Simon Morgan, a former Peter Smedley flak at Colonial, has come out strongly in support of the PacMan claiming he is arguably Australia’s greatest CEO in recent times.
Colonial was a $1.5 billion ugly duckling which was later sold as an $8.5 billion swan the subscription price at the float was $2.60 and the CBA paid approximately $8.25 per share and that was in just two and a half years as a listed company.
Smedley’s performance at Mayne has not been as spectacular, but it has been a hell of a lot better than most CEO’s running major corporates. On the 23 of June 2000, the day before Peter took over, the share price was $2.94 the day after he started it was $3.27.
The highest price achieved by Mayne in the Smedley era was $7.49 on the 8th of October 01 and the lowest price since was $3.65 on the 7th of May 02. Today the stock is around $4.25 that’s $1.31 per share in extra value he has added in just two years, or around 44% from the day before he started.
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Stripping out the market excess of $7 plus, 44.2% far outperforms the ASX top 100 return of 13.4% over the same period.
There is no argument that the profit downgrade hurt the stock and the image, however no full forward kicks every goal. Maybe the systems were wrong, but every CEO has to deal with this sort of issue it is not as if Smedley has presided over a OneTel or Enron catastrophe.
Certainly, the corporate governance issue was a mistake. Smedley should never have agreed to take on the Chairmanship of Mayne and to his credit he didn’t take it on.
In six years working with him, and two CEO’s since, I found him to be tough but fair, honest and focussed. Smedley hasn’t entered a popularity contest, he has accepted two roles protecting and growing shareholder wealth.
Peter Smedley could easily be called Australia’s $10 billion dollar CEO, having created $7 billion in shareholders wealth at Colonial and $2.5 billion at Mayne.
If you had been savvy enough to put $10,000 into the Colonial float at $2.60 back in May 1997, CBA would have paid you $32,000 in mid-2000 for your shares. If you had then invested this money in Mayne your shares they would have been worth $46,000 by mid 2002.
By backing Peter Smedley over this time you would have earned 35% compound growth. What other CEO’s have delivered this kind of return over such a period?
(Disclosure: The author was a Colonial Flack for six years, however is not a former Shell employee and has only spoken to Peter Smedley once since leaving his employment.)
Now, let’s check out some of the feedback that subscribers have been reading in the sealed sections:
A Big Four banker writes:
An interesting defence of Peter Smedley by Simon Morgan, but you should find out what CBA think of Smedley. After buying Colonial, they found a house of cards of questionable foundation, and apparently Smedley is not a popular word at CBA now with CEO David Murray or the board.
And the people who really established the value at Colonial were fund managers Greg Perry and Peter Polson.
Regards, Name Withheld
CRIKEY: That makes sense because at first Smedley was all set to join the Commonwealth Bank board as a non-executive director but he pulled out after a couple of weeks. And Smedley, who collected about $25 million from the whole deal, is known to have borrowed from Kerry Packer in saying “you only have one David Murray in your life and I’ve had mine”.
9. SMEDLEY WAS NO STAR
A veteran health industry executive writes:
“Dear Crikey, what a load of hooey that Peter Smedley is a star CEO.
Mayne shares were at $5.10 on the day it announced its Australian Hospital Care takeover. Any shareholder who swapped into Mayne has lost one quarter of their wealth.
But it gets worse. Fauldings shareholders who took Mayne shares have lost half their wealth.
Smedley knew nothing about health and wasn’t prepared to learn. His sole contribution to the health sector has been to remind people that doctors are the main clients and if you forget it you lose your job.
One swallow does not a summer make.
To determine whether Colonial was in fact a swallow you would need to ask The Commonwealth Bank and they have been conspicuously quiet about the quality of the organisation they purchased.