Latham, CEO payouts, Futuris and Gunns, boards rort elections

2. In defence of Iron Mark's spray



By Stephen Mayne, serial ratter on former colleagues

While many journalists will be urged by their Labor Party contacts to dismiss The Latham Diaries as the ravings of an embittered madman, we shouldn't forget one thing: Mark Latham is making a major contribution to the collective public knowledge of Australian politics.

The contrast between the image projected by Latham and his former colleagues last year with what we are being told now shows how much spin and deception there really is in politics. We were all duped.

As an old spinner in the Kennett Government media unit, I used to operate on the following rule of thumb: If you assume the collective knowledge of the MPs, their staff and senior bureaucrats represented 100% of knowledge about Victorian state politics, how much did the public know? I reckon it's as low as 5%. The state political journalists would collectively have known 10% but they only tell the public about half of what they know, if that.

The 12-strong Kennett media unit would have perhaps known about 30 per cent of what was really happening and then you go up into the advisers, Cabinet and bureaucracy who all collectively knew more than the press secretaries. Is this era of spin, where there are twice as many PR professionals as journalists in Australia, the public is often left in the dark.

Which means that anything that suddenly gives the public greater knowledge about the inner working of key personalities in politics should be welcomed. Sure, it's bad news for the ALP – but it's good news for the public. While many of the insults are gratuitous, we now have a far deeper insight into the federal ALP, and if the ugly disclosures can trigger some reforms, then that would also be a good thing.

Information is power in the modern age, so anything that increases disclosure is to be welcomed, although with Latham there are doubts about the accuracy of some of his claims.

As someone who has burnt plenty of bridges, I know more than most what it's like to upset former friends and colleagues with public disclosures. However, the alternative would have been keeping the public in the dark and sweeping unpleasant revelations under the carpet, all in the name of maintaining some personal allegiances. Staying mates with someone like Terry McCrann would have been to condone his appalling sycophancy when it comes to abusing his editorial responsibilities by blatantly pushing the Murdoch family's commercial interests.

Ratting on your mates is regarded as a sin in Australia, but if your mates have done the wrong thing and the ratting merely comprises a truthful public disclosure of some relevant information, then it should be encouraged.

Yes, Latham is committing the single greatest dummy spit in Australian political history. But you should also remember that he possesses a lot of sensitive information which he is putting into the public domain. There is a strong public interest in this so journalists, who make a living from public disclosure, should welcome The Latham Diaries for what they tell us that we didn't know before.



23. Least justifiable termination payouts to CEOs



By Stephen Mayne

The Commonwealth Bank annual report is just one of hundreds that will reveal increased executive pay over the next few weeks, but this trend for outrageously large golden goodbyes seems to be gathering pace, no matter how well – or poorly – the CEO performed.

Fred Hilmer's $4.5 million "retirement benefit" is completely unjustified at Fairfax, and Roger Corbett's golden farewell is also way over the top at Woolworths.

However, in terms of the least justifiable termination payouts to CEOs, here is our top 12 from the past six years and you should remember that these figures are just for termination or retirement, they don't include super, profits on shares or other accrued entitlements:

1. George Trumbull, AMP, $7.5m
2. Keith Lambert, Southcorp, $4.4m
3. Sir CK Chow, Brambles, $7.7m
4. Frank Cicutto, NAB, $6.5m
5. David Higgins, $6.7m, Lend Lease
6. Dennis Eck, Coles Myer, $4.7m
7. Brian Gilbertson, BHP-Billiton, $10m
8. Peter Macdonald, James Hardie, $8.2m
9. Fred Hilmer, Fairfax, $4.5m
10. Peter Yates, PBL, $6.5m
11. Ted Kunkel, Foster's, $3.4m
12. Paul Anderson, BHP, $3.2m

Sure, someone like Anderson did a reasonable job at BHP, but giving a $3.2 million "termination payment" on top of everything else was impossible to justify. Chris Cuffe's $26.5 million payout from CBA would ordinarily be on such a list but he wasn't the CEO of a publicly listed company. Feedback, corrections or additions to smayne@crikey.com.au.



25. Is Futuris circling Gunns?



By Stephen Mayne, candidate for the Gunns board

Bloomberg and The AFR have now both run rumours that Futuris is contemplating a takeover for Tassie tree-lopping giant Gunns Ltd and it looks like there might be something in it.

Gunns shares tanked from $4 to almost $3 in the six weeks from mid-July to August 31 after a disappointing profit, but turnover has suddenly picked up since then and the stock is back up to $3.28 this morning after a 4.6% spike yesterday.

Gunns shares normally have less than one million change hands each trading day but over the past month, there have been 14 days with turnover of more than 2 million. It looks like someone is accumulating a stake and the entrepreneurial Perth-based Futuris is surely the only potential predator.

Futuris is only capped at $1.45 billion but is trying to build up its timber business. It runs the ITC plantations management business and bought the Neville Smith timber business in Victoria last year, plus a 23.6 per cent stake in Forest Enterprise Australia, and further plantation land. Futuris owns 50.8 per cent of ITC.

Gunns is today capitalised at $1.1 billion but with $300 million in debt, it has an enterprise value of $1.4 billion and any bid would need to be pitched at more than $1.5 billion. The proposed $1 billion-plus pulp mill in the Tamar Valley is causing a lot of consternation for Gunns, so the future of this project would be critical with any Futuris bid. Whilst a recent Citibank report released on 2 September estimated the project would add $1.13 to the value of Gunns, there are considerable risks and the company is intending to rely solely on debt finance.

There aren't really any other potential predators and who would want to buy Gunns given all the political and community angst it causes. Auspine is the minnow of the timber sector with a market cap of just $191 million and Carter Holt Harvey would appear to be out of the game now that New Zealand's richest man Graeme Hart is bidding more than $3 billion for the business.

The Federal Government would not be a disinterested buyer in any Futuris takeover because AWB Ltd, the government-created monopoly wheat exporter, is the largest shareholder in Futuris with 14%, although this is hostile.

Futuris was originally built up by director Alan Newman, who was Robert Holmes a Court's understudy for years. The late Hacca loved tilting at bigger players than himself and also taught Newman about the importance of charm, something the thugs at Gunns haven't got a clue about.

If Futuris did buy Gunns, you could expect a far more conciliatory approach to green groups and other critics, which wouldn't be a bad thing given the cowboy attitude of John Gay's team.




26. How boards rort contested elections



By Stephen Mayne, Australia's most unsuccessful election candidate

Having not run for a public company board since the embarrassment of only getting a pathetic 11.41% at the AMP AGM in May 2003 after almost $10 billion had been lost in the UK, it will be very interesting to see how the three tilts in the forthcoming AGM season are handled.

Gunns, John Fairfax and Macquarie Infrastructure Group are today formally placed on notice about the outrageous election rorting that Crikey has been subjected to during the previous 19 tilts and we look forward to them running free and fair elections this time.

The biggest rort is declaring there is no vacancy on the board when the company's constitution usually allows for between 3 and 15 directors and your average board has nine. Given that most incumbent directors get 99%, the effect of declaring there is a no vacancy makes it statistically impossible to get elected because you have to knock off an incumbent to win. NAB, Fairfax, AMP, ASX, Westfield, CBA, WA News, NRMA and David Jones all pulled this stunt against Crikey.

The second most outrageous rort ties in with the first and it involves a chairman using undirected proxies against the outside candidate, which typically run to about 6% of all votes cast at a corporate AGM. You can't beat an incumbent with 99% when you know the chairman has 6% in his back pocket before the AGM even starts. The only board which clearly declined to use open proxies against Crikey was National Australia Bank in 2000.

This block of votes is gathered by having a postal voting system where reply paid envelopes are sent out with the ballot paper and any shareholder who simply signs the form but doesn't cast a vote on a resolution, is handing their vote to the chairman. There's no box to tick asking whether you want to do this, it is the default mechanism. This would be the equivalent of a government being able to use all blank ballot papers to vote for themselves, just because the voter happened to turn up at the polling booth and drop the ballot paper in the box.

The third major rort comes from censoring your platform which is distributed to shareholders in the notice of meeting. The worst offender in this regard was News Corporation which allowed no information at all, but others such as Westfield, NRMA, CBA, Woolworths, David Jones and Spotless were blatant censors. Makes it a bit hard to win votes when you can't tell shareholders why you are running for the board.

The fourth most popular rort, which ties in with the third, is refusing to supply a copy of their share register or attempting to charge a ridiculous fee to provide a list of the top 200 shareholders when the board has this sort of information all the time.

Only AMP has ever every provided a free list of the top 200 shareholders, removing all the confusing nominee companies to reveal beneficial ownership. The ASX itself were good enough to provide a top 100 in 2001, but apart from that, companies have been very reluctant to provide the information that is par for the course in political elections.

Does anyone else think it's time for the Australian Electoral Commission to take over corporate elections? We'll see whether any progress has been made over the coming few weeks.




27. Old Adelaide spin and connections



By Stephen Mayne

The original source of the Coopers/Lion Nathan email in Crikey on Wednesday is Neal Cameron, operations manager at Miranda Wines, the Griffith winery business established by the Miranda family early last century. The Daily Telegraph first named him in this story last Saturday as the person who wrote the email and urged recipients to pass it on. Neal's email includes the following:

"With the family owned Coopers Brewery being the only remaining significant independent brewery left in Australia, to have it consumed by a corporate like Lion Nathan, turning 145 years of history into just another brand in a long list is an absolute tragedy. Please show your support for Coopers by buying a six-pack this weekend and consuming a beer that has been brewed by the same family for six generations. Either a Coopers Pale Ale or a Coopers Sparkling Ale will show you why this brewery must be saved."

Hang on a minute. Wasn't Miranda Wines taken over by that bigger corporate McGuigan Simeon a couple of years ago? As Operations Manager at Miranda at Griffith, Neal obviously doesn't see any problem with the nasty big corporate consuming years and years of family history at Miranda! No tragedy in that Neal?

Then again, Lion Nathan is controlled by a Japanese multinational brewer Kirin whereas McGuigan Simeon is still largely Australian-owned and, after recent troubles, is only capitalised at $468 million.

Staying with Adelaide spin and connections, those who worry that the departure of Grahame Morris from Jackson Wells Morris will jeopardise its connections with the Howard Government shouldn't be too concerned.

The most recent hiring, Coalition staffer Bob Lawrence, just happens to have been Alexander Downer's brother-in-law since he married Downer's sister Una more than 20 years ago. When you consider that John Howard's former flatmate Michael Baume has also just joined the JWB advisory board, they shouldn't have too much trouble staying close to the powers that be in Canberra.

Copyright © 2022 The Mayne Report. All rights reserved

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