Interview QA with Richard Haire

So much has changed, and yet so little, for Richard Haire during his 20 years of running what used to be Queensland Cotton Holdings. He talks to Tony Featherstone about the many challenges along the way.

Rupert Murdoch, Frank Lowy and Wal King immediately come to mind in the CEO longevity stakes. All have steered their companies for decades. Richard Haire FAICD, CEO of the former Queensland Cotton Holdings, now part of Singapore agribusiness, Olam International, barely gets a mention. Yet Haire has run that business for 20 years, first as a marketing company, then a listed company and now as a division of Olam. In an era where CEO tenure is about five years, Haire’s achievement in such a volatile industry is remarkable.

Not that Haire sees it that way. The former rugby player is as down-to-earth as they come. He spends most of his time jet-setting between Brisbane and Singapore as he helps grow a global agribusiness. But his country origins are never far away.

Haire grew up on a wheat and sheep farm with four brothers and a sister in Wee Waa in north-west NSW and now has a small farm in the Tweed Valley in northern NSW where he runs cattle and grows fruit – more for love than money.

After studying economics and accounting at university, Haire joined Cargill, an international commodities dealer, “more because I could play rugby than for my knowledge of debits and credits”.

Later, he returned to Brisbane as an investment banker and as part of that role, advised the then Queensland Cotton Marketing Board. A year later, he became CEO of that organisation at age 31 and three years later would lead it to a share market listing.

“I’ve had a lot of lucky breaks in my career,” says Haire. “I led a pretty young team at the time that had a lot of fire in its belly. It just worked out.”

That “fire in the belly” would see Queensland Cotton take over other agribusinesses, expand into the US and Brazil, buy cotton gins in NSW and even launch an unsuccessful friendly $109 million takeover bid for the listed Namoi Cotton Co-operative in 2005 to attempt what Haire describes as “something that would have been pretty special” and “one of my biggest corporate disappointments [that the takeover failed]”.

Two years later, Queensland Cotton was itself part of a takeover battle as Olam and the Belgian cotton trader, Louis Dreyfus Cotton International, slugged it out for control. Queensland Cotton recommended Olam’s bid and would later be delisted from the Australian Securities Exchange (ASX). Olam’s management convinced Haire to stay on for three years; his time is officially up in July.

It must have been a difficult decision for Haire to stay: after running his own race as CEO of an ASX-listed company, he would be one of many executives in a Singapore company with a different, more entrepreneurial culture. He no longer had a board to report to and his role changed considerably, with Olam adding new Australian businesses such as the recent purchase of the failed Timbercorp’s almond plantations to Haire’s responsibilities.

Haire’s current title – managing director and regional head of Australia and New Zealand, Olam International – must seem a world away from Wee Waa.

As a 20-year CEO “veteran”, Haire has experienced executive life at co-operatives, listed companies and now a subsidiary of a foreign company. He has ridden the ups and downs of an industry that can have its spirits buoyed or crushed by uncontrollable factors such as rainfall. And, through board experience, most notably the Rabobank advisory board for Australia, and more recently the national board of the Australian Institute of Company Directors (he is president of the Queensland Division Council), Haire has formed a strong view on governance as a value driver. One senses the Manly Sea Eagles rugby league fan misses having a permanent Australian base, but it’s hard to imagine Haire ever giving up agribusiness.

Here is an edited extract of his Company Director interview:

Company Director (CD): You’ve been in the top job for 20 years now. How do you stay passionate about your role?

Richard Haire (RH): First of all, I have a real passion for agribusiness. When you grow up on the land it’s often in your blood for life. As they say: “You can take the child out of the country, but you can never take the country out of the child.” I have always loved what I do. Also, my role has changed considerably over the years as our company changed. I went from leading what was effectively a Statutory Marketing Authority, to leading a listed public company, to being part of a foreign multinational. And, there were plenty of acquisitions and takeovers along the way. So the role has never been dull. I also think the nature of agribusiness, where you can endure very long droughts and then lose crops to flooding, is interesting in itself. It is a real management challenge to deal with long and severe cycles that you can’t control.

CD: What are the pros and cons of being a CEO for so long?

RH: It certainly creates great corporate memory. You know from experience what works and what does not. It also creates a cultural consistency and certain predictability about the company’s personality – which can be an asset, but also a liability if you become too rigid and stifle innovation.

Longevity also creates much stronger ownership of results. The reality is you can’t achieve much in three years in an industry such as agribusiness that has long cycles. The downside of having the top job for so long is you can lose passion for the role, so you have to work harder to stay fresh.

CD: Why did you decide to stay on at Olam after the Queensland Cotton takeover?

RH: Olam wanted me to stay on for at least three years after the acquisition to ensure business continuity. At the time, that was longer than I preferred, but the thought of working for a genuinely global agribusiness, which has operations across all types of commodities, appealed to me. And, I liked it that Olam was very entrepreneurial and focused on growth. This type of growth agenda can be harder in a small listed Australian agribusiness where your cost of capital is usually comparatively high.

CD: How have you found the change from running a publicly listed Australian company to being part of Olam, which is listed on the Singapore Stock Exchange?

RH: It’s been a big adjustment and very positive. There is no question that public ownership creates a significant drag on an organisation’s leadership.

Olam is, of course, listed, but I no longer have to attend to everything that comes with listing, such as dealing with fund managers, analysts, journalists, shareholders and so on.

I truly believe an organisation needs significant scale before it should consider listing – it is not a decision to take lightly. There is a high financial and intellectual cost that comes from being listed compared to running a private company where you have more time for developing and executing strategy and building corporate culture.

CD: How has your role changed within Olam?

RH: I lost some responsibilities such as the US and Brazilian businesses, which now report to those geographies, and gained others such as Olam’s interest in a New Zealand dairy business, the almond plantations previously owned by Timbercorp and recently acquired wool operations. I’m also part of Olam’s executive investment committee, so I spend a lot of time analysing the company’s investment opportunities. And, I am heavily involved in Olam’s carbon and sustainability strategy, a fascinating area.

CD: There’s a view that there could be more takeovers in Australia this year. Having been involved in both sides of takeovers – and being a former investment banker – what advice could you give other directors tackling this area?

RH: Look, it’s different for every company. I would say CEOs and directors must work hard to take emotion out of the transaction, whether acquiring a company or being acquired yourself. You cannot afford the luxury of being emotionally caught up in the situation and forget your fiduciary duty is to act in the best interests of shareholders. You must be selfless; our directors knew the Queensland Cotton board would be dissolved after the takeover and acted with great integrity.

I was fortunate Queensland Cotton had a terrific board and some very good advisers. The same goes when acquiring a business: the CEO has to be incredibly disciplined about the return on capital and not just buy for growth’s sake. This can be harder in agribusiness because many such assets are fully valued in my view, possibly because there is still a lifestyle element in parts of this industry.

CD: What did you learn from the integration of Queensland Cotton into Olam?

RH: Integrations must be done quickly. Obviously you need careful consideration before you make changes, but you can’t let integrations linger. Your executive team has to engage with new ownership quickly, and vice versa. The real challenge is for the new owners to win the hearts as well as the minds of the acquired employees. That is, you can’t just seek intellectual and financial engagement – you need the acquired employees to engage with the new owner’s history, culture, staff, stakeholders, customers and prospects, and you have to work hard to get it. This alignment often gets lost – to the detriment of all parties – when a company is acquired.

CD: Do you miss having a board to report to?

RH: Yes and no. I respected our board and valued its expertise, input and the camaraderie we’d built over several years. In some respects, it can be easier to report to a board than to another executive who is looking at your business performance every day and has a very deep understanding of the business, more so than a typical non-executive director (NED). The upside is there is a lot more flexibility because you no longer have to deal with all the formal board processes to get things done.

CD: What are the challenges that boards of agribusinesses face, especially co-operatives?

RH: From an agribusiness perspective, the challenge for boards is understanding agricultural cycles and the complex nature of risk management in this industry. Co-operatives present particular challenges for boards. I think this structure is outdated in the agribusiness industry. The more successful a co-operative becomes, the more problematic it becomes, given there is no market base to build and value the equity. How do you equitably distribute a co-op’s value?

CD: What makes a good board and NED in your opinion?

RH: A good board has diversity of thought, diversity of interests and diversity of experiences, but, by the same token, it has conversity where directors work together as a team. Good NEDs understand the differences between NED and executive roles. They find a balance between being informed and interested but not second guessing management to the point of distraction. And, they understand that sometimes you individually have to take a bullet for the team, and sometimes the team takes one for you. Good NEDs really add great value.

CD: How are conditions in the cotton industry?

RH: Australia’s cotton industry has been in recession for the past seven years because of drought. But recent rains have put the industry on the threshold of what could be a few great years at least and the cotton price, usually an early indicator of global economic upturns, looks strong. There could be some crop damage from recent flooding, but in the scheme of things, not too much cotton will be lost.

This rain will lay the foundation for some wonderful crops for years to come. Our job now is to execute really well and take advantage of these conditions. We managed to get our cost structure pretty lean during the drought and Olam’s global cotton business performed very well, so we are in good shape.

CD: Olam granted you two million options when you stayed on at the company. What’s your view on directors having more equity in companies they govern?

RH: It’s problematic. It’s good to have the board’s personal interests aligned with shareholders but too much of it creates potential conflicts around when the options are exercised. Directors are often in possession of information that did not seem material at the time but with the benefit of hindsight could be construed as giving them an information advantage over other shareholders.

CD: Why did you take on the presidency of the Queensland Division Council of the Australian Institute of Company Directors last year?

RH: I have a real interest in governance, not just as a way to protect shareholder interests, but in how good governance creates organisational value. For me, good governance is about dealing with risk in a systematic way.

At Olam, we think about governance in terms of whether our coffee and cotton suppliers in developing nations are being paid fairly and treated properly. We think about the effect our farming practices are having on the environment. We think about how our products are being used by our end customers. Governance becomes meaningful when you consider it right across the value chain and see it as part of everyone’s job.

CD: Will we see you on more Australian boards?

RH: Not at the moment. It’s very difficult to take on external board roles when you are a front-line executive. Having said that, my time at Olam is technically up in July, so who knows? I’m certainly enjoying the job, the company and its management. But like anybody who spends so much time in planes and airports, the travel wears you down after a while and takes a toll on your personal life. I’m only 51, so I’d love to get involved on other boards when the time is right.

After so many years running a company, I would like to think I have something to add around the board table in terms of strategic and governance issues in Australia and Asia.

CD: What do you do to relax away from work?

RH: I love my farm. It’s only 120 acres but a chance for me to get away from the corporate world. When I’m there, I completely escape and relax. And, I spend time with my two boys, who are both engineering students at university. Having played rugby in my younger years I keep an eye on union and league – even in Singapore! Being based in Brisbane, I probably should go for a Queensland league team but have always supported the Manly Sea Eagles – and the Reds, of course, in union.