NZSA Disclaimer
In a compelling and thought-provoking webcast hosted by the Institute of Directors (IoD), Kirsten Patterson (KP), Chief Executive of the IoD, welcomed Oliver Mander, Chief Executive of the New Zealand Shareholders’ Association (NZSA) in a candid conversation exploring the complex dynamics between boards, shareholders, and long-term corporate value creation.
Mander opened the discussion by describing NZSA’s role as a “force for good” in New Zealand’s capital markets, aiming to protect, empower, and enable individual investors. He outlined the organisation’s increasing focus on evidence-based policy development, particularly around capital management and remuneration.
But the real heart of the discussion was one of the IoD’s top governance issues for 2025: capital allocation – and how this is impacted by investor expectations, boardroom behaviour, and the evolving regulatory and demographic landscape shaping New Zealand’s capital markets.
A major theme emerging from the conversation was the relationship between capital allocation decisions and shareholder value. Mander stressed that investors expect boards to have effective processes in place when making decisions about capital use – there is a growing demand for evidence that rigour, transparency, and strategic discipline has been applied by boards in capital decisions.
“I’m loathe to say boards are getting it wrong,” Mander acknowledged. “But what we look for — and what is often missing — is clarity on the judgment process, the principles behind capital decisions, and how those are disclosed.”
He noted that decisions resulting in simultaneous buybacks and dividend reinvestment plans are a red flag to the NZSA. “We’ve seen listed companies raising and returning capital in the same year. That may be a signal as to a lack of discipline, clarity or coherence in a company’s capital management approach.”
But this is not to condemn boards outright. Mander emphasised that capital allocation involves difficult judgments with long-term consequences. The real issue, he argued, is how those judgments are reached and communicated to shareholders. Investors are increasingly tolerant of long-term strategies, he said, but only if boards are transparent about their thinking. A dividend cut, for example, need not provoke panic if accompanied by a compelling narrative explaining the rationale and expected long-term benefits. Boards need to balance dividends with the required capital to sustain and grow their business – in a disruptive world, a rationale for a reduced dividend to fund transformational investment may become more commonplace in future.
Patterson challenged Mander to describe what robust capital debate looks like from the outside. Since neither investors nor regulators sit inside boardrooms, signs of effective governance must be inferred. Mander acknowledged the limitations but suggested that investors assess boards based on their transparency, the principles they publish, and how consistently they apply those principles. He stressed the importance of seeing clear links between a company’s strategy, its dividend policy, and its broader capital management approach.
Discussing how capital decisions intersect with communication, Mander offered examples of both success and failure. He pointed to The Warehouse Group as a case study in mixed messaging. While some long-term investments such as the acquisition of Noel Leeming have paid off, other acquisitions, like Torpedo7, have been disappointing. Add to that the struggles faced by the core business and a tough New Zealand economy, and the result is a complex investor sentiment where sound decisions risk being overshadowed by a lack of clarity and inconsistent performance.
“Investors will forgive a mis-step if there’s a credible long-term story. But if the track record is poor, it’s hard to regain trust.”
Long-term value
When the conversation turned to long-term value, both speakers acknowledged the difficulty of defining the term. Mander noted that NZSA strongly supports a long-term orientation, but added that the timeframe of “long-term” remains contested. He noted that most incentive schemes measure performance over just three years – despite the much longer-lasting effects of capital decisions. He also referenced Fletcher Building as a cautionary tale of how repeated impairments and write-offs can erode investor confidence over time, regardless of stated earnings.
“Investors lost faith in their underlying earnings because of persistent write-offs and impairments stemming from decisions made over a decade ago that impacted the bottom line.”
Demographics added another dimension to the discussion. Patterson raised the question of how New Zealand’s aging population might influence investment behaviour, with retirees often favouring income-generating assets. Mander responded that while older investors might select shares offering reliable dividends, many remain committed to longer-term value creation. He noted that NZSA members, though representing an older demographic on average, often invest with future generations in mind and are willing to tolerate strategic risk when properly justified.
The conversation also explored the influence of younger generations and the rise of values-driven investing. Mander observed that younger investors, although perhaps less financially powerful today, hold strong convictions around environmental and social sustainability. As their capital grows over the coming decades, these preferences are likely to reshape market dynamics. In this context, long-term investing and ethical considerations are not just trends but signal a structural evolution.
Regardless of demographic, Mander advocated for broader investment capability, extending beyond basic financial literacy. “We want investors to have documented investment strategies, supported by clear objectives, and an understanding of total return — not just dividends.”
Mander also highlighted the role of government policy, noting that settings around superannuation and taxation influence investor behaviour. He pointed to the lack of clarity around capital gains tax treatment as a factor that may encourage dividend-focused strategies. He also noted that as New Zealand continues to reform its retirement policies, the long-term investment environment could shift, creating both risks and opportunities.
Governance
On the topic of director independence, Patterson asked whether independent directors were doing enough to protect shareholder interests. Mander replied by emphasising the concept of the “unfettered mind” – the idea that directors must be free from influence to make objective decisions. He noted that independence isn’t only about board composition; it’s about behaviour and mindset. The Beacon Awards, NZSA’s annual recognition of director excellence, celebrate those who demonstrate this kind of independence, including directors who challenge dominant shareholders to protect minority interests.
One of the Beacon Awards made by NZSA went to three independent directors of PGG Wrightson for their courage, conduct and action in handling their relationship with a large shareholder, Agria, to the benefit of minority shareholders.
Mander was equally passionate about the need for greater director visibility. In an era where directors are no longer cloistered in “wood-panelled boardrooms,” he argued they should be more accessible to shareholders. He cited Vista Group as an example of a company that benefitted from long-term, proactive engagement with individual and institutional investors, when new major shareholders emerged. This “engagement capital,” he argued, can be crucial in moments of uncertainty. In contrast, he pointed to companies that have suffered from a lack of engagement, finding themselves unprepared when shareholder activism emerges.
Activism
Mander described the rise of shareholder activism in New Zealand not as a threat, but as an evolution. “It’s not that New Zealand has been sleepy when it comes to shareholder activism – it’s simply that activism occurs in a different way to the large, public actions seen overseas,” he remarked. “Since late 2023, we’ve seen more activity — and more vocal minority shareholders.”
While the local style may be less aggressive than in the US or Australia, shareholder pressure is increasingly influencing boardroom decisions. He described NZSA’s approach as “constructive activism”: evidence-based, objective, and focused on solutions. He warned, however, that activism must serve shareholder interests, not personal ideologies. As such, investors must learn to distinguish between private convictions and their fiduciary responsibilities.
Asked how boards should handle vocal minority shareholders, Mander urged boards to listen without being led. Rational concerns should be met with data and dialogue, while emotional appeals require empathy and effective storytelling. He stressed that boards must now master both the analytical and the psychological dimensions of leadership.
Q&A
Turning to NZSA’s internal processes, Mander explained how the organisation develops its positions using over 20 publicly-available policies. These policies draw on international best practice and local experience, and contain hundreds of assessment points, assessed against market disclosures, annual reports, and governance documents.
Mander acknowledged improvements in disclosure and governance over the past five years, crediting increased transparency from NZSA and better engagement with directors.
On the question of whether widely held companies are inherently harder to govern, Mander noted that boards must learn to read market sentiment and engage at both macro and micro levels. While individual shareholder views vary, the cumulative effect of strong engagement can build goodwill and resilience, even during periods of underperformance.
He also highlighted the tax system’s influence on investor behaviour, particularly its lack of clarity around capital gains. For most investors, a desire to be ‘squeaky clean’ on tax sometimes nudges them toward dividend-heavy strategies, potentially skewing the market. NZSA is advocating for a clearer, more holistic approach to investment taxation to better support long-term thinking.
Patterson then steered the conversation toward Milton Friedman and the debate over shareholder primacy versus stakeholder governance. Perhaps somewhat controversially, Mander offered a view that the debate could be a red herring. “I’d be concerned as a shareholder if a company wasn’t managing its stakeholders properly,” he said. “Doing right by stakeholders is in the best interests of the company and, therefore, likely to benefit shareholders.” He added that climate-related disclosure laws, while controversial, have improved how both boards and investors think about risk, showing how seemingly stakeholder-driven reforms can benefit shareholders as well.
The conversation concluded with a discussion of regulatory reform. Mander expressed cautious support for many of the proposed changes, including the removal of requirements for companies to publish prospective financial information. He noted that inexperienced investors often misinterpret these projections, while seasoned investors make independent assessments. He also floated the idea of introducing shareholder thresholds into disclosure rules to improve transparency among large unlisted companies — a move he admitted may be a “bridge too far” for the current reform cycle.
He sees a benefit to a strong investor-protection focus in New Zealand’s regulatory and compliance regime. “New Zealand can’t compete globally on scale when it comes to attracting capital. But we can compete on quality. Let’s make our capital markets, private and public, a place where international and domestic investors alike know they won’t lose money to fraud or incompetence.”
Final Thoughts
Asked for one change he’d like to see in board-shareholder relations, Mander didn’t hesitate: engagement. “Lose the hubris,” he said. “Treat all shareholders with respect, regardless of how many shares they hold.”
As the webcast wrapped up, Patterson and Mander reflected on the shared mission of IoD and NZSA. Despite occasional differences, both organisations aim to improve governance and build long-term value. Their conversation offered a rare glimpse into the evolving world of corporate oversight, where transparency, communication, and empathy are becoming as crucial as strategy and compliance.
In a market increasingly shaped by demographic shifts, regulatory evolution, and rising investor activism, the call for boards to engage deeply and authentically with shareholders has never been clearer. Corporate governance is not about ticking boxes. It’s about relationships — between boards, shareholders, and the communities they serve. And those relationships must be built on trust, transparency, and a shared understanding of long-term value.
As Mander put it, “Do what’s right. That matters.”
Oliver Mander