Malcolm Turnbull's Fairfax frolic in 1992
January 29, 2008
This Tony Stephens feature appeared in The SMH the day after the dramatic John Fairfax AGM at the Sydney Opera House on November 25, 1992, where Malcolm Turnbull made his presence felt.
There was something of the shock of the new about yesterday's annual general meeting of John Fairfax Holdings Ltd.
Mr Conrad Black, deputy chairman, talked tough and offered hope for a bright new future.
Mr Malcolm Turnbull, principal individual shareholder, talked tough and warned the board not to put that future at risk.
A shareholder with a smaller stake but an equally loud voice said The Sydney Morning Herald should be read by the leisured classes and not the hoi polloi. It should not be read on buses, trains or in other public places.
And a computer breakdown stopped the counting of votes in the biggest division of the day. The question of whether a $1 million interest-free loan should be made to a senior executive was left unresolved in a shambolic finale at the Sydney Opera House. Last night, the board of directors announced this had been approved by a margin of more than four to one.
"I am deeply sorry about this," said Sir Zelman Cowen, the Fairfax chairman, four hours after the meeting began. "It must be supremely vexing to you all. It is deeply vexing to us."
It vexed Mr Turnbull. When Sir Zelman said the result would be published in Friday's Herald, Mr Turnbull asked whether it would be in the memorial notices.
The meeting was the first Fairfax AGM in five years, since Mr Warwick Fairfax's disastrous attempt to privatise the company and the subsequent receivership.
About 800 shareholders sat in the Concert Hall, drawn by a sense of the company's 160-year history as part of Australia's social fabric, by self-interest and the promise of dividends down the track, and by all the turbulence that has torn at the company during the past five years.
In the end, the biggest question asked was the question that has been asked of so many boards in these deeply recessed times: Were the fees and entitlements paid to directors and senior executives fair and reasonable?
With former deputy chairman Mr John B. Fairfax sitting in the stalls, Sir Zelman spoke of "the great contribution to Australian life" of the Fairfax family.
He predicted an increase in profitability and said: "We believe the company can achieve new heights of achievement."
The first question of substance came from Professor Bob Walker, deputy chairman of the Australian Shareholders' Association, who asked why the Fairfax board had inhibited free and open discussion of the matters before it and whether options were issued validly to Mr Stephen Mulholland, the chief executive.
Professor Walker won applause for saying the company's communication with shareholders had been "outrageously poor".
Mr Black said the options were issued validly and the company needed someone like Mr Mulholland to lead it out of the humiliating and disgraceful condition of receivership.
He regretted the "sloppy drafting" of the resolution dealing with senior executive options - the resolution was withdrawn after legal action - but was appalled by any suggestion that the board had acted deviously.
He reminded shareholders that the board included a former Governor-General(Sir Zelman), a former Chief Justice of NSW (Sir Laurence Street) and several distinguished businessmen.
On options for executives and staff, Mr Mulholland used the word"incentivisation".
It recalled the former Leader of the Federal Opposition, Mr John Howard, and his short-lived "incentivation".
A shareholder said the word was horrible. Mr Black agreed.
Mr Black promised dividends, albeit unfranked, for this financial year, pointing out that share prices had risen 30 per cent since May.
He said if Mr Mulholland could make "a million or two" during the next few years it would be something over which shareholders should rejoice.
Other shareholders raised the questions of the ordination of women ministers, Masonic lodges, the use of Japanese cars at Fairfax and payments to Lady Fairfax.
Mr Dan Colson, a director, said Lady Fairfax was seeking close to $8 million but lawyers felt her claim would fail in the courts.
Mr Turnbull - "Is that Malcolm?" asked a shareholder. "God bless his soul"- said he was heartened by Mr Black's saying he was chastened by the sloppy drafting but accused the directors of failing shareholders.
He did not object to Mr Mulholland becoming rich but said the granting of options reflected poorly on the board's business acumen.
One should not place too much store on the loudness of applause but this was the Opera House, where such things matter, and Mr Turnbull won the biggest acclamation of the day.
He was rivalled only by Mr Black's ringing defence of foreign interests in Fairfax.
When Sir Zelman thought he might have to rule Mr Turnbull out of order, Mr Turnbull accused the chairman of trying to gag him. Sir Zelman denied the charge.
Mr Black hit back. Fairfax had been degraded, dishonoured, humiliated and rent asunder. The new management had relaunched a proud company.
Mr Turnbull had taken $6.3 million in fees from Fairfax, enough to make him a significant shareholder.
Mr Black thought Mr Turnbull an "astute man in many ways". He took his critic's presence as a shareholder as a vote of confidence.
On the matter of the interest-free $1 million home loan to Mr Michael Hoy, one shareholder said a look at the Herald's real estate pages would show that$1 million would provide only a modest house in Sydney.
Shareholders at the meeting, however, voted by show of hand against the loan.
Votes then went to the computer, to take in the institutions and proxies.
The computer broke down. The meeting broke up. The paper came out again today.
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