Next gen takes reins at listed companies

When family businesses list on the ASX, it is usually only a matter of time before professional directors and executives take charge.

In many cases, that eventuality is actually the plan, with the listing process an exit strategy for the family, which is able to sell-down its equity over time and leave the business in the hands of new investors.

In a few cases, however, the founders want to retain a strong family influence – just like their peers in family companies – while also meeting the governance standards and investor demands that come with being an ASX-listed company.

That means grooming the next generation – invariably men – to take over.

In doing so, they are following a similar path to the likes of Rupert Murdoch and Frank Lowy, who brought their sons through to senior roles in their listed companies.

Closer to home, Kerry Stokes has done something similar.

While he is still chairman of Seven Group Holdings and Seven West Media, his son, Ryan Stokes, is the heir apparent.

Ryan is managing director of Seven Group and a non-executive director Seven West.

Perth company directors David Watson, Dan Smetana, and John Chan are in a similar situation to Kerry Stokes.

Aged in their 70s, they have built substantial businesses, retain large shareholdings, and want a family presence after they retire.

Mr Watson is the executive chairman of CTI Logistics and also the major shareholder with a 32.7 per cent stake.

His two sons both work for the company.

His elder son, Matthew, joined the CTI board as a non-executive director in 2010.

At the time, CTI said Matthew would represent the Watson family’s interests and long-term commitment to the company and provide continuity and stability.

CTI announced in February this year that Matthew would join the company’s executive team and assume responsibility for sometransport operations and other functions, including OH&S and ‘chain of responsibility’.

He has brought considerable experience to this role, having worked in London for six years with Cisco and Accenture, before spending 12 years with Rio Tinto in Perth.

In light of this appointment, Matthew resigned as a director.

His younger brother, Charlie, joined the group in 2015 and is currently warehouse manager and group legal counsel.

Charlie also came with substantial experience, having worked as a lawyer for nine years including at Jackson McDonald and Gilbert + Tobin, where he reached senior associate.

Mr Watson said his hope was that Matthew and Charlie would rise to the top of the company in future.

He explained that Matthew resigned from the board only because the company would have had four executive directors, out of five directors in total.

The company is seeking additional non-executive directors to create an acceptable balance on its board.

In addition, Mr Watson acknowledged that he and other directors, including Peter Leonhardt and David Mellor, were approaching retirement age.

“We’re going through a succession transition, not only at the board level but also in the senior executive ranks, where many staff have been with the company for over 30 years,” Mr Watson told Business News.

“I’m looking forward to the day when my sons are directors and I can spend more time down south.”

Mr Watson said he had not encountered any criticism of Matthew’s period as a director.

“Everyone was supportive, I can say that categorically,” he said.

He insisted Matthew and Charlie were free to speak up and challenge him.

“I’ve encouraged all my children to speak up, they will certainly have their say around the table,” Mr Watson said.

“I encourage all our staff to speak up.”

Dan Smetana ran Joyce Corporation for many years and is gradually winding down his involvement, recently stepping down as chairman to become a non-executive director.

The family links have been boosted with the appointment to the board of his son-in –law, Travis McKenzie, whose day job is a director at Celsius Property Group.

“He has very relevant qualifications,” Mr Smetana said.

“He’s a lawyer and works in property development, and Joyce has a lot of property assets.

“And he’s at an age when he can bring vibrancy to the board.”

Other listed Perth companies with a family flavour are apartment developer Finbar Group and publisher Aspermont.

Finbar’s chairman and major shareholder is 72-year-old John Chan, who has led the business since 1995.

His son, Ronald, has worked in the business for 15 years and risen through the ranks, culminating in his appointment as an executive director in 2017.

Aspermont’s chairman and major shareholder is Andrew Kent. He has been a director since 1998 and holds a 27 per cent stake.

His London-based son Alex Kent, who is a major shareholder in his own right with a 12.5 per cent stake, was appointed managing director in 2015.

Alex joined Aspermont in 2007, was appointed an alternate director in 2011 and joined the board in his own right in 2014.

The transition under way at these companies is similar to what happened at Decmil Group and Matrix Composites & Engineering some years ago.

The Decmil business was established by Denis Criddle around 1980; he proceeded to become chairman of the company in 2009 after it had listed on the ASX before retiring from that role in 2011.

His son, Scott Criddle, was appointed managing director in 2010, having joined the contractor in 1993 when it was family owned.

Similarly, Maxwell Begley established Matrix around 1982, originally as a heavy engineering business before it started manufacturing specialised oil and gas equipment.

He stayed with the company until 2012, when he retired from the board upon turning 70 years of age.

His son, Aaron Begley, joined the business in 1993 and was already managing director when it listed on the ASX in 2009.