(a counterpoint to the double-tap to the head)
There have been many excellent thesis’ in the last two years over the zombie companies that populate the TSX Venture exchange; most notably the collective works of John Kaiser, Don Mosher and Tony Simon (all have been linked at one point or another on ceo chat and a quick name search will be far better in terms of reading some of the discussion they generated than a few links from me here). They should and have been applauded for trying to aim the spotlight on this issue. Before I proceed I want to point out that I have absolutely no disagreement with the aforementioned points of view on this subject but wanted to provide a first-hand experience that has me caught agreeing but at the same point doing everything I can to keep a zombie company alive.
The reason for this bipolar position? Two simple words “fiduciary duty”, or most certainly my interpretation of how it pertains to anyone running a public company.
By now we have all seen the pitchfork wielding crowds lambasting the “zombies” on the exchange and I am readily available to take up arms and join the mob. That is, so long as it’s not my “zombie”. Yes, in true support group fashion, I will sit here and inform you all that I have a problem. For over 12 months now I have been the President and CEO of a defacto zombie company on the TSX Venture. It is good to get that off my chest and the good news is this admission comes without me ever suffering denial of my problem.
The problem is my fiduciary responsibilities dictate that I do everything in my power to save my shareholder’s company even if it is fighting for every last breath and a candidate for euthanasia. Do I let it die? Hell no. To start with I hate the blemish on my resume. Professional pride is certainly at stake regardless of being able to use the bear market as a perfect excuse. Many executives simply choose to move on to newly minted and better structured ventures leaving their orphaned shareholders behind. In some cases, we have seen complete board resignations forcing a delisting. Pride aside, what is far more at stake is demonstrating to at least my group of shareholders that they aren’t so easily discarded; that we will go the extra mile to make them feel important enough to tirelessly fight a potentially losing battle.
Shareholders are our life blood and we have a direct responsibility to them and an indirect responsibility to the sector at large to treat their investment health like we would our very own. It is unfortunate that unlike the last great culling of junior resource deals in 1998-2003, there is no tech bubble that allowed for countless change of business transactions that fueled some semblance of investor return over a languishing resource sector. This time the zombies are truly exposed as what they are. Should they be left to die? Well I can only speak for my own and say no. But I also believe that my own personal thesis is not close to being in the majority of how these zombies are necessarily viewed by their incumbent management teams.
I could go on and on, as anyone who knows me could quite happily testify. Suffice it to say I just wanted to throw out there a reason why some zombies exist and will continue to exist despite every logical and regulatory argument for their demise.
I am a zombie CEO.