Thursday, March 11, 2010

Common Denominators Of Under Performing CEOs

TY for your comments and views. I would like to post it up as well, but a couple of my lawyer friends have advised me against it. This is still a visible blog with a lot of readers. Its probably the most read English financial blog in the country, and the legal repercussions are enormous. Notice how litigious Malaysians are nowadays, people suing each other left right and center. I do not have the resources or time to waste defending this in courts. Its just not worth it.



Maybe at another time, or when the society is more democratic, kinder and more open to these kind of views. Nobody wants to be on those kind of lists even when they deserve to be there.

So, thanks again and I hope you all understand why I just had to give this a miss. I apologise for having to this about turn - my bad, my mistake, sometimes adrenaline runs ahead of reason. However, I think I can share what under performing CEOs have in common. That way, you will be able to spot them a mile away.

Again, I will not include those companies already driven to PN17, or CEOs being prosecuted already by SC.

These under performing CEOs have a strong denominator running through them: a lack of focus on cost of capital. This is the biggest factor to me. The corporate problems mainly stemmed from poor judgments on how capital is deployed and how to extract proper returns and create value.

The second thing is warped understanding of leverage. There are plenty of companies who over gear all the time, be it in a bull cycle or recession, they will always be grappling with huge debt, which in the end just eats away at value creation.

The third thing is jumbled acquisitions. There is a difference in being a conglomerate with viable, well run units, and somebody who has a mish mash of businesses, making it difficult to value or manage. Its tough enough to run a business in one industry well. When you have more than three of four, its silly to think you can execute just as well or have the breadth of talent to do so.

The fourth thing is CEOs who are more content to enrich themselves first, way before the shareholders. They usually have a total disregard for respecting minority interests. They engage in not quite so arms-length type of transactions.

The fifth is poor execution, the inability to move the company to the next level. The inability to do long term value creation. The inability to deliver consistently.

http://i221.photobucket.com/albums/dd73/antec900/ChrissieChau001.jpg

p/s photos: Chrissie Chau

5 comments:

Robert said...

Oh no, this is not the Dali that we know.

And don't think any CEO will step up against it, nobody wants a high profile court case just because they are being underrated in a blog?! What, you think they have not lost enough face in the internet and choose to lose more in mainstream media, press & tv??

The country is litigious because the people choose to.

Come on, step up, Do it like a man. The nation needs someone like you.

Salvatore_Dali said...

lawbet,

maybe i am not man enuff to do this ...

solomon said...

Dali,

If the government can release the good and bad school or even police stations, why not for this....

I guess our KPI minister will support this good idea?

Man or no man is the not the question. I guess all you need is the blessing/mandate from the TOP....hahaha

jazzmutant said...

if dali used his creative license, the kpi minister would be on the said list as well.. bugger couldn't do jackshit, PM had to rope in idris jala before anything got moving

clk said...

i think a list of the worst CEO or Companies in M'sia would run a mile long....just so many of them from cronies, to political appointees to those whose idea of a PLC is to screw the minorities upon the IPO stage. we still have a long way to go in terms of Corp Governance.

even GLCs who are Govt owned have a poor sense of Corp Governance!