Rick Crabb FAICD, a member of AICD’s WA Division Council and the chairman of several resources companies, talks about the challenges of directorship.
Q&A with Rick Crabb
Company Director (CD): What unique challenges do directors of mining companies face?
Rick Crabb (RC): Balancing the commodity price cycle with the equity/debt funding cycles to ensure projects can progress. Mining projects need to follow a logical technical development path but often the depressed state of the market for the particular mineral commodity, lack of interest from equity markets or lack of debt funding from the banking community means you struggle to synchronise key decision points. Overlay this with increasingly prolonged timeframes for government clearances and the result is a long project development horizon. Directors need to understand this reality and build the strategic business plan accordingly.
CD:What is the value of AICD membership to you?
RC: The quality of the professional development courses, functions and publications are just first rate. I particularly like the fact that AICD offers a busy program – it keeps up a momentum as if you are part of a campus community.
CD:Why did you decide to become an AICD councilor?
RC: I have been on public company boards for 20 years and when I was a practising resources/corporate lawyer, I was involved in liaison groups with ASIC and ASX on changes to the Corporations Act and Listing Rules etc. I have also been a member of the ASX Corporate Governance Council Implementation Review Group for five years, which periodically considers the practical implications of the ASX Corporate Governance Principles and Recommendations. My focus and input on these various committees has been from the context of small listed resource companies. I saw that I could continue my input to this community as a WA-based AICD councilor.
CD:What do you enjoy most about this role?
RC: The interaction with other councilors and the AICD staff both locally and nationally, who I find are all very diligent and passionate about the organisation. It is also a great way to keep right up-to-date with developments that may affect the companies with which I am involved.
CD:How, if at all, has the global financial crisis (GFC) impacted your thoughts about directorship?
RC: I have seen many severe downturns in the equity and commodity markets. In fact, I think the problems experienced in the resources sector after the 1988 crash and later, after Bre-X, were much worse than the GFC. I see it as just another reminder that periodically the resources sector experiences a severe downturn – sometimes shared with a broader equity downturn or sometimes alone. It always seems to be a different thing that triggers the downturn. So as a director, one always has to try to balance this fact of life with shareholders’ expectation that your company will expand its business and increase shareholder wealth. Theoretically, the more mature your company, the more capable it should be to handle the downturns, but there are many unfortunate examples where this has not been the case.
CD:What drives you?
RC: I love being involved in businesses that grow and employ people. The real wealth creation that can be achieved in the resources industry is amazing. An untapped resource in the ground can in a very positive way, while still respecting environmental concerns, contribute enormously to improve the lives of the local and broader population.
CD: What’s the best lesson you’ve learnt as a director?
RC: Trust your gut feeling if something doesn’t seem right, particularly if it concerns an issue about which you have special knowledge. Don’t be afraid to say: “Hang on guys, I don’t understand this – are we sure this is the right way to go?” In other words, have the guts to ask the dumb question. It is better to look the fool than regret it later. But ensure you have carefully read the background material!
CD:What advice would you offer aspiring directors?
RC: Don’t rush to accept the first position offered, as you need to ensure your skill set and personality will fit with, and compliment, the other board members. You must be comfortable that the board shares your basic philosophies on ethics and fair play. The CEO should understand that, as a non-executive director, you have an important role to play regarding strategy and governance and you should be treated with the respect the position deserves.
CD:What are your passions outside of work?
RC: My wife and I have four children. The older three are in their 20s, but we still try to spend as much time together as we can. I like to keep fit. It helps me cope with stress, so I spend time in the gym or on the beach. We consider our beach house on the coast at Margaret River as our fifth child, so we try to get down there once a month to watch the sunset and drink some great wines.
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