Action aplenty at the WA News AGM

West Australian Newspapers chairman Peter Mansell might have been victorious in this contested board election but the voting turnout was less than one-third as the largest shareholder, Kerry Stokes' Seven Network, stayed out of the fray, along with many other institutional investors.

Stokes' offsider Peter Gemmell has recently requested two board seats which is not surprising given that WAN shares are under pressure and hit a 10-month in November, meaning Seven is now underwater on its $400 million investment.

The final voting results from the poll showed Mansell receiving 55.33 million votes in favour and 5.78 million against. Getting him under 90% in a poll was a good effort, especially after he used more than 5 million in undirected proxies to boost his percentage. I had 7.56 million proxies in favour and 34 million against, whilst the final poll result was 7.72 million in favour and 42.25 million against – a creditable 15.44% which is slightly above my long-term batting average.

Getting the chairman below 90% was a good effort but the Australian Shareholders' Association and proxy voting advisors ISS apparently went against me so it was always going to be a struggle.

The attendance was apparently the lowest in years which once again proves the point that Friday AGMs struggle for numbers – especially one that starts at 3pm in Perth.

Given that Seven has 17% and is three times bigger than any other shareholder you would think that a board seat would be a no brainer and should have happened months ago.

EXPLAINING THE "NO VACANCY" RORT

When I pointed this out and asked for more detail, Mansell said the approach was only “recent” and denied he'd done the same “no vacancy” tactic against Stokes that was used against me.

The no vacancy rort involved this company of only five directors claiming there was only one vacancy and two candidates at this AGM. This is the wording they used in the notice of meeting: “In accordance with the Company's Constitution, the maximum number of directors that may be elected to the Board of the Company is five (refer Article 8.1(a))”

The company admitted during the meeting that this clause does not specifically say “five” but simply says the board can select any number it likes, after it sees how many candidates have nominated.

When I asked that the rort not be deployed in any future tilt, they simply said the provision had been in the constitution for a long time. Precisely, it is a notorious defensive mechanism that many Australian companies deploy and it should be out-lawed. Board size is a matter for shareholders within overall limits prescribed in the constitution, such as a minimum of 3 and a maximum of 12.

Chairman Mansell played an odd game where he opened up questions on the accounts and accepted three that ranged over general territory, but when I got up and started asking questions he said these were general business which would be dealt with at the end.

This led to semantics where my question asking why The West Australian's editor Paul Armstrong had not been sacked had to be asked in the context of whether we were getting value from his $467,323 pay packet laid out on page 26 of the annual report.

THE BOARD ELECTION DEBATES

We then quickly moved to the re-election of directors and former Wesfarmers finance director Eric Fraunschiel assumed the chair.

Mansell was up first but somehow I was called upon to speak straight away. The campaign speech covered the following territory:

“This board is too small, it has no media experience, it has not taken responsibility for the $60 million Hoyts write-off and it has failed to sack a discredited editor who has just suffered a humiliating sixth adverse finding from the Australian Press Council. I'm a media guy with plenty of journalistic, internet and business experience who could add some value, but the board has done this dreadful no vacancy trick forcing you shareholders to sack the chairman if you want to back me. I won't win because the instos will stick with the status quo but please vote for me anyway to send the board a strong message on these key issues.”

The applause was quite good at the end of that but the voting was done by a poll so there was no way of accurately gauging the support this generated from the floor.

With no-one else wishing to speak, I then got back up to ask Mansell a question about how he finds time to serve on the WAN board when he chairs five companies, three of which are listed, and sits on seven boards in total. He literally is Australia's busiest director and he did not deign to answer this point, instead relying on Eric to deliver the usual “he's a great guy” speech.

After the poll was conducted we moved onto the remuneration report which was uncontroversial, so I took a breather to get ready for general business, which started off with about 10 minutes of bleating from some distributors of The West Australian who sounded like they had a pretty fair case.

One old guy went on for about five minutes about The West Australian's supposedly poxy newspaper competitions, which opened the door for the one gag of the afternoon: “Chairman, I'd also like to raise an issue about a competition – the competition for the board.”

There was some muffled laughter and I then got down to the serious business of pointing out the very low turnout and the failure of Stokes to vote.

THE PAUL ARMSTRONG DEBATE

It was past 4.30pm as another couple of shareholders got up – including one former politician who launched a defence of Paul Armstrong and the paper's combative approach to politicians.

Having been personally manipulated by former Liberal Party power broker Noel Crichton-Browne, who used Crikey to attack critics of Brian Burke, I was suspicious that this bloke might be a Burke acolyte. There have been plenty of whispers over the years that The West Australian under Paul Armstrong has been way too close to Burke.

Indeed, Burke's main factional enemy is former Attorney General now Health Minister Jim McGinty, the man who established the very Corruption and Crime Commission which exposed the nefarious tactics of Brian Burke and Julian Grill earlier this year.

Rather than pillorying Burke, Armstrong has instead been at war with McGinty for much of the past couple of years.

This all came to a head on January 24 this year when the paper splashed with a picture of a woman lying on seats in a hospital waiting room with the huge caption: “How would you feel if this was your grandmother, Jim?”

The story claimed an elderly woman was left waiting for hours for a neurological problems. McGinty later complained to the Press Council claiming the patient was young, only waited 15 minutes and had a serious skin ailment.

McGinty and Premier Alan Carpenter didn't hold back. McGinty later declared that The West Australian was “the nation's most inaccurate and dishonest newspaper” such that “the board of WA News needs to sack the editor.”

Even Carpenter, himself a former journalist, said this about Armstrong in May: “An immature, dishonest, unethical person who should not be in that position. He's an embarrassment to the newspapers. He's an embarrassment to the state of Western Australia.”

Having lived through Jeff Kennett's attacks on various journalists and media outlets in Victoria during the 1990s, I'm the first to admit that the healthiest thing for a democracy is an adversarial relationship between government and the fourth estate.

However, when the CCC report came out a few weeks back, The West Australian trumpeted Burke and Grill as “winners”, whilst The Australian's splash painted a completely different picture and Grill has subsequently been charged.

All of this background sparked my final contribution to the AGM which was highly controversial because it basically went as follows:

“Western Australian has suffered from the fact that no-one buried Brian Burke after the WA Inc scandals of the 1980s. The West Australian's editor and some of the paper's senior journalists are way too close to Burke and the paper has been captured by his forces. The attacks on Burke's chief factional opponent Jim McGinty have been way over the top and this has been bad for WA. As a board, you need to be sensitive about the important role you play in a democracy as guardians of the monopoly newspaper and I don't believe you've done your job in ensuring Brian Burke is eliminated as a corrosive force in this state.”

Armstrong was sitting stony faced in the front row but both Mansell and CEO Ken Steinke came out swinging, rejecting the Burke claims as “offensive and absurd”.

Steinke said he thinks Armstrong “is doing a fine job” and then came up with the remarkable statistic that six adverse Press Council finding in four years isn't a bad batting average and my old paper, The Daily Telegraph, has a much worse record.

Rather than associating me with The Tele, Steinke clearly didn't realise I took the paper to the Press Council last year and lost. Getting adverse findings ain't easy, but Armstrong seems very good at it.

When Armstrong's hospital waiting room Press Council appeal was dismissed, he produced an editorial labelling the decision “bodgie”, claiming the widely respected industry body displayed a “breathtaking indifference to the facts”.

For me, this was when the board should have intervened.

POST-AGM REACTIONS

The reactions after the meeting was very interesting. Peter Mansell came up to say hello just as one shareholder was bleating about how bad the paper was, so the bloke stopped telling me and started moaning to Mansell, who beat a hasty retreat.

About 20 shareholders came up to shake hands and thank me after the meeting but there were two who took a contrary line, one of whom said I was “way out of line” and deserved “a kick up the backside”.

Thankfully, managing director Ken Steinke rescued me from this bloke and we had a five minute chat which must remain confidential.

My gut feel is that the board feels Armstrong has enlivened the paper, which he certainly has done over the past few years, but doesn't want to be seen to bending to the whim of politicians. Indeed, by viciously sledging Armstrong, these Labor politicians are probably entrenching him.

Raising all these issues at the AGM is certainly taking it to a new level but the board won't want to be seen to be bending to my demands either. At the end of the day, Kerry Stokes will be the kingmaker here and it all depends whether he thinks Armstrong is good for business.

With a Rudd Government coming Federally, it perhaps does not make sense to run Australia's most anti-Labor newspaper.

For all the pre-AGM postering, The West Australian actually gave the issues I raised at the Fortescue Metals AGM in Perth on November 8 the best run of any of the papers, but this goodwill did not extend to the WAN AGM coverage when there was no mention of anything I raised, or even the outcome of the contested board poll.

Armstrong will now be an enemy for life, but he's used to people having a go and certainly loves to dish it out.

Indeed, WA Premier Alan Carpenter specifically mentioned my AGM comments in his most recent call for Armstrong to be sacked - partly for being way too close to Brian Burke.