January 9, 2008
In this Mayne Report members update we really showed some patriotism ahead of the Rio Tinto EGM on the Alcan takeover.
Thursday, September 27, 2007, 11.35pm
Dear Mayne Report subscribers plus a handful of family and friends,
It might look a little patriotic and jingoistic but when you read the flyer below, which I'll be distributing at tomorrow's Rio Tinto extraordinary meeting in Melbourne, it is clear that the company is treating Australia with contempt.
And how about the irony of starting an EGM just when the AFL grand final parade kicks off. No doubt many of the board will enjoy the game after getting their final rubber stamp from shareholders to spend $US44 billion buying Alcan.
A team of four of us are heading down to distribute these flyers and film, so we'll keep you posted on how it goes in the next update and also devote Monday's video to the issue.
FLYER: TIME FOR RIO TINTO TO CALL AUSTRALIA HOME
Friday, September 28, 2007
Today's Rio Tinto shareholder meeting will almost certainly approve the $US44 billion takeover of Canadian company Alcan – the largest cash bid in Australian corporate history.
However, what few people realise is that the terms of the agreement will see the world's second biggest mining company become even less Australian. Rio Tinto is a dual listed company with an Australian and UK listing - but its head office is in London.
The company's Australian assets are worth at least $70 billion but the business is still run from the other side of the world in a country were Rio Tinto has no mining operations.
When the dual listed company structure was established in December 1995, the boards of CRA and RTZ reached an agreement with the Keating Government to retain part of its head office in Melbourne, from where the Eastern Hemisphere of the global operation would be run.
This agreement was broken 15 months later under the Howard Government, when 100 jobs were axed in Melbourne and Australia was downgraded to running just three of six global divisions – aluminium out of Brisbane, iron ore out of Perth and energy out of Melbourne. Now we have a further downgrading of Australia's role with this Alcan deal because the aluminium business will be run out of Montreal rather than Brisbane.
It gets even worse when you look at the Rio Tinto board, which currently has only three Australian based directors - Sir Rod Eddington, Ashton Calvert and Mike Fitzpatrick. Three Alcan representatives will join the Rio Tinto board, which means the Australian-based representation will be down to less than 20% given the board will be expanded to 16.
The Keating government originally requested that RTZ-CRA's board remain one third Australian-based in perpetuity but backed down after the companies threatened to scuttle the 1995 merger.
Up until the appointment of American Tom Albanese as managing director last year, Rio Tinto also had an Australian CEO in either Leon Davis or Leigh Clifford since the 1995 merger. In 1997, when the CRA name was buried, Rio Tinto gloated that six of its eight top executives were Australians. These days, only two of the top nine hail from Down Under.
Given that the Australian-listed shares trade at a premium to their London equivalents, it makes sense for Rio Tinto to "do a Brambles" and collapse the dual-listed company structure and instead shift the global headquarters to Australia.
With wall to wall Labor Governments on the horizon, this would surely make it easier for Rio Tinto to operate in the country which will still deliver close to half of group profits, even after the Alcan deal.
In an era or growing resource nationalism across the world, Rio Tinto needs to treat Australia with a lot more respect.
For further information: Stephen Mayne (0412) 106 241
PUTTING THE WIND UP CHARLES GOODE
This is the script for the videoblog next Tuesday when I'll be putting long-serving ANZ chairman Charles Goode on notice of a board tilt at the December AGM if he doesn't retire. Hope you'll agree it is a compelling argument for change.
CHARLES GOODE VIDEOBLOG SCRIPT
Today, I'd like you to meet Charles Barrington Goode – he's the last of the great influential Melbourne Club types holding powerful posts in Australian boardrooms.
Charlie's path to the top is classic old school: Scotch College, Melbourne Uni and then 28 years with the blue blood broking firm Potter Partners before a stellar 20 years stretch as a professional director with venerable blue-chip Australian companies.
During that time, Charlie became an expert at sacking incumbent CEOs and importing expats to take over:
· Charlie flicked Don Mercer from ANZ in 1996 and replaced him with Scot John McFarlane.
· John Akehurst got the bullet from Woodside in 2002, Charlie preferred American Don Voelte.
Despite firing plenty of CEOs, Charlie's been progressively retiring at times of his own choosing from his board gigs in recent years:
· He retired from Pacific Dunlop in 1999 after a 12 year stretch.
· He retired from CSR in 2001 after 8 years
· Only two month ago he quit as chairman of Woodside Petroleum after 19 years on the board.
But for some strange reason, Charlie will not let go of his last great gig, the chairmanship of ANZ.
The ANZ has a board rule that no director can serve more than 15 years – but Charlie gets an exemption and is refusing to go despite being a director since 1991 and chairman since 1995.
ANZ has just appointed a new MD, another expat in Englishman Michael Smith, and Charlie is hanging on because he reckons companies shouldn't change their chair and CEO in quick succession.
That's funny, here's a list of big Australian companies that saw no problem with changing its chair and CEO in a 12 month period: BHP, Westpac, Southcorp, Lend Lease, NAB, AMP, David Jones, CommBank, Telstra and even ANZ itself back in 1992.
Here's an offer Charlie surely can't refuse. If Charlie retires before this year's AGM, I'll buy $10,000 worth of ANZ shares. If he doesn't , I'll run for the board on an "it's time" platform.
Retirement would probably do ANZ a favour because it would not be a good look for ANZ to have a chairman who also chairs a Liberal Party fundraising arm under a new Labor Government.
Charles, we don't want to call the fire brigade to get you out – go with dignity, NOW!
TERRY CAMPBELL'S BIZARRE REQUEST
I've had some strange requests from directors over the years but the recently retired Goldman Sachs-JB Were executive chairman Terry Campbell turned up a beauty at AGM of small cap investment company Mirrabooka earlier this week when he asked that the meeting be treated as off the record.
This was so the investment managers could all stand up and speak frankly about different companies they'd invested in. Mirrabooka was the first time that owning shares in 440 companies actually made for more informed questioning because I was able to get up and say that they were underperforming this year by missing the boat with the mid-cap iron ore stocks and retailers.
Out-going director Russ Fynmore came up after the meeting and said this was spot on. I bought into 100 new stocks during the recent downturn and have made the biggest gains on the iron ore and retail plays. When asked how Mirrabooka had played the downturn, the fund manager could only mutter that they were fully invested at the time and had "nibbled on a few Coca Cola Amatil shares".
Coke is just inside the top 50 so this so-called small caps company isn't even meant to hold it at all.
There are another four JB Were listed investment company AGMs coming up and the main game will be attempting to stop AFIC from voting its large holding of News Corp shares against my shareholder resolution on the basis that News Corp is a major investment banking client of Goldman Sachs.
That's all for now.
Do ya best, Stephen Mayne
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