16 Apr 2013

Quality of Mighty River's board and management crucial

7:01 am on 16 April 2013

The quality of Mighty River Power's board and management are crucial to its future success, but there are a few question marks over some of the directors, say fund managers.

Mighty River Power chair Joan Withers was a director of collapsed company Feltex but Devon Funds Management's Phillip Anderson said he was happy Ms Withers chaired the company.

He said Ms Withers was a strong chairperson and overall they were happy with the way she handled the Feltex situation, although he could not go into further detail because it was before the courts.

Shareholders' Association chairman John Hawkins said the Feltex matter should be left to the courts.

"What I can say is that Joan is very highly regarded by her peers and in my dealings with her at least I've always found her to be very upfront, straightforward and ethical in the way that she's handled things."

Another Mighty River Power director, Keith Smith, had been criticised in the past for sitting on too many boards and spreading himself too thinly.

Mr Smith chairs Tourism Holdings and Goodman NZ and is deputy chair of The Warehouse Group.

But Mr Hawkins said Keith Smith had cut back his commitments because he was getting information back from the market that they didn't want him undertaking too much.

Mr Hawkins said he was still on the boards of a number of private companies, but shareholders would expect that he put the full commitment necessary into Mighty River in preference to anything else.

Other Mighty River Power directors, such as financial analyst James Miller, were hailed as excellent members of the board.

Contract date

Mighty River Power managing director Doug Heffernan's contract runs out in June next year.

Mr Hawkins said he wasn't very happy with the situation.

"The board has given Doug a bit of a parachute to make sure he stays on the board to give them a chance to properly assess the skills of a new CEO, that the company will need as a public company - I have to say we don't agree with these sort of handouts."

Some, such as BT Funds Management's Paul Harrison, would welcome a contender for the top job from outside Mighty River Power.

He said that although there were a couple of strong candidates internally for Doug Heffernan's job, it would be interesting to see someone come in from the outside to take a clean view of what the business was doing both in terms of international strategy and operating cost.

Such niggles aside, Mr Hawkins and the fund managers said they were reasonably comfortable with the board's composition.