Rebel shareholder forces boards to take stock

It's a pity in some ways that professional dissident shareholder Stephen Mayne missed out on winning a board position at last week's annual meeting of West Australian Newspapers Holdings Limited.

To most in corporate Australia, Mayne is a pain in the derriere, but his platform of encouraging shareholder activism is a laudable one. Goodness knows what big Mayne will do if he actually gets elected somewhere, but on the way to that auspicious day he and his Crikey.com website are doing much to redirect the shareholder activism debate in Australia.

On the way out is the blunt attack on directors' salaries – although there are some doozeys out there this year – and in is a new focus on issues of performance, inaction and lack of timely disclosure.

Mayne is also a strident critic of Australian fund managers who, he argues, are lazy and inactive. So far this year, Mayne has stood for election to such boards as AMP, the Commonwealth Bank and the Australian Stock Exchange. Alas, he has been without success – so far.

But the time is coming for many companies when a Stephen Mayne will get elected to the board as all types of shareholders try to push companies – companies they own – down a different path. What Mayne is doing is expressing the concerns of many shareholders who are worried as to where the next plank of growth is coming for their companies. And he's articulating issues that shareholders delight in bitching about privately but rarely have the guts to raise publicly.

The board of AGL got a fright in Sydney the other week when a director nominee running on a ticket of abolishing a 5 per cent shareholding limit almost got up – with substantial institutional support. The same shareholder enthusiasm will ultimately kill the 5 per cent rule.

The real platform of the Mayne crusade, however, is that despite the wake-up call major investing institutions received earlier this year, many are still operating in dreamland.

Just as company directors have had a comedown from the years when high inflation delivered their growth, so too the big Australian institutions are now finding themselves under international competitive pressures to perform.

There is truly global competition in capital management and some great Aussie icons in the game are finding their once-compliant clients are demanding more in terms of returns and governance. Which comes back to Mayne's key point – that institutions are generally too reluctant to confront boards of directors with whom they are unhappy, and generally unwilling to tip out poor performers. But that may be changing, and quickly.

Institutions are now having to work harder on their investments, especially managing existing positions where they are battling recalcitrant boards with deeply entrenched views on their own capabilities.

As custodians of other people's money, they are facing unprecedented performance demands that don't include rubber-stamping nonsense served up by boards of companies in which they hold investments.

Perception being reality, the days of the cosy self-assessment for major boards are surely nearing an end.

That's good news for Stephen Mayne and his crikey candidates. And it's good news for the Australian capital markets.

Copyright © 2022 The Mayne Report. All rights reserved

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