Director or CEO (The Beacon Award), and the other to the villain of the corporate world (The Glob Award).
THE BEACON AWARD
For individuals who showed outstanding performance in leadership and guidance in corporate practice, bravery in standing out from the crowd on controversial issues, putting the concerns of others first, treating the small shareholder with the respect of a business owner, ensuring fair and equitable outcomes for all.
The NZSA 2010 Beacon Award winner is Air New Zealand CEO Rob Fyfe.
He was presented with this year's award on 18 November 2010 by NZSA Chairman John Hawkins. You can view the award certificate which is reproduced in full by clicking on this link (PDF).
Beacon Award winners to date are:
2010 - Rob Fyfe (Air New Zealand)
2009 - Michael Hill (Michael Hill International)
2008 - Bruce Plested (Mainfreight)
2007 - Tony Gibbs (Guinness Peat Group)
2006 - Brian Gaynor (Milford Asset Management)
2005 - Simon Botherway (Brook Asset Management)
2004 - Ralph Waters (Fletcher Building)
2003 - Kevin O'Connor (Infratil)
2002 - Rod Deane (Telecom)
THE GOLDEN GLOB AWARD
For the villains of New Zealand business, who have done such a poor job for small shareholders that it has earned them castigation by the NZSA.
New Zealand Shareholder Association Golden Glob Joint Winners for 2010.
Regrettably and as usual the Association was spoilt for choice in selecting Golden Glob candidates. However, we had little trouble in selecting our winners as they stood out from the others by a country mile. In fact we hope they stay a country mile away forever, considering the level of misery they have inflicted on the unsuspecting, misinformed, often elderly people who entrusted them with hundreds of millions of dollars.
It gives us no pleasure at all to announce that Mark Hotchin and Eric Watson are our clear joint winners of the NZSA Golden Glob for 2010.
Watson came to fame years ago with a string of deals in Blue Star office products incorporating Ubix, Wang NZ, Whitcoulls, PC Direct, and Link Printing. After backing those assets in to an American office supplier, he moved into Noel Leeming and Bond and Bond with his Pacific Retail Group. The dismal failure of his UK Powerhouse empire had some questioning his credentials. Consequently, he tended to take a lower profile in Hanover due to the negative connotations around the medias so called "Watson effect". He met Mark Hotchin and found they shared a passion for fast cars and horses.
Hotchin had a quieter and more settled background. Starting as an apprentice in his father' joinery factory, he took on some small-scale property development and then broke through by picking up the Regency Court, St Heliers from receivers to net his first real money. Through the purchase of Corporate Cabs, and Matarangi Beach Estates, and some insider deals with his friend Eric, (he earned a rap over the knuckles from the Securities Commission when he sold some shares in PRG -Pacific Retail Group,) he became known as a canny businessman.
The real business partnership occurred when they acquired the old Elders Finance Company in 1999. In the best tradition of all clever salesmen, they quickly decided that a new name was needed and so "Hanover Finance "was born. Not for them the steady and cautious approach. There would be money to be made if they had a private bank, and with the benefit of hindsight it seems Hanover quickly became just that.
Make no mistake, these two are no fools. They soon harnessed the power of non-disclosure (as allowed by our loose regulatory regime), related party lending, unrealistic optimism in the face of clear economic signals, and of course, ultimately greed. Like some previous winners of this miserable award, they fully understood the power of brands and marketing. What better than a trusted ex newsreader to tell people where to invest? The vulnerable and gullible probably still thought they were tuned to TV One and happily ploughed their life savings into Mark and Eric's house of cards.
In 2007, the then CEO described Hanover's December results as "superb". An objective assessment of that half year result would have alerted anyone to the reality of the situation. The company was thus remiss in issuing this public description - to the cost of many thousands of New Zealanders. But Mark and Eric marched on. They sucked out nearly $87million from Hanover in the 2 years before receivership. But some was recycled back into the company to create the illusion that related party loans were being serviced and thus did not require write downs. Only later did it become clear that the $54million in "profits" that supported this rape of investor's assets was largely illusory as much of it consisted of capitalised interest. Mr Ponzi would have been proud of their efforts.
When receivership beckoned, Hotchin and Watson floated another over optimistic scheme for investors, and advisors Price Waterhouse Coopers-a moratorium. This also conveniently extracted themselves from the possibility of being caught by voidable transaction rules This plan was sold by another paid advocate, with soothing words from Mark that "you will get your money back," and the greatest line of all: "We are giving you assets, not liabilities." And they did give a few million back in order that they might retain the tens of millions which they had already extracted.
When that didn't work, they had another stroke of "genius". Flog it off to someone apparently more gullible by claiming it had massive net assets. Not for Mark and Eric a minor slip up in valuation. No, let's ask for 5 times what it's worth and let's get the hell out of here. A fine example of caveat emptor perhaps?
Hotchin also said he had had a "very good run" out of Hanover, and felt "a moral obligation to help". Really?
For its part, the New Zealand Shareholders Association would like to acknowledge the contribution of these two for their part in reducing the NZ secondary financing market to an empty desert, littered by the remains of so many investors that have been bled dry.
Eric and Mark, for you it can only be the 2010 Golden Glob - the lowest award available.
Signed:
John Hawkins Chairman
Alan Best Director.
Golden Glob Award recipients to date are:
2010 - Mark Hotchin and Eric Watson (Hanover Finance)
2009 - Rick Christie (Provenco)
2008 - Greg Muir (Hanover Finance)
2007 - ANZ Bank (the Feltex debacle)
2006 - no villain (what were we thinking of?)
2005 - Tim Saunders (Feltex)
2004 - George Gould (Gould Holdings)
2003 - Ron Brierley (Guinness Peat Group)
2002 - Phil Pryke (Contact Energy)