The release of BRW‘s Executive Rich List last week has provided more evidence of the “great wealth destruction“.
The value of the shares held by Australia’s 200 richest executives fell by an incredible $24 billon during the last 12 months, and our richest entrepreneurs have been hit hardest.
News Corp chief Rupert Murdoch topped the list, but his stake fell more than $4.5 billion to $3.4 billion. Second-placed Andrew Forrest saw his stake in Fortescue Metals plunge $6 billion to $2.37 billion, while James Packer’s Crown Holdings is worth $2 billion less than a year ago.
And then there are the boys from Babcock & Brown, led by former chief executive Phil Green. A year ago his shares were worth $1.72 million; today they are worthless. Eight other Babcock executives have also dropped off, taking the total number of departures to 76. The exodus has meant the cut-off for the list has plunged from $16.2 million to $6.4 million.
But these incredible losses are hardly surprising – every investor and super fund member knows that pain. The biggest losers are old news.
Instead, let’s turn our attention to those executives who actually managed to make money in the past 12 months, or arrived on the list in spectacular fashion.
Not surprisingly, the list is short – just 13 executives from last year’s list managed to increase their wealth.
But some trends quickly emerge. Mining and energy continues to create huge wealth, despite recent falls in commodity prices, while defensive sectors such as health, education and professional services are defying the downturn.
The chief executive of Linc Energy, Peter Bond, is the big star of the list, jumping from 32nd to 11th after his fortune shot up $161 million to $360 million. Linc and Bond are riding the liquid gas boom and have largely escaped the commodity price falls that have rocked many mining entrepreneurs in the past 12 months.
Still, Bond’s wealth has been on something of a rollercoaster in the last six months, falling from a peak of $1 billion in October.
Little-known executive Stewart Elliot is the boss of Energy World Corporation, which owns power plants across Asia, including one in Indonesia and another in Alice Springs. The company is based on Hong Kong but it is listed in Australia, and so Elliot joins the list with a stake worth $181 million.
English-born Elliot has enjoyed a long and distinguished career in Hong Kong, with stints at property and infrastructure developer Hopewell Holdings and independent power company CEPA. According to his bio, Elliot also has investments in property and hotels.
Rod Jones is the founder of Navitas, an education services company based in Perth that provides English language training, high school and university preparation, and migrant settlement services.
The company has emerged as something of a defensive stock in the last 12 months, and its share price has risen thanks to higher earnings and enrolments. Jones’s stake has increased in value from $104.5 million to $127.2 million.
Here is a win for the little guys. Dentist Daryl Holmes is the chief executive and major shareholder of 1300 Smiles, a Queensland-based company that owns and operates 17 dental surgeries across the sunshine state.
Holmes makes his debut on the list with a fortune of $40 million; 1300 Smiles has a market capitlisation of $54 million. Dentistry, like most health businesses, is proving to be quite recession proof, but Holmes has also attributed the company’s share price performance (the stock is only marginally down over the last 12 months) to careful management and cost control.
The float of law firm Slater & Gordon in June 2007 was seen as something of a gamble by many in the legal fraternity, but the company’s performance has been impressive. In the last 12 months, the share price has increased around 7%, helping boost the value of the stakes of directors Ken Fowlie, Peter Gordon and Andrew Grech by $6.3 billion to $37 million.
It’s worth noting that Slater & Gordon is one of those businesses that should do well out of the downturn – it is involved in a number of high-profiled legal actions resulting from corporate collapses, including Opes Prime and Storm Financial.
The Executive Rich is scandalously short of female members, although the debut of mining executive Ines Scotland is one bright spot.
After a long career at Rio Tinto, Scotland joined junior explorer Citadel Resource Group in 2005. The company has a portfolio of gold and base metals projects in Saudi Arabia (where Scotland is based) and posted a loss of $72 million for the six months to December 31.
Scotland’s stake in the company is worth $33.1 million, although Citadel’s share price has halved in the last 12 months.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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