February 2, 2010
Dear Mayne Reporters,
ANZ has today unveiled some sweeping changes to its board but even one of Melbourne's clubbiest boards has managed to hire an Allco Finance Group director as its new chairman, whilst also recruiting another director, Peter Hay, who is a doyen of the Melbourne Club.
The Australian's John Durie wrote the following about Allco-turned-Qantas director Barbara Ward today: "Then it's all eyes on to Barbara Ward taking her experience as head of the Multiplex audit committee and Allco Finance board to Qantas and facing a tough vote with Risk Metrics to oppose her election."
So, the biggest proxy adviser is out there targeting Allco directors, yet ANZ has turned around and recruited another one, Sir Rod Eddington, as its new chairman. Oh dear.
And who would ever have thought we'd see a Big Four bank appoint a chairman associated with a vehicle which had just cost them up to $100 million, if you can believe this Richard Gluyas story in The Australian on Saturday.
The ANZ handover move can't happen straight away, of course, because Sir Rod is already the busiest man in corporate Australia, as was explained in this Mayne Report video.
This means Sir Rod won't face election to the ANZ board until December next year, but it also means shareholders can lodge a protest against plodding chairman Charles Goode when he does a John Howard and seeks another term at the AGM in Brisbane on December 18 despite being 70 and having served for 17 years.
Will the Murdoch press challenge Sir Rod's record?
The Murdoch journalists are in a difficult position on this one because Sir Rod sits on the News Corp board, although I suspect he'll be bailing out as "lead independent director" to free up some time for ANZ.
I gave Sir Rod a serve at the 2006 Rio Tinto AGM and the 2005 News Corp AGM in New York because he lent his good reputation to Rupert Murdoch's notorious poison pill adventures to fend off John Malone.
Sir Rod is believed to have the view that he couldn't have worked for Rupert Murdoch in his wilder younger days, but having served News Corp since 1999, he almost certainly won't be around to see Rupert off.
As the man Rupert recruited to run Ansett before that horrible hospital pass to Air New Zealand in 2000, it was always strange that the governance experts claimed a former News Corp executive could somehow be regarded as "independent", let alone the "lead independent director".
Now that he has fully settled back into a packed Melbourne life, it doesn't make sense that he make the six trips to New York each year for News Corp board meetings.
Board hopping from JP Morgan to ANZ
Clearly, Sir Rod will also have to surrender the chairmanship of JP Morgan Australasia, which means he'll no longer be lobbying bankers such as CBA CEO Ralph Norris to roll over Centro's $2 billion exposure to the Wall Street giant.
Incidentally, that phone call to Norris will make for interesting fodder at tomorrow's CommBank AGM given that CBA was also the biggest investor in Centro. Who was Norris speaking for when Sir Rod called? The bank owed $1 billion or the superannuation clients who'd dropped more than $500 million. It's a classic example of why banks shouldn't be in funds management.
Cosy directors' club and Labor connections
The whole inter-related system of directorships and connections is one of the big weaknesses in corporate Australia and Sir Rod's ascension to the ANZ throne will just be another classic example.
As the chairman of Infrastructure Australia, Sir Rod is advocating a massive government investment program and as chairman of ANZ he'll want as much of that privately financed as possible.
The Australian banking cartel delivers our citizens the most expensive banking system in the world, so it is being smart replacing a fundraising mate of John Howard as ANZ chairman with the business figure regarded by many as being closest to Kevin Rudd.
One top 10 director mate of Sir Rod's told me earlier this year: "Sir Rod's done a great job keeping Rudd in line."
If Federal Labor fails to take on the banking cartel after the credit crisis has passed, then Sir Rod will have done his job for the bank cartel.
Charles Goode does a John Howard
Out-going ANZ chairman Charles Goode is an old mate of John Howard's and a prominent Liberal Party fundraiser and they share the unfortunate character trait of hanging around too long. After getting an exemption from the ANZ 15 year rule - something which sees Margaret Jackson and Jerry Ellis both bailing out over the next 12 months - look at how Charlie has explained the timetable for the handover:
“I am delighted that Sir Rod Eddington has agreed to join the Board and succeed me as Chairman. He will join the Board early in the second half of 2009 when he has relinquished some of his current commitments and will assume the Chair after a transition period at which time I will retire from the Board. Sir Rod is one of Australia's most respected business leaders with extensive international business experience and involvement with government.”
Doesn't that sound similar to John Howard's performance on The 7.30 Report last September when he said this to Kerry O'Brien:
If the Australian people are good enough and kind enough to re-elect me again, there are a lot of things I want to do, and I would want to approach those things with enormous energy, but I would expect well into my term, and after those things have been implemented and bedded down, I would probably, certainly form the view well into my term that it would make sense for me to retire and in those circumstances, I would expect, although it would be a matter for the Party to determine, that Peter would take over.
Time is up now, Charlie!
Just give us a date and go, Charlie. ANZ has been the worst performed bank in recent times and you should be showing some accountability for the Opes Prime fiasco, not to mention the complete mishandling of succession planning.
Personally, I rate Sir Rod after chatting with him after a legal forum which produced this highly critical account. But he does have some skeletons in the closet and Qantas chairman Leigh Clifford probably would have been a better choice given that he has spent several years on the Barclays board.
Finally, check out this Mayne Report account of the Allco meeting last year when Sir Rod fronted the shareholders as an independent director backing the disastrous Rubicon proposal and even referred to his old airline mate David Coe as "Coe-ee". Michael West had a terrific piece in the Fairfax papers on all this today, pointing out that almost $1 billion was lost in Rubicon whilst up to $200 million in fees was extracted.
Fairfax AGM tomorrow
Subscribers will get an account of tomorrow's Fairfax Media AGM which kicks off at 10.30am at Crown. Former Federal Communications Minister Chris Schacht has been on the blower and will be making the trip over from Adelaide, so this should guarantee we have enough debate to start the day at the 10am CommBank AGM and then head over to Fairfax from about 11am.
Fairfax chairman Ron Walker will be in for an interesting time after presiding over an acquisition binge followed by a share price collapse. BRW's 2008 Rich List reckons Big Ron is worth $427 million. Wonder if that valuation will be credible by tomorrow night?
Did billionaire Kerry Stokes obey the rules calling security?
I've been in touch with the ASX about the extraordinary behaviour of Kerry Stokes at the Seven Network AGM and spokesman Matthew Gibbs has been back as follows this afternoon:
On your Seven Network query:
As suspected, the conduct of shareholder meetings is outside of ASX's jurisdiction. ASX listing rules require the prepared announcements delivered at the meeting to also be announced to the market as a whole via the Company Announcements Platform, but not the extemporaneous comments at the meeting. The web casting or pod casting of AGMs is not compulsory. Consequently, there is no ASX listing rule basis under which we could compel a company to make available a written transcript, or audio or video recording of an AGM.
The Corporations Act allows the chair of such meetings considerable authority to conduct the meeting as he or she sees fit, within reason (check this with ASIC given it oversees the Corps Act). As you know, the chair must allow a reasonable opportunity for members at the meeting to ask questions or make comments - but what is a 'reasonable opportunity' will depend upon the circumstances of the meeting.
There are no guidelines that ASX is aware of (and certainly no ASX rules) about companies being allowed to confiscate recording devices. It is not uncommon for constitutions of companies to provide specifically that people with recording devices can be asked to leave or have the device turned off or confiscated. However, action in relation to recording devices is (probably) one of the powers at the disposal of the meeting's chair.
ACTU research paper on corporate governance
The senior leadership team at Telstra have for a number of years been running with the same game plan. It involves bullying, abusing and litigating all those in its orbit - the Government, the ACCC, competitors, employees and their democratically elected representatives in the unions. As a strategy, it hasn't been an overt success - particularly in terms of the regulatory environment in which Telstra operates.
The ACTU reckons this combative and litigious approach, in relation to the government's proposed National Broadband Network, is placing shareholder value (and employee jobs) at risk. The "bet the farm" tactic of Telstra certainly looks pretty risky and unnecessary.
Analysts have estimated a possible $11.4 billion decline in market value for the company in the event of a poor outcome on the NBN, although the shares have been holding up pretty well of late. Even if Telstra were to participate in the project, the risks associated with the regulatory environment are significant - and the conduct of the senior leadership team is exacerbating the risks.
There have been a couple of interesting recent developments:
1) Telstra unions last week successfully applied to undertake a ballot to engage in industrial action against the company because of its refusal to negotiate a new collective agreement.
2) Telstra unions and the Terria consortium have begun discussions over the content of a constructive relationship agreement which will deliver industrial certainty in the event that the consortium is successful in its bid to construct the NBN.
The ACTU report on all this stuff can be accessed here. The Telstra AGM on November 21 in Melbourne will be an interesting affair because the ACTU has got the numbers together to produce a 1000 word s249P statement. This means the union message has been distributed to all of Telstra's 1 million-plus shareholders.
That's all for now.
Do ya best, Stephen Mayne
BHP Post-script: The whisper is out that we might be doing much better than expected in the proxies for the BHP-Billiton board tilt. There's talk of many billions of dollars worth in favour of our plan to ditch the Rio takeover bid and ease long-term chairman Don Argus out.
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