KEY POINTS:
What is the best best way for a company's independent directors to orchestrate a rebellion?
Such boardroom bust-ups are highly unusual, so it is extraordinary the independent directors at miner Pike River Coal and energy distributor Vector have given very different answers to this question over the past two weeks. But a clear winner has emerged.
According to a statement put out by Pike's 60 per cent shareholder New Zealand Oil & Gas, the Pike independent directors - chairman Dennis Wood, James Ogden and Graeme Duncan - quit for "personal reasons".
No further comment was made - publicly at least - until the NZX said NZOG's explanation was insufficient. NZOG then modified its argument, saying that it "understood" the directors had resigned because the explorer had decided to take control of Pike's planned float in February.
The excuse was always on shaky ground.
As one observer of the break-up at Pike noted: "All three directors resigning for personal reasons - how likely is that?" But NZOG's later comments consigned to history any lingering notion that "personal reasons" was a proxy for marriage difficulties or cancer.
The excuse was revealed as a catch-all phrase that can mean cancer, marriage problems as well as deep concerns about a company's governance.
Conversely, the approach of the Vector independent directors Tony Gibbs, Greg Muir and John Goulter was upfront.
They resigned with the curt and devastating statement that "they regret this action but advise they have ongoing concerns with the governance of the company and the leadership of the chairman."
Then they made themselves available to investors and the media to elaborate on their reasons. Through this mixture of public and private disclosures the nature of their concerns quickly became clear.
They believed Stiassny was too close to Vector's 75.1 per cent shareholder, the Auckland Energy Consumer Trust; he was overly aggressive and confrontational; and that he and the trust were circumventing process and strategy agreed with management and the rest of the board.
Stiassny denies the claims.
It is arguable Gibbs, Muir and Goulter could have said more in their statement to the NZX - more detail may have rallied institutional shareholders to their side and ensured their concerns were thoroughly aired.
But this is a marginal issue. No matter how much they said, investors, the public and the media would have wanted more. Moreover, their comments were backed up by collective depth of their experience and reputations; their calibre was such that the act of a collective resignation spoke volumes about Vector's difficulties.
The fact of the matter is that they made a statement to the NZX. They registered their concerns on the public record and in doing so gave investors and Vector's other stakeholders a point of reference, against which all other rumour, innuendo and public pronouncements could be tested.
This touchstone was noticeably absent in the case of Pike River.
Investors, instead, had to rely on reports by this newspaper and others to get even an indication of what was happening behind the scenes. Sources - sufficiently well placed - gave the Business Herald the confidence to publish claims that the directors were concerned about the level of funding extended to the pike river project.
Although this is good for the newspaper as it attracts readers, it is still less than an ideal. For one, information divulged by anonymous sources, no matter their quality, is nothing compared to a clear and concise explanation to the NZX.
The Pike directors might argue that they were unable to make public comment because Pike was a private subsidiary of NZOG. But that does not wash.
The departure of all the independent directors a material development because Pike is - apparently - due to float on the stock exchange and seek $60 million to $65 million from the public in a little over two months. Even if subsequent claims are set aside, their departures are material if only because these directors would have a major influence over corporate strategy.
The directors also have their reputations to consider.
Wood is a director of Tower, Ernst & Young Corporate Finance St Josephs Mercy Hospice and Mercy Healthcare. Ogden is a director of New Zealand Post, Kiwibank, Vehicle Testing, Agriquality among others.
If NZOG was unwilling to explain their departures on terms that they find acceptable, they should make a statement to the exchange themselves. The NZX demonstrated it had no problem with this this week, when it allowed Viking Capital chairman Brent King to defend his reputation on allegations published in the National Business Review.
NZOG's performance on this matter has been well below par. It reached rock bottom when it told the NZX it had only included information about changes in the Pike River board in its release because of the reports in the Herald and "not because the information itself was thought to be market sensitive".
As Pike represents more than half Pike's assets this statement beggars belief.
The public is entitled to equal access to sensitive information. The manner in which the Pike River director's departure ensured that only those with the connections were able to reach a reasoned view.
Small investors, which make ip the bulk of NZOG's share register, were kept in the dark.
The departing Vector directors have set the benchmark. Hopefully others, finding themselves in such difficult situations, will follow their leads.
