JB Hi-Fi Limited

ASX:JBH

JB Hi-Fi Limited

ASX:JBH
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$94.78 (-1.4%)
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#267
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Forum Topics JBH JBH # JBH AGM

Pinned straw:
Karmast
Added 2 years ago

I attended the JB Hi-Fi AGM this morning. Nothing especially new or exciting business or strategy wise. However I was not impressed by the behaviour of a number of Board members and the Company Secretary in the meeting. In my opinion they came across as over confident, chuckled at legitimate shareholder questions and in one case were disinterested. For the $159 000 + we pay them in Board fees a year I expect a lot better than that at the one event a year they have to interact with their individual shareholders. One of the three Directors up for election today has too much on their plate and another has several black marks against her for significant risk failures at past ASX listed Directorships that destroyed shareholder value. So while I think JB has a dominant market position and structural advantages, I am not comfortable with the Board overseeing my investment at present. All just my opinions of course. Selling IRL and on Strawman.

Karmast
Added 2 years ago

The subject of independence and owning some shares is a subjective one of course. If you have a whole Board with Buffett and Mungers skill and integrity you don't need independence. But sadly we dont have many managers of Aussie companies that fit that description.

So, thats why having independent Directors is the next best option most of the time. ASA wants these independent Directors to hold at least 1 years worth of fees within 3 years on the Board. If they have no spare money it means they can use 1/3 of each years Board fees to get there, which shouldn't be too hard for most. Hopefully 1 years worth of fees in shares sharpens the mind and ensures they take the most care...but it isn't so much that they'll take huge risks or not act with integrity because they had so much to lose. The core job of independent Directors is to oversee the company and ensure all shareholders are treated fairly...not just consider management. And finally independence shouldn't just mean they are "professional" Directors. They should be bringing real skills that the Board needs and ideally past experience from the industry the company operates in.

Again its subjective but it seems a sensible position and compromise for the majority of companies and Boards.


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Strawman
Added 2 years ago

I'd be annoyed by that too @Karmast

Even if the questions weren't "intelligent", as they saw it, or in other ways unworthy, it's not a lot to expect them to treat their shareholders they represent with due respect.

There are too many professional directors these days, and I'm not sure what a lot of them really bring to the table.

On the long list of rules I'd enact if I became president of Australia would the requirement for all directors to be significant shareholders in the company. You couldn't even be nominated unless you add already acquired a sizeable stake. And you could only be paid in options -- specifically, low exercise price options, issued at the money, with 5 year expiry, and only executable at expiry.

You could debate the finer points of this, but I bet it'd better align incentives and lead to better shareholder outcomes.

25
Solvetheriddle
Added 2 years ago

too right, at a recent AGM there were 2 questions, both mine, one was with the share price at an all-time low are the directors planning on buying any stock? they don't own much btw.....a lot of uncomfortable squirming in chairs.

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Noddy74
Added 2 years ago

What I wouldn't give to see @Strawman's "long list of rules I'd enact if I became president of Australia..."

Some do it better than others when it comes to director alignment. The Australian Shareholders Association has specific guidelines about this, which you can find here. They're a little less militant than the Overlord in that they don't require directors to begin with a shareholding and I don't think they stipulate fees couldn't be paid in cash, but they do say directors should have accumulated shares to the value of one year's base fees within three years. Similarly their guidelines stipulate Executive KMP's should have similar requirements. For the CEO this would be the equivalent of one year's fixed remuneration in shares within five years.

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Karmast
Added 2 years ago

Spot on @strawman and @solvetheriddle and @Noddy74

Full disclosure is that I am a Board member at the Australian Shareholders Association. The questions were perfectly fair and reasonable questions from people other than me. Seeing the body language at the AGM was a reinforcer of why being physically present can be a great "tell" when you can. None of that means JB cant keep doing well but for me I'd rather not risk it now. I contrast this with the Nick Scali and Codan AGM's of the past week that I also attended - excellent meetings, very shareholder friendly, Directors happy to answer questions directly and chat afterwards. So I came away with conviction built in two holdings and broken in another...

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Strawman
Added 2 years ago

There's a more than a decent chance that my list of edicts would drive the country into an unrecoverable disaster @Noddy74

As they say, the road to hell is paved with good intentions!

Keep up the great work at the ASA @Karmast -- I should give a plug too for the Virtual summit

I'm debating Peter Wargent on "Property v Shares" tonight at 6:30 AEDT.

Gloves are off... ;)

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Tom73
Added 2 years ago

Looking forward to a classic Strawman property rant at the ASA Virtual Conference at 6:30pm :)

Also for those attending, check out the On Demand interview by Owen Rask of David Dicker - he really just cuts through the crap!

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Strawman
Added 2 years ago

Good work of you can get it!

8
Karmast
Added 2 years ago

Nice job @Strawman with the property rant at Virtual Conference. Fun but factual and I'm convinced you have the stronger argument...plus history on your side!

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