It’s even more unusual that any company follows it to the letter.
Generally, large shareholders that find fault or issues with companies will target the board and management. It is usually done behind closed doors in private meetings with the chairman or chief executive.
Shareholders also have natural leverage to push for governance changes. Each year there is an annual meeting at which they get the opportunity to vote (for or) against any directors standing for re-election and on the chief executives’ remuneration package (although the latter is not binding.)
There have been plenty of well-publicised examples in which chief executives or directors have been moved on in response to agitating from shareholders.
Qantas recently had a massive refresh of its board, and its former chief executive Alan Joyce brought forward his departure after a series of mishaps/scandals and customer complaints about service.
Who could forget Rio Tinto, whose scandalous blowing-up of sacred Indigenous artworks brought down its chief executive, two other senior executives and presaged the cleaning out of most of its board?
Lendlease chief executive Tony Lombardo.Credit: Peter Rae
Notably, neither of these upheavals led to a major about-face in their strategy. Rio was being pushed to sell its iron ore division and Qantas wasn’t being pushed to sell assets.
This is where Lendlease is different.
The only comparable example in recent years has been AGL, where activist shareholder Mike Cannon-Brookes, with support from some other investors, managed to harpoon the company’s strategy to demerge its retail and wholesale energy businesses.
In this instance, Cannon-Brookes had the company cornered because shareholders were required to vote on the deal and he had the numbers.
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To be sure, Lendlease chairman Michael Ullmer announced he would retire at the end of this year after one of its largest shareholders, Aware Super, had called for him to move on.
But its chief executive, Tony Lombardo, was spared the gallows by enthusiastically supporting Lendlease. He said the strategy would leave a company that was “firmly anchored in the very best of our proud legacy, but less complex, more focused and fit for purpose”.
“By reshaping the portfolio, concentrating on our core competencies in markets where we have proven we have the right to play, and the competitive advantage to win, the financial and operational risk profile will be lower, and we believe the quality of our earnings ultimately higher and more sustainable,” he said.
What did shareholders think of Monday’s outline of Lendlease 2.0?
The share price immediately shot up to 10 per cent. You be the judge.
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