Tower chairman and ex-CEO squabble over loss blame

By NZPA

Thursday 5th December 2002

Tower Ltd chairman Colin Beyer and former chief executive James Boonzaier have fallen out over responsibility for the $75 million annual loss the company reported today.

While "sincerely apologising" to shareholders for the mess the company was in, at a news briefing on the result, Mr Beyer blamed Mr Boonzaier for the result.

Mr Beyer , who was appointed chairman on the same day Mr Boonzaier was appointed 12 years ago, said the board did not shrink from being accountable to shareholders. But he was not going to resign and would offer himself for re-election at the next annual meeting in March.

"As well as being accountable we were clearly responsible in that we didn't move quickly enough. It's easy to say that in hindsight.

"On behalf of all board members, I want to apologise sincerely to our shareholders."

Asked why he did not resign, he said: "Do you want a public hanging, you can have one if you want."

He said the problems were management issues not board ones.

Mr Boonzaier, who resigned in July and was paid a $2 million termination package, said he would not dignify the attack on his management with comment.

The company that was founded in 1869 and listed in 1999 after demutualising, had grown ten times under his leadership, had turned in a "respectable" half-year profit of $40.7 million and was ahead of budget shortly before he quit.

Investments markets had been "shocking" in the period since he left and Tower had similar problems to most fund managers, he said.

"When I left the company the share price was $4.30; three months later it was $1.60.

"It sounds to me a board which isn't accepting accountability for the result and is clearly seeking to avoid that."

Mr Boonzaier said he would "certainly have a chat to my lawyer" over Mr Beyer's comments.

Explaining the $70 million of Australian losses, Mr Beyer said the board had had misgivings about a recommendation of splitting the Australian sales arm and its manufacturing and administration arm.

Mr Beyer said he felt that traditional sources of the business were wrongly de-emphasised and management had failed to recognise that old style, multi-agents still had a role to play. He had concerns about retraining.

M r Beyer said he believed Mr Boonzaier had done a "reasonably good job" when Tower was a mutual. His concerns related to management of Tower once it became a listed company in 1999.

"He tended to concentrate too much on attending meetings, making announcements, talking to major shareholders and doing things to promote the share price."

Mr Beyer said he felt that there should have been more focus on the changing Australian environment which was having adverse effects on Tower's business there.

He also felt ne w strategies the board had been urging were adopted later than they should have been, and that the chief executive had failed to act sufficiently quickly on non-performing managers.

Following Mr Boonzaier's departure, changes were made and 90 of the nearly 2000 staff in New Zealand and Australian were laid off. Significant new redundancies in Australia would be made.

Acting chief executive Keith Taylor said the company was on track to make a profit this year and reinstate the suspended dividend.

The share price still fell 4 cents to $1.65 -- $2.71 below the company's estimate of asset backing and low enough to make Tower vulnerable to takeover.

Mr Beyer said he had taken legal advice before making his comments.

Asked why Mr Boonzaier should be the scapegoat, Mr Beyer said: "It all happened on his watch."

He said he had received a number of letters which said the board members should stay on to fix the mess.

Two new members had been added to the board and two unnamed members would resign this year to reinvigorate the board.

"If the shareholders want somebody to go they will get rid of him and I think that's fair enough," Mr Beyer told NZPA.

"I certainly don't hide from adversity and I don't hide from responsibility, and if the shareholders think the board is responsible rather than the chief executive then they don't understand the different roles of governance and management."

He said his apology was "implicitly admission of responsibility".

Mr Boonzaier said he might attend the annual meeting if he was in town. He has not sold his 70,000 shares.

"If I believed the result was going to be something like this, I would've sold my shares. Clearly I didn't expect them to go from $4.30 to $1.60."

He said his $2 million golden handshake was "perfectly in market norms" for a chief executive in the job for 12 years.

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