Zlatko Todorcevski has a key piece of advice for executives looking to switch to a non-executive director career — take things slowly. “One of the things that was always impressed on me by people I spoke to was: do nothing for a period of time, because the non-executive career is quite different to the executive one,” he says.
He also tells them not to take on too much all at once. It was six months after he left Brambles before Todorcevski took on his first directorship at construction materials company Adelaide Brighton, and two years before he assembled his current portfolio of listed company directorships. He is now deputy chair and lead independent director at Adelaide Brighton, chair of the audit and risk committee at Coles Group, and chair of the audit committee at The Star Entertainment Group.
“Particularly where you don’t have experience with the business, it does require the first six to 12 months to get to know the business and the management team — to build your understanding of the sector,” he says. “When I took on Adelaide Brighton, I really invested the majority of that on visiting operations, spending time with the executives then reading research on the sector. Only after the first nine months or so did I feel I had capacity to take on another board.”
Man of steel
Todorcevski started his executive career with an accounting cadetship at the BHP steelworks in Wollongong. A decade in steel was followed by 13 years with the mining giant in oil and gas in the UK and Houston, Texas. Next came three years as chief financial officer of Oil Search and four as CFO at Brambles. However, travelling internationally three weeks out of four was too much for him and his young family so he handed in his notice in 2017, bringing his 30-year executive career to an end.
The transition from executive roles to a non-executive director career is a complex one. After receiving counsel from David Gonski AC FAICDLife, Gordon Samuels AC QC and others, Todorcevski says he always makes time for executives wanting advice about moving to a board career.
When aspiring directors contact him for advice, Todorcevski encourages them to stay in their executive roles for as long as they can, because he finds the ability to deal with different issues in different contexts and remain calm, particularly in circumstances that might be high-pressured, comes from having experienced those pressures previously as an executive.
He also advises them they should have independent financial means, “because it’s important to have that to be able to exercise independent judgements. It’s not a financially lucrative career. If that’s the reason you’re doing it, you’re doing it for the wrong motivations.”
Todorcevski notes most companies have minimum shareholder requirements and directors are likely to be investing in companies long before they receive the investment back via board fees.
“Think about seeing a NED as a profession and a separate career,” he advises prospective directors. “It’s not something you do in retirement as a pastime.”
Todorcevski says he doesn’t work less than he did as an executive — he spends three weeks in four on listed board work and also has other responsibilities — including being a member of the University of Wollongong council and chair of its risk, audit and compliance committee. Nonetheless, the style of work is different. Rather than focus on the details, including as he did as a CFO at Brambles and in other roles, the focus is much broader.
“It’s a judgement call about when you decide to do a deep dive into an issue where something doesn’t feel right or you’re not comfortable with the information you’re getting or the direction something is going,” says Todorcevski.
His role at Adelaide Brighton is a neat fit for a man with a background in logistics and major projects, but at first glance, his positions on the consumer-focused Coles and Star Entertainment Groups might appear less so. However, Todorcevski says his background helps him contribute to both boards.
He joined Star after meeting chair John O’Neill AO FAICD, who convinced him the board and executives were working to turn the gaming company’s Sydney operations around and building on its strong retail franchise. They discussed his background in accounting, international finance and capital markets, and also his oil and gas sector experience.
“In many cases, you’re making multibillion-dollar investment decisions without absolute clarity on whether the resource exists,” he says of the oil and gas sector. “That’s in some ways similar to building a large integrated resort facility, as Star does. We do the planning, making sure it has accommodation and restaurant and bar opportunities. At the end of the day, you’re planning that people will like that facility, but you just don’t know.”
His experience in being accountable for risky decisions and understanding the upside as well as the risk make him a good fit, says Todorcevski. The Coles board already had directors with FMCG, media and grocery retail experience. He brought experience in supply chain logistics.
While there are concerns companies have grown too risk-averse — from regulators and some business leaders, including Reserve Bank of Australia governor Philip Lowe and non-executive director David Gonski AC FAICDLife, who has said risk-taking is part of innovative thought — Todorcevski says he hasn’t seen this on the Coles or Star boards. He points to Coles, where the current board had only been together for three or four months when it approved two major, fully automated distribution centres in a billion-dollar investment with 10–20-year time frames.
Likewise, Star is spending $3.6b on a development in Brisbane’s Queen’s Wharf and $2b developing the Star Gold Coast, both with a focus on tourism. “Neither board is shying away from making multi-decade investment decisions,” he says. “That’s just not an issue at the moment.”
Todorcevski doesn’t accept the idea of a social licence. “We need to be really clear that the licence to operate is a function of the legal or regulatory framework,” he says. “Broadening that view of licence into something like social licence is really counterproductive.”
He endorses the view of US investment banker Alan Schwartz, which he summarises thus: “The role of a listed company and its board is really to maximise shareholder value in the context of the rules and framework that the community sets. And it’s the community’s role to set those rules.”
This is not to say the boards on which Todorcevski serves ignore the issues captured by the idea of social licence. It is different for each board. For Star, it’s about responsible gaming and service of alcohol. At Coles, it’s about food safety and providing value for the 20 per cent of Australian households that have an annual income of around $23,000. And Adelaide Brighton has reduced its carbon emission by 20 per cent in the past decade.
“I don’t buy into the notion there’s a licence — if you don’t factor in all of those considerations, your business will be put at risk or its ability to operate will be withdrawn,” he says. “I do agree that those companies that focus on a myriad of different issues like that are successful.”