Dear 16,000+ Mayne Report readers,
The AGM season and Victorian council elections are both peaking right now so there's plenty going on to warrant another missive 6 days after last Sunday's bumper edition
. If you're not interested, click here
to unsubscribe.News Corp AGM
It wasn't exactly in accord with ASA policy of being ready 14 days before the AGM, but this comprehensive News Corp Voting Intentions report
was finally loaded up onto the ASA website at about 3am on Tuesday morning, 25 hours before Rupert fronted shareholders in Los Angeles.
It took about three hours to put together so do take a look
. The data tracking the $360 million in salary paid to the Murdoch men over the past 13 years has never been assembled before.
Paul Barry attended the AGM and filed for Crikey, but declined my invitation to be ASA's proxy on the basis that he was an independent journalist.
Yes, and ASA is proudly independent too. Paul's Crikey piece
lamented the lack of tough questions at the AGM. Indeed Paul, you flew all the way from France to LA and then declined an opportunity to put the world's most powerful bloke through his paces. His AGM report could have been just as easily written off the webcast.
The News Corp voting results were very interesting with clear majority support from the neutral shareholders for an independent chair and an end to the outrageous voting gerrymander.
I've been spreading this message far and wide. The ABC website The Drum
published this 1200 word analysis
yesterday afternoon. And check out this interview
on ABC News Breakfast on the morning after the AGM, along with this interview
with Ticky Fullerton on The Business
the night before.Woolies and the Get-Up pokies EGM
Woolworths released the notice of meeting
for its pokies EGM yesterday and was immediately embroiled in a slanging match with Get-Up! over some of its claims in the material which is being sent to 417,000 shareholders. Here is what Get-Up said:
Activist group getup has claimed success in holding Woolworths to account over its potentially misleading statement to its 500,000 shareholders and the ASX earlier today Woolworths released a letter from Chairman James Strong which falsely represented the evidence in support of one dollar maximum bets and 120 an hour maximum losses for poker machines.
Mr Strong was required to send the letter because GetUp members, who are shareholders of Woolworths, have forced the company to hold an extraordinary general meeting to vote on reforms that would reduce the impact of their poker machines on problem gamblers.
In the original staetment sent to the ASX at 12:30pm Woolworths Chairman the James Strong said:
"There is no reliable evidence that the measures proposed in the resolution will have any impact on problem gambling in Australia."
Then at 4:00pm Woolworths released a revised statement to shareholders and the ASX which says:
"There is no conclusive evidence that the measures proposed in the resolution will have any impact on problem gambling in Australia."
"The fact of the matter is that there is reliable evidence from the Federal Governments Productivity Commission that the resolution being put to Woolworths shareholders is the effective and the best way to minimise the damage caused to our communities by Woolworths poker machines," said GetUp National Director Sam McLean.
"We call out Woolworths for their pokies porkies which could have been misleading to shareholders and they've had to change their spin."
"This means Woolworths is admitting that there is strong evidence that the company could reduce the harm it is doing to communities. Failing to act now would be grossly irresponsible."
Interestingly, a delegation from Woolworths fronted a group of institutional investors at a forum put on by Citi over the past few days.
Citi analysts Elaine Prior and Craig Woolford produced a 6 page report which is now circulating amongst investors, some of whom were clearly unimpressed with the arguments presented by CFO Tom Pockett, external relations boss Andrew Hall and Bruce Mathieson junior, who has taken over from his tough-as-nails billionaire father to be CEO of the Woolies pokies division.
The Citi report notes there was a "lengthy Q&A session" and concludes with the following observation: "We sense that some meeting participants found WOW's message confusing. On the one hand, the company downplayed the importance of pokies and gaming revenues, while focusing on the benefits of retail liquor sales and the broader merits of hotels. On the other hand, WOW emphasized the potential damage to shareholder value should the Get-Up measures be implemented. Since gaming EBIT is not disclosed, it is difficult to weigh up the issues."
In other words, Woolworths remains in the bunker on pokies, denying evidence and refusing to disclose relevant information. The decision by out-going chair James Strong to commence the EGM at 8.30am is another example of the company's attitude. Whilst the mainstream media didn't give the Woolworths arguments a big run today, the activist group is going all out on social media attempting to whip up a consumer frenzy similar to what engulfed Alan Jones.
It was noteworthy that The AFR
extensively covered Woolworths today but didn't mention the pokies once. Surely that was a coincidence and nothing to do with the much-needed revenue it pocketed from the glossy Dan Murphys magazine that was inserted in today's paper.Battling it out with Billabong
The press have been reporting every ebb and flow of ASA's debate with Billabong and its founder Gordan Merchant on the question of whether he should be voted off the board at next Wednesday's AGM on the Gold Coast.
It's been very interesting to see how seriously corporate Australia takes the Australian Shareholders' Association.
Two sets of lawyers - Minter Ellison representing founder Gordan Merchant and his board pal Collette Paul and then Allens representing Billabong International Ltd - sent formal letters through challenging our recommendation and commentary.
I sent the following letter email back to them on Monday this week:
Thank you for your correspondence to the ASA on behalf of Gordan Merchant, Colette Paull and Billabong International Ltd.
I only became aware of the letter from Minters on reading the Saturday newspapers after a copy of it was obviously provided to at least 2 journalists. The Allens letter was forwarded to me in Melbourne by ASA CEO Vas Kolesnikoff this afternoon.
After assessing the situation, including the events of Friday, I amended the published commentary supporting our against recommendation on Saturday afternoon to the following and also locked access to the report to non-members:
In his position as the founder and largest shareholder he effectively prevented the Board of Directors engaging over an indicative offer of $3.30 per share from TPG Capital in February 2012. In a letter from his lawyers to the board, Mr Merchant claimed that an offer of $3 per share "vastly under-valued" Billabong and expressed opposition to TPG being granted access to commence due diligence even if the offer price was lifted to $4 per share. Despite all his insights from being a director, Mr Merchant mistakenly believed a $4 offer "would still represent a discount to the true value of Billabong shares". Eight months later Billabong has announced another profit warning, conducted an emergency 6-for-7 rights issue at $1.02 and seen its share price plunge to a low of 82c on October 12 after TPG terminated negotiations over a potential revised offer pitched at $1.45 per share. The decision not to realistically engage with TPG potentially cost Mr Merchant and all shareholders dearly as the business continued to deteriorate through 2012. In his position as a Director, he should have known the difficult financial position the company was in and acted accordingly. His failure to do so warrants shareholders voting him off the board at the 2012 AGM.
ASA is entitled to make voting recommendations and won't be changing its opposition to the re-election of Mr Merchant and Ms Paull. This is a judgment call that we've made. I don't believe it will have a material effect on the outcome.
However, in spite of the constraints of running a large team of volunteer monitors with relatively few resources, ASA does strive to be factually correct in our commentary – hence the amendments published on Saturday and reproduced above. We also support the notion of including the views of issuers in our published material.
The amendments on Saturday were done before seeing the detail of your letters, so I would like to invite any feedback or suggested changes on the revised material before hopefully coming up with a final form of words that we all agree is an acceptable expression of our opinion accompanied by accurate facts and terminology.
I'm of the view that the above version is close to something you'll find acceptable, but will await your replies with interest.
ASA Policy and Engagement Co-ordinator
We heard back from Gordan Merchant's lawyers earlier today and Billabong itself suggested we amend the commentary to the following:AGAINSTMr Merchant is the founder, a current director and largest shareholder of Billabong. In summary, recent relevant events relating to change of control proposals are:· On 20 February 2012, Billabong announced that the Board was considering a non-binding indicative proposal from TPG to acquire all of the shares for $3.00 per share. · On 27 February, Billabong announced that the Board, together with its advisers, had reviewed the TPG proposal in detail and concluded that the indicative price of $3.00 per share did not reflect the fundamental value of BBG in the context of a change of control at that time. The Company also announced that it was advised by Mr Merchant that he would not accept an offer of $3.00 per share for his shares and that in his view the price was significantly below the underlying value of the Company. · On 28 February 2012, Billabong announced that the Board and its advisers had had further discussions with TPG and that TPG had indicated that it would be prepared to increase the indicative price under its proposal from $3.00 per share to $3.30 per share to facilitate due diligence. The Board considered this revised proposal and unanimously determined that that this revised price did not reflect the fundamental value of BBG in the context of a change of control at that time. · In connection with BBG's announcement of 28 February 2012, for the purpose of ensuring full disclosure to the market, BBG attached a letter from the lawyers of Mr Merchant and Ms Paull advising that Mr Merchant and Ms Paull (as shareholders) 'do not support Billabong taking any steps to assist or facilitate a proposal by TPG Capital, including allowing TPG Capital to commence due diligence on Billabong, even if the price TPG Capital offered was $4.00 per share' which Mr Merchant and Ms Paull 'consider would still represent a discount on the true value of Billabong shares'. Since February 2012, the Company has announced a strategic capital structure review, the Nixon joint venture, the TPG proposals, Sally Pitkin as a new member of the Board and Launa Inman as the new Managing Director, a trading update and capital raising, and the formal process to evaluate change of control proposals. Most recently, on October 12, the Company announced that TPG had withdrawn its proposal which had an indicative price of $1.45 per share. The ASA's view is that shareholders should vote him off the board at the 2012 AGM.
We thank the lawyers for their contribution and will resolve on the final wording later today. However, the against recommendation stands and we're expecting quite a protest at the AGM next Wednesday.
Billabong shares are trading at 84c this morning, a long way south of the $14.92 that Gordan Merchant pocketed when he offloaded $200 million worth of shares to institutions a few years back. Some of those same institutions are expected to vote against his re-election next week and it all goes back to this letter
that his lawyers sent to the board in February making it absolutely clear that private equity firm TPG should not be engaged with. Cochlear AGM one for the ages
The 2012 Cochlear AGM last Tuesday was well worth the trip to Sydney.
Not since the extraordinary 2008 Toll Holdings AGM (click here
for a reminder) has an AGM been so important for publicly revealing a remuneration controversy and then ensuring that the full board and management are in the discussion which is then followed up with substantial media coverage to ensure the key lessons are learnt.
Crikey ran this 1000 word piece
summarising what happened and telling the full story. Since then I've even had senior analysts from global investment banks making contact wanting to understand the issue. Investors want to be able to trust a board and management with their money. Trust in Cochlear has declined this week and they had better work hard to change things next year.
It might be a good start for the normally un-communicative company to establish an investor relations division. Chairman Rick Holliday-Smith was left to do all the lobbying of institutions by himself, but by then it was too late.
He also told the AGM that some investors were confused. There was no confusion, they knew precisely what they were voting against, as is explained here.A frenzy of activity at the Australian Shareholders' Association
Boy, there's plenty going on at the ASA. AGM season is a huge endeavour with more than 100 volunteers across the country fanning out to AGMs.
Unlike my old tactic of just turning up and working out a few questions whilst listening to the formal addresses, ASA deeply engages with companies right throughout the process.
For instance, check out this excellent Voting Intentions report
prepared by our Perpetual monitor Helen Mair. Whilst impressed with the 40% cut in board fees, Helen is opposing the remuneration report because there hasn't been enough reform in the management pay structures. That said, we are openly recommending against the spill as we acknowledge the progress made and can't see any justification for spilling the board.
We're always on the look out for new members and monitors. For instance, does anyone fancy attending the Slater & Gordan or Macquarie Radio AGMs in November. Both will be fascinating given recent events.
The ASA derives its strength from the hard work of volunteers and the contributions of members. However, we're not like the Australian Institute of Company Directors with its 186 staff and $46 million in annual revenues. Therefore, if you'd like to assist, click on the image below and sign up for just $115 a year or $125 if you'd prefer the hard copy of our monthly magazine, Equity.Is it time to reform the corporate voting system?
The Australian Council of Superannuation Investors has today released a path-finding study
into Australia's corporate voting system.
The ASA has long been a supporter of the show of hands at AGMs so we'd be unlikely to embrace the recommended move to compulsory polls.
However, there are a number of other sensible reforms proposed in an obviously flawed system.
For instance, why on earth can't Peter Cox appoint scrutineers to observe Fairfax Media's agents counting the votes at next week's contested board election?
And in this age of electronic commerce, how can there still be no full audit trail of voting involving ASX listed companies?
Well done to ACSI, a range of institutional investors and proxy adviser Ownership Matters for commissioning the study, now let the debate begin as Bill Shorten contemplates adding voting reform to his lengthening list of financial services changes in Australia over the past couple of years.Manningham update: mayor Gough blatantly misleads netballers
Further to the discussion in last Sunday's edition
, there has been more dodgy campaigning by Manningham's normally reasonable mayor Geoff Gough. The following email was sent out by the Donvale Netball Club on Tuesday:
From: Donvale Netball Club <firstname.lastname@example.org>Date: 16 October 2012 9:11:31 AM AEDT
Subject: Templestowe Netball Home Sell OffDear Donvale Netball Club families and members,On 25 September, 2012 the Manningham Council approved the sale of the land currently occupied by the Doncaster & Districts Netball Association (our netball association, and also the venue at which our club trains). This is in connection with the Templestowe Village Draft Structure Plan.The minutes of the Council Meeting (http://www.manningham.vic.gov.au/council/council_meetings/agendas_and_minutes.html) state that the sell-off would be “dependent upon the relocation of the existing basketball and netball facilities.”Currently, THERE IS NO PLANNED RELOCATION by the Council, so therefore it would appear that we could simply be left without a home AT ANY TIME, or at best, offered sub-standard facilities that would fail to cater for City of Manningham netball needs. The Mayor, Councilor Geoff Gough, visited the courts on Saturday, and advised that there is no land available that would be able to replace our current structure, and that the entire land space would be sold off with no retention for any public usage.The only way that we can express our dissatisfaction to the council is to email/write/ring every Manningham Councilor, whose contact details can be found through www.manningham.vic.gov.au, and we urge you to contact them immediately to let them know that the Manningham netball community cares about its future not just for today's young people, but tomorrow's as well. A Leader Newspaper reporter will be at training 4.30pm (Tuesday 16 October, 2012), as they plan to run a featured article. If you are available to be present, we would welcome your input!Netball is part of a way of life for many of our members and their families, with physical exercise, social interaction, skills development and leadership training. Once the council sells the land, it is gone forever, and IF WE DO NOT ACT NOW, it just may take our netball with it.Kind regards,
Donvale Netball Club Inc. Committee
After slamming the antics of Cr Meg Downie for the past 4 years, the mayor then posed for a photo with her and a few completely misinformed and misled netball players last Tuesday.
Of course, the whole presentation of the facts is utter garbage. I've driven much of the push to relocate the netball facilities based on a gender equity argument that it is sexist for council to continue to make girls play netball outdoor on cold hard concrete when men are provided with indoor basketball facilities. But if we are going to remain debt free after building a new $18 million highball facility at Mullum Mullum Reserve with 5 indoor courts and 4 outdoor, it will require a partial realisation of the current outdoor netball courts which used to comprise my old primary school before Jeff Kennett shut it down in 1993-94.
Rather than flogging the entire block to developers, the Templestowe Village Structure Plan specifically identifies a large proportion which will be retained as public open space. Similarly, I'll continue campaigning for any development of the site to include community facilities such as a new library and a kindergarten, which would respect the educational heritage of the land.
The Bulleen Boomers, with its 3000 plus playing members, are strongly behind the proposed Mullum Mullum Reserve development, partly because it would also deliver a show court for its WNBL team. Geoff Gough is a Bulleen local who has done very little to assist the Bulleen Boomers over his 15 years on council. Maybe this explains why, after 3 amazing seasons, Liz Cambage has gone to play in China this season. She's sick of training at the sub-standard council-owned facilities at Sheahans Rd in Bulleen and playing matches at the Veneto Club, a local pokies venue. Below is a photo your 196cm correspondent, Big Liz and little Alice Mayne after a bastketball clinic at Sheahans Rd 3 years ago. How to vote in Koonung ward
We provided a detailed assessment
of who Manningham residents should vote for in last week's edition but omitted to cover the Koonung ward, which has been the source of most of our problems over the past 4 years.
Former Fitzroy mayor Mike Zafiropoulos and SBS general manager looks like the best option. I also like fellow Greek and strong soccer advocate George Neofytou.
Former Manningham mayor Ron Kitchingman, with his calm demeanor and long experience, also deserves support and town planner Stephen O'Brien looks like the best representative for those residents who are concerned about excessive development around the $1.57 billion Westfield Doncaster, now the 5th most valuable shopping centre in Australia with about 15 million visitors a year.
Deputy mayor Jennifer Yang is also likely to get back but I've got my doubts as she continues to try and satisfy everyone who gets in her ear.
For instance, she badly let down her mayor Geoff Gough 2 months ago when she failed to back either him or the council officers on the proposal to build a $6 million water recycling plant in a council park near Westfield. This was a path-finding sustainability proposal which deserved support but the local squeaky wheels got to Jennifer and she collapsed, leaving the mayor high and dry.
Unlike the mayor's ridiculous carry on about saving public open space from development at Templestowe Village, 2 months ago he was strongly pushing what the residents dubbed a "sewerage factory" in a public park.
From the member edition archiveThe Mayne Report
goes to more than 16,000 people but if you're a relatively new reader, here are some links to some of the more interesting email editions sent out over the past three years.Murdoch special, media inquiry, pokies, Manningham, Zara, secretive councillors, Vodafone and then some
Thursday, September 15, 2011Bumper August edition: Bolt, Gillard, pokies, Murdoch, Gunns, unions, ASA, Manningham and Woolies
Tuesday, August 30, 2011Elected to ASA board, pokies, Rio, Santos, RHG, Hartigan, Manningham, capital raisings and Rich List
Thursday, May 19, 2011Council super slug, rate rises, Woodside AGM, lost $1000 bet, pokies article and then some
Wednesday, April 27, 2011Rio, Santos and ASA board tilts, councillor misconduct, David Clarke, Woolies, pokies, Rich List, capital raisings and Murdoch
Tuesday, April 19, 2011Mark McInnes, Hanson, Boomers, Manningham, MAV elections, defamation, expense claims and conflicts of interest
Friday, March 25, 2011Bumper March monthly edition: sued, Rio, Packer, MAV, Cornwall, Rich List, Westfield, AGMs and much more
Monday, March 7, 2011Mayne family news - happy birthday to Philip
Happy 8th birthday to Philip Mayne today. Due to poor diary planning, I'm in Colac speaking on corporate governance tonight but we had a lovely meal at his favourite pizza joint last night and he was very excited on opening up his Skylanders present this morning.
Laura, our eldest, turned 11 in August and Alice is 10 next February. It's a wonderful age with the kids all happily attending the same local primary school together and doing plenty of extra activities courtesy of not being overwhelmed by homework.
They all even enjoy handing out how to vote cards on election day, so the next question is when will they attend their first AGM?
If we can't find a few more ASA volunteers to cover these 108 companies on a second strike, it may well happen sometime before the AGM season wraps up at the end of November.
That's all for now. Best be off as have got to load a pile of great stuff onto the ASA website before the school pick-up and road trip to Colac.
Do ya best, Stephen Mayne
* The Mayne Report
is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.
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