Year of rebuilding fortunes post-GFC

A CURSORY glance at the shareholding wealth of the directors and executives of the state’s top listed companies reveals what has attracted Prime Minister Kevin Rudd and Treasurer Wayne Swan.

WA Business News’ annual survey of director interests shows Western Australia’s most prominent corporate players have rebounded impressively from the global financial crisis, amassing paper fortunes such as Andrew Forrest’s $4.67 billion holding in Fortescue Metals Group, Tony Poli’s $848 million stake in Aquila Resources, Chris Ellison’s $264 million slice of Mineral Resources, Rod Jones’ $268 million worth of Navitas, and John Borshoff at $90 million of Paladin Energy.

These are just the public faces. Many other executives and silent shareholders have reaped similar rewards without being unearthed by WA Business News’ trawling of regular directors’ interests notices, annual reports and other public disclosures.

What these numbers don’t show, though, is the risk and energy put into these enterprises by those listed. Few of those on this list, which was limited by WA Business News to a $10 million holding based on share values last week, would have started the past decade knowing that they would make such a fortune.

Several of the companies that have driven this wealth were little more than a glint in the eye of their founders 10 years ago, when resources was in the doldrums and mining iron ore, especially, was a mundane chore for behemoths of the sector.

How things have changed.

With his 972,830,215 shares in FMG worth almost $4.7 billion, Mr Forrest vies for the position of Australia’s wealthiest man. Mr Poli could challenge the FMG chief for this moniker in the future, while a host of others follows in their footsteps.

They share a stage with another group who have enjoyed the fruits of the mining boom in a different way.

Kerry Stokes holds Seven Group shares worth $1.7 billion. Seven now owns his Westrac business, a major machinery supplier to the mining sector.

Tony Lennon, from property company Peet, has a stake worth nearly $200 million. Peet is an old company with a national presence, but it has also enjoyed the booming property opportunities in WA where mining has flooded the market with money.

Clearly there are some leaders who are a cut above the rest in terms of engineering returns for themselves, and their shareholders.

Most of those don’t work alone. Many of those leading this select list are joined by their colleagues, with several executive teams having delivered its membership staggering results.

FMG has five members of its leadership on this list, including Graeme Rowley at about $93 million and Russell Scrimshaw at about $38 million.

It has plenty of happy shareholders too.

Aquila has three, including Charles Bass ($40 million) and Derek Cowlan ($10.7 million), Mineral Resources has five including Steve Wyatt ($100 million) and Peter Wade ($32 million), Navitas has four, including Peter Larsen ($144 million) and Paladin three with Rick Crabb ($20 million) among them.

Typically, these people were there at the birth or early stages of what has become an immensely successful enterprise.

Despite the federal government’s view that these are somehow lazy fortunes to be taxed back to levels viewed sensible by politicians and bureaucrats, all of these companies tell of the difficult times during start-up phase and later. The risks taken were immense.

Intriguing, too, is the government’s attack on foreign ownership as part of its taxation grab.

Of this exclusive group, both FMG and Paladin owe foreign investors for funding their early capital needs.

In the case of Paladin, a Hawaiian investor put in $200,000 to keep the company alive at a time when Australian investors were not interested in John Borshoff’s uranium story.

Despite the hit taken by mining companies in recent weeks as a result of the government’s proposed Resources Super Profits Tax, this year’s list is much healthier than 12 months ago, when the sector had plumbed the depths of the global financial crisis.

Not only, according to WA Business News’ figures, has the number of WA directors and executives holding stakes valued at more than $10 million risen by more than 30 per cent in a year, but some of those stakes have also jumped markedly.

Nowhere is this more obvious than at the top of the list, perhaps proving that the market values quality in times of volatility.

While Mr Stokes has joined Mr Forrest as a billionaire public stockholder, the next level of paper wealth has also grown substantially. Last year, collectively, the top 10 stakes held by directors were valued at $4.66 billion. That same exclusive group currently holds shares worth more than $9 billion.

Across the board the story is similar. Take for example Greg Tate, who has shares worth about $50 million in Fleetwood, a company that makes caravans for the leisure travel sector and dongas for the mining industry. Last year his stake was worth just under $40 million.

While Mr Tate’s actual shareholding has slightly risen during the year due to the exercise of options, many others have taken advantage of the market lulls to top up their stakes.