Best Value CEO
At Montgomery Investment Management we are pleased to learn that Graham Turner of Flight Centre has been named the best value Chief Executive Officer for 2012 by Egan & Associates.
A critical factor that we look for in potential investments is the quality of management. Just as important though is ensuring that the interests of management and shareholders are aligned. An agency problem (or a conflict of interest) can result from linking management’s remuneration to short term goals. In these circumstances, efforts can be directed to achieving KPI’s instead of increasing the underlying value of the business. As such, we typically look for companies that are run by managers and boards with the long-term interests of the business in mind.
Having Turner at the helm is one of the reasons we are happy to hold Flight Centre in our portfolios. He was quoted as saying, “For me, the main outcome is growth in profits and the business, the share price goes up and down almost on a whim so I think it is pretty silly rewarding on share price, rewarding on consistent long-term cash flows and profits is the key thing, for me that is what business is all about”. At Montgomery Investment Management, we couldn’t agree more.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
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