Insightful Insights

  • Should shareholders be treated like Kings?

    rogermontgomeryinsights
    September 1, 2009

    According to Richard Puntillo, in theory, publicly traded corporations have shareholders as their kings, boards of directors as the sword-wielding knights who protect the shareholders and managers as the vassals who carry out orders. In practice, in the past decade, managers have become kings who lavish gold upon themselves, boards of directors have become fawning courtiers who take coin in return for an uncritical yes-man function and shareholders have become peasants whose property may be seized at management’s whim.

    When a listed company announces an acquisition, commerciality is often cited as the reason for failure to disclose the purchase price.  But with Australia’s corporate graveyard littered with the write downs of overpriced acquisitions past (think Fosters, Paperlinx,AMP, Lend Lease, RIO and Valad) it is about time that companies treated their shareholders like kings.

    By Roger Montgomery, 1 September 2009

    by rogermontgomeryinsights Posted in Insightful Insights.