WHAKATU WORKS

Hawke's Bay Tribune, Volume XXIII, Issue 80, 16 March 1933, Page 10

WHAKATU WORKS

FARMERS’ MEAT CO. DIRECTORS' POLICY DEFENDED. COMPANY’S SOUNDNESS DUE TO THEIR EFFORTS. (To the Editor.) Sir, —At the recent general meeting •f shareholders of the Farmers’ Meat Co. (Whakatu), I did not deem it ex pedient to add to, or to emphasise or amplify, what had already been said by the chairman, nor did I consider it advisable to contradict many of the ill advised and unfounded statements made there by some uninformed shareHolders, nor to combat the suggestions and references also raised, and which were aimed clearjy at the directors. To avoid trouble’ often requires tact and diplomacy to prove to a man privately that he is absolutely wrong and to prove it to his face before hundreds of others, where feeling runs high, doesn’t improve matters or make them any easier and has a tendency to develop into a brawl and in the end no purpose is served. There are about 12(10 shareholders and I am not very aeriously impressed with the opinions of a few among a meeting of less than One-quarter of the whole lot. I have not been bought—l have never done, nor have I been a party to anything in connection with the Meat Company's business unless I knew it was right or, in my considered opinion, after consultation with the remainder of the directors and the officials, that it was the best thing in all the circumstances to do and that always without fear or favour from anybody.

I resent most strongly the inferences and scarcely veiled imputations made at the meeting pointing to the directors and until they are proved I refute them entirely and absolutely. I know well there are many sets of circumstances in which there mav quite justifiably be different opinions, but there are other things which are facts and as to which there can be no different opinions. You sometimes wieet an obstinate fool who will declare black is white and stick to it. but in reality that doesn’t mean there tan not be different opinions and at the same time all be sound opinions. FANTASTIC ASSUMPTION. Firstly, more than an inference was raised that owing to certain actions of the directors some other company or companies could possibly get themselves into a position where they could control the policy of the company and It was plainly hinted the directors were indifferent to it. There are those of us who know that while the directors and shareholders are unwilling to agree to such a thing and will exercise their powers to prevent it—any such assumption is simply fantastic. It is impracticable and impossible and these other companies know it just as well as we do. I don't want to examine the reasons here—legislative restrictions, the powers of the Meat Board, the necessity for licenses and control of freezing works generally, and the conditions of our own articles —I will do that somewhere else if it becomes necessary. Secondly, there was a very mistaken impression in several directions that •ince we acquired Messrs Borthwick's killing business the facilities and space available for our own shareholders had diminished, and was more restricted , than previously. There could be nothing further from the facts. Before acquiring this business, the directors were meticulously careful to assure themselves beyond doubt that they eould so provide that no shareholder would be prejudiced in this respect in 'the slightest degree. So well did the directors insure themselves against any ♦harge of this kind that our manager assures me the capacity of the two works operating now is greater by about 1500 to 2000 sheep and lambs a day, than was the capacity of the three works operating before the acquisition of this business. No delay whatever which has happened can be attributed to this cause. Thirdly, there is an impression, not •tressed at the meeting, that Bothwicks have contracted for a preference over shareholders and such preference is being given. Borthwicks have no such thing and they never asked for it. They probably knew that anv such request would be quite useless. They get their fair quota and no more. .... Fourthly, there was a statement that Whakatu' seemed to be becoming an investment company. This is an assertion evidently made without any knowledge of the facts. There isn t j a shred of evidence in existence to support it. Fifthly, there was a grievance because everybody bad not got his lambs away in one of the first two shipments. Every reasonable shareholder knows that the cause was entirely beyond the control of his directors, or any any other freezing company’s directors. Moi •cover, it is forgotten that if every freezing works in the North Island hail not been delayed, but had been going at full speed from the season’s beginning. the lamb prices which were forth, coming in England would not have been there, and if that is remembered more than half the sting is removed. They can’t get their stock in now because there is no shipping available, but the Overseas Shipping Allotment Committee controls shipping and I defy anyone to show how the directors eon remedy it—l doubt if they would be alloivcd to do it if they bought ships. Do the shareholders want to buy ships? AUTHORITY OF DIRECTORS Sixthly, one shareholdei statid, in affect, that it was very necessary to -curtail the authority of the directors aud when he learned that this might possibly be compulsorily delayed lor a short tunc, he expressed much concern. He said in effect “AAe don t know what thev might do and—poul, the a hole thing’s gone.” That is a dehberatc imputation that the directors air not trustworthy, that they arc faithless and unworthy of the ti ust which has hern placed in them. Further that the danger arising from this is imminent and most serious and unless some drastic stops are immediately taken a disaster may happen to this company owing to a breach of then trust and an abuse of their powers bv the directors. The fact that tin- individual clumsily attempted to explain that it didn’t mean what is plainly conveyed made it really worse. Il this gentleman had been present at

directors’ meetings during the last 10 or 12 years, and had known how extremely jealously every director, without exception, has guarded and sought to protect the property, and to promote the prosperity and reputation of this company, and bow zealously and persistently he has studied its interests. he would realise then that no one Knowing the circumstances, and with any sense of honour or decency or fairness, would make such an utterly unfounded imputation. If we had been discussing ploughing and I interfered from the .same angle ns this gentleman does in this matter he would likely tell me. and 'ery properly so, to confine myself to opinions about matters of which I knew something—well, every man to bis own trade Now I am not going to lie drawn into anv aimless newspaper correspondence about these matters. I am aware r.f " hat happens When a person is cornered all sorts of irrelevant subjects an introduced, as many red herrings iMissihle dragged across, anything 1 that might help to cloak the real issues—l know all these tricks. I have used them. A CHALLENGE. Money is hard, but I will deposit ITO alongside that of anyone else who is willing. We will lefer the following matters to two or three gentlemen able and competent to analyse and to ’orin a sound opinion on all of them, Jf only one of them can be proved to be substantially wrong the other man takes the £2O. If all are proved to be substantially correct I take it. (1) That while the directors and shareholders do not agree to it there is not as the result of any action of the directors anv practicable method whereby anv other company can put itself in a position to enable it to govern the policy of this company. (2i That the facilities and space available to shareholders is any less than it was prior to the acquisition of Messrs. Borthwick’s killing bus. mess. <3l That Messrs. Borthwicks have any right to a preference, or are given an undue preference over any shareholder. (4) That any of the company’s money has ever been invested in anything, or anywhere, other than for the furtherance and betterment of what is strictly the company’s business. (5) Thai the directors or officers of the company have failed to do anything which they reasonably could do to secure more shipping space. (6) That the directors have ever alienated, or attempted to alienate, other than by mortgage in the ordinary way of business, the company's business or real property without first consulting the shareholders, or that the directors have ever exercised any of their powers except after mature consideration, extreme care, and with every necessary discretion that could reasonably be expected from ordinary careful, cautious, prudent business men in that position. COMPANY IN GOOD HANDS. Now I wish to clear the air in certain directions. 1 recognise that among those present at the meeting there was a large number who were able to take a sensible balanced view of things and who knew when it nas been proved over years that the affairs of their company are in good hands. One gentleman very accurately aud properly pointed out the remedy a majority of shareholders in any company in New Zealand always has if they have no confidence m the directors. Put them out and instal others, but I would point out that there must be some measure of trust reposed in directors whosoever they are, just the same as there must be any manager or overseer or supervisor. The only way to avoid that is to do it yourself. There are about 1200 shareholders, but we can’t have 1200 managers. Mr Parker published a statement bearing on the balance sheet, from which more than one inference could fairly be drawn. He explained that he never intended to infer that the balance sheets had been faked—* i r inference is so palpably childish that I never thought he did —I accept his statement unreservedly. 1 do not resent, and I have never resented from men of goodwill, helpful criticism such as that offered by Mr Christie. His suggestion that we should promote other avenues of trade is good, and no opportunity of this kind has ever been missed. Only three months ago there was a letter from the Minister of Industries asking for full information bearing on our tra V? with the East, and intimating that a fail was being opened in Hong Kong about the middle of this year and inquiring if such was arranged would we send an exhibit. On my own motion, we agreed to supply all the information and to inform the Minister that, if exhibits were arranged by the Meat Board, we would be glad to provide one from these works and would assist by every means in our power. I take it that is the reply Mr Christie would have us send. He also made pertinent reference to old and obsolete and conservative methods. The Whakatu works were established to fulfil a certain object and they have fulfilled it, hut some shareholders would have us go on in the same rut in which it was started twenty years ago and never get out of it. A cautious and prudent policy is a good one, but there is a medium and carry this too far and it can get you into difficulty just as effectively as over-speculation. HARMONY AMONG DIRECTORS. I have carefully refrained from commenting on the attitude of any director, because I know only too well that once the directors cease to work in perfect harmony the interests of the company are prejudiced anil I would rather submit to much than be a party to the raising of any discord among them There has never been any so far ami that largely av mints for the continued success of ’be company I have been told lint when I next go up for election I will be displaced. It is far from me I think, to imagine I have all the brains of the company— I I know there* are among the sharehold- ' its many who may not be expert in I the technical nmiiagcnient of complin j ics. Inn: who could express very sound I opinions on many other matters and I who would make quite good and useful I directors I But you don’t always get these men They know you can work yourself to death and get nothing for it but criticism. very often unfair. I can remember attending innumerable meetings of a directors’ snb-conimittee. I recollect sitting at different times foi two whole days, irom 10 a.m. to G p.m (for which I got nothing whatever) trying to see that this agreement with Messrs Borthwicks was water-tight and that we got what wo were intended to get. Since then an individual absolutely ignorant of the very first thin;; about it,

comes and tells me it is al) wrong. J ask in what way and —“Oh, well, somebody told me it was,’’ is all I got. But there are probably among the shareholders born geniuses who, in their own minds, gather an unlimited supply of knowledge and experience in these matters without any practice, and who would be willing to serve. It is government of companies bv just such as these which has put practically every co-operative freezing works in New Zealand where it is to-day—bank-

rupt. This is only my forty-third year in a law office and I have been intimately concerned with the management of companies as director, chairman of direrctors, or managing director and chairman' for more than thirty-two years. No one could appreciate more highly than I do the confidence which has been placed in me by shareholders over a long number of years. I value it all the more because I have been in recent years what is known as a

“dry” shareholder, but I am not pandering to anybody and if a majority of the whole of the shareholders think they can get somebody who will serve them more diligently, or more honestly, than I have done—then get him, and I say that without the least resentment. I hope no one thinks it would annoy me. because if he knew my inner mind he would be so sadly and grievously disappointed that 1 could almost be sorry for him. My trouble is always how to get out of these things. Tn this critical period throughout the last three or four years, during the time I have given trying to keep this company sound and prosperous and on its feet I could have earned much more money than they give me. but I take what they give me willingly and in the right spirit. I don’t question it because I know they intend to be very fair and it may easily be all they can afford.

POWERS OF THE DIRECTORS. I The powers vested in the directors i of this company are in effect exactly : the same as the powers vested in the I directors of scores of other companies • in New Zealand and are those which i are generally vested in directors. I know shareholders have been gross- , ly deceived by many malicious, totally false and unfounded rumours and until some real evidence is produced going to show that I, or the other directors, have abused our powers, or used them wrongly, I say with all deference that I am not submitting to any curtailment. I know the shareholders have the right to do it, they can do many unjust and unkind things if they like, but here are directors who for twenty years have been vested with just ordinary powers and who, individually, for periods up to seventeen or eighteen years can defy the whole world fo prove that they have ever abused them or over-reached them or used them other than with caution and discretion. With the help and loyal cooperation of shareholders, which I willingly acknowledge, they have brought the company from what it was to what it is, with a killing to-day second only to one other freezing works in New Zealand. All these years they have guided it through difficult times and good times, while every other co-opera-tive freezing works in the North Island has gone to the wall. But today it is suggested that they with this record behind them are no longer to be trusted in the exercise of these very

ordinary powers, and one individual is so anxious and concerned about the imminent danger which threatens this company that lie fears if there is even the shortest delay in curtailing the powers of the directors something wiP be done which will bring irretrievable disaster to the company.

I suggest to the whole bulk of dependable common-sense shareholders that thev beware of lying falsehoods. If any of them are ever in doubt about any question, as far as I am personally concerned, if he conies with goodwill and in a helpful spirit ho will be most welcome at a directors’ meeting and if there is no betrayal of confidence given to anyone .else that matter will be explained to him truthfully and discussed with him fully. If a majority of the shareholders, and I mean a majority of the whole of them, because f will see that* this goes to a vote of the whole, and not only those who attend a meeting, decide to put a slur of this kind on me without evidence to justify it. they can do so. but I have some little dignity left and I will easily know what to do. T apologise, Sir, for the space necessary for this letter, but the existence of these works is of importance to the whole community and if shareholders continue to listen to the trash some few of them have lent ears to recently. then the future existence of the works will be, in real jeopardy. That. Sir, I hope, is sufficient reason.—l am, etc., GEO. EBBETT. Hastings, 15/3/33.