News: Coca-Cola Amatil CFO & SPC boss step down, page-15

Hey Johnmagee,

CEO performance depends on how you judge what they do. If extracting the highest value out of a stock occurs by selling the stock, then this makes sense to do. I'm not fully across GNC but just looking at the prices and timing of the announcement of the proposed takeover and then subsequent fall after the takeover was rejected, then the performance still beat the market by 38%.

How does this relate to CCL? If you believe the market and the chatter going around, then CCL is doomed. That analyst from Morgan Stanley recently had a target price of $7 on the stock! (His valuation is only wrong by ~38% at the moment) So if you want to extract value, you may be waiting a long time for the market to 'catchup' and start buying the stock. Whilst the stock price is in the doldrums, you then have all the punters saying that the CEO is doing a bad job. On the other hand you have TCCC who believe the Indonesian story and by having them invest you get to reflect this value faster.

In terms of why she sold 30% of CCAI. This is really clear. By getting TCCC involved you get to leverage their considerable resources to help in building the market in Indonesia.

Why not fund it from the CCA balance sheet....well this is also pretty clear. It increases risk which will push the stock price down, shareholder equity falls and the inherent leverage of the company increases. All of a sudden that really nice balance sheet that has so many people comfortable starts looking more risky and success in Indonesia starts to become even more crucial.

How do you judge improvement of a company? Is it if the stock price goes up? If the dividends go up? Is it strong ROE or ROIC? Or is company success based on who owns the stock? What metric are you using when you think about these things? There are many different aspects to consider and it is by no means a simplistic straightforward answer.

The point of my initial response above was to highlight that the moniker of 'Dr Death' is unfair and not entirely accurate.