October 26, 2016
Dear Mayne Report readers,
Greetings for the first time since our last bumper email edition on October 7. If you'd rather not receive these occasional email newsletters, click here to unsubscribe.
It has been 2 years since we last caught up with Rupert Murdoch at one of his annual meetings, so, with your help, we'd like to reconnect at Fox Studios in Los Angeles on November 10, in order to produce more coverage and debate like this.
After Rupert split his AGMs weeks apart in New York and Los Angeles last year, we decided it wasn't worth the effort to be restricted to just 2 questions at one meeting by a dictatorial and undemocratic 85-year-old executive chairman.
Fortuitously, this year we've got the 21st Century Fox AGM at Fox Studios on November 10 in the morning, followed by the News Corp AGM at 2pm in the afternoon. That's two for the price of one! What will happen in between? Will shareholders be carted back to the non-descript nearby parking lot for a separate frisk and registration before taking the bus back in to the Zanuck Theatre or will they put on a tour of the studios?
This is too good an opportunity to pass up, especially considering the US elections are two days earlier on November 8 and Rupert's Fox News has been instrumental in the rise and rise of noxious Donald Trump.
We'll be keen to ask questions about Trump, plus how a sexual predator like Roger Ailes was able to run amok for years whilst running Fox News.
And we'll also have questions on the outrageous $US606 million in salaries and bonuses that the Murdoch men have extracted from public companies over the past 18 years, as was documented in this recent Crikey story. This included a record $120 million in 2015-16, which will trigger big remuneration protest votes.
However, the better half won't let me spend $3000 travelling State-side to take on Rupert so I need some crowd-sourcing support quickly, as time is tight.
Donate to help hold Rupert Murdoch to account
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Does Bill Leak and News Corp believe in free speech?
We're hearing plenty at the moment from the News Corp dancing bears about Bill Leak's offensive cartoon racially stereo-typing Indigenous Australians. Of course a privileged white billionaire should be able to employ dozens of aggressive ranters like Andrew Bolt to belittle, humiliate, insult and intimidate minorities.
The Herald Sun had a big editorial today slamming section 18C and Media Watch last night covered the on-going campaign the Murdoch empire is making on this so-called free speech question.
If all these News Corp journalists were serious about defending free speech they would be equally critical of Rupert Murdoch for his completely dictatorial AGMs where shareholders are limited to just 2 questions on the entire agenda, microphones are cut off, security is deployed and shareholders are put through a ridiculous registration rigmarole which has dwindled numbers to barely a handful in recent years.
And all that is on top of the dual class voting gerrymander and poison pills which undemocratically entrench the head of the world's most powerful family who insists on accountability for others whilst rorting democracy and suppressing free speech at his own public company.
Under Australian law, shareholders must be given a reasonable opportunity to comment and ask questions on each item of business on the agenda. There are no such requirements for Delaware-registered companies and Rupert exploits this to the max.
I'm looking forward to Alan Jones, Ray Hadley and Andrew Bolt donating to help fund our free speech campaign. If you can't criticise western media moguls, what hope is there for free speech?
Here's a snapshot of the history of our encounters with Rupert at AGMs since he redomiciled from Adelaide to Delaware in 2004.
21st Century Fox and News Corp in 2014
First visit to Fox Studios for phone hacking extravaganza in 2011
Third visit to New York in 2010
Rupert apologises for Glenn Milne assault in 2007
Taking on Rupert in New York in 2005
Herald Sun ignores transparency achievements at City of Melbourne
I sent this email to Herald Sun editor Damon Johnston on October 6:
Welcome back from New York.
Presume you'll be publishing an editorial endorsing Robert Doyle in the coming days (postal ballots are out this week so you'll need to be quick), but was hoping you could inject some nuance.
Robert works best when he hasn't got the numbers and the combination of the two Greens and I have been a good moderating influence these past 4 years.
I've basically been an embedded journalist and have worked very hard to revolutionise disclosure, which has helped all media, including the Herald Sun.
4 years ago, 40% of our items were dealt with in confidential and we weren't even revealing the QVM financials or publishing a Citywide annual report. There was no public questions, no audio of council meetings, no executive pay disclosure, no lease register etc etc
The full list of reforms are available here.
I'll also be publishing this email edition of The Mayne Report at about 9am this morning which has plenty more interesting material.
Not looking for a specific endorsement but just something that encourages voters to deny Robert a majority so that the rare cross-party collegiality at City of Melbourne continues for another 4 years.
City of Melbourne Councillor
So, what happened? Well, we got an uncritical editorial backing Robert Doyle citing a car-centric approach with no mention of majority control, followed by a ridiculous beat-up attacking the Greens last week and then this editorial on Monday noting in the 3rd paragraph that the governance reformer might be defeated. (See below for the scenarios at play on the result, but nothing is clear yet!)
Okay Damon, if that's how you want to play things it's back to LA for some Rupert AGM action, donations permitting.
Around the grounds of Victoria council elections
With media coverage dwindling and the Victorian Electoral Commission providing very little information, we've taken on the role of Antony Green for the Victorian council election, predicting outcomes, talking to scrutineers and profiling the 76 contests across the state. It's been a hell of a big job and impacted negatively on the City of Melbourne outcome where I barely campaigned and spent no money.
The key place to go for council analysis and information is the @maynereport Twitter handle along with this comprehensive 10,000-word call of the card, which has links to the current councillors, the lists of candidates and the results, where they are available, plus some commentary on what should happen and what is happening.
We need more talent sorting in local government, particularly given Labor, Liberal and the Nationals largely leave the field vacant, rather than using local government as a way to develop rising stars and remain connected to their communities.
With the Greens set to secure about 30 officially endorsed councillor positions across Victoria, we are also working up this list tracking councillors who are party member: List of council election winners who are members of political parties
Why do the Greens vote in a bloc on council?
We'll also be adding former members, but it looks like Labor will still have the numbers, albeit narrowly. Labor councillors in Victoria are generally not bound to vote together, although they do risk expulsion if voting against a Labor member for mayor or not preferencing fellow Labor candidates ahead of rivals.
The Greens, by way of comparison, have a very rigid group voting approach. At City of Melbourne, Greens councillors Cathy Oke and Rohan Leppert voted together on 100% of occasions over the past 4 years, right down to the smallest discretionary spend to buy a table at a fundraiser in confidential session.
They are both great councillors, but would be even better if they weren't joined at the hip and were instead free to vote with their conscience on occasions. This will no doubt come up as a problem now that we will have multiple Greens in places like Port Phillip, Darebin and Moreland for the coming 4 years. What are the dead-lock breaking provisions when people don't agree?
Municipal Association of Victoria CEO Rob Spence was predicting on ABC television last night that the major parties will be jolted into action and start endorsing candidates at the next council elections in 2020 to head off the Green insurgency.
I agree, they should do this. However, once elected, all endorsed big party councillors should be free to vote as they like in order to avoid excessive factionalism, group voting and party politics polluting local government.
Finally, check out our list tracking more than 75 comeback councillors, very few of whom appear likely to succeed.
City of Melbourne update - Doyle returned, probably with a majority
The big news from City of Melbourne is that Robert Doyle has been comfortably returned for a third term as Lord Mayor with a primary vote of more than 45% and appears to have secured his coveted majority after polling 40.8% of the first 51,156 above the line votes counted in the separate councillor election. If this holds, it will be enough to secure 4 quotas in addition to himself and the new deputy lord mayor Arron Wood.
However, the counting so far excludes the 8.5% of below the line votes which only broke 17% Team Doyle's way in the 2012 election, so the final primary vote is likely to finish up in the high 30s.
The VEC sent these figures through to candidates at 7.30am on Sunday morning, but for some reason nothing has been loaded onto the VEC website.
Based on the 51,156 above the line votes counted in the councillor election, the primaries were as follows:
Team Doyle: 20,886 votes (40.8%)
The Greens: 9231 votes (18.04%
Ken Ong ticket: 4506 votes (8.8%)
Phil Cleary ticket: 4261 votes (8.32%)
Morgan-Watts: 2644 votes (5.17%)
Stephen Mayne: 2467 votes (4.82%)
Robin Matthews (ALP): 1301 votes (2.54%)
Animal Justice: 1161 votes (2.26%)
Richard Foster: 1114 votes (2.17%)
Marcus Fielding: 952 votes (1.86%)
Indigenous Voice: 919 votes: (1.8%)
Light on the Hill (ALP): 662 votes (1.29%)
Melburnian Voice: 544 votes (1.06%)
Heritage Agenda (ALP): 508 votes (1%)
The City of Melbourne councillor election is like the old Senate contests with group voting tickets that deliver whole chunks of preferences from party to party, based on backroom deals.
Who could be bothered filling in 44 boxes below the line, so about 92.5% of electors in this contest just went with a 1 above the line.
How the preferences will flow in Melbourne
Assuming the final proportions remained the same (and they won't as below the lines votes will work against Team Doyle, but late votes from offshore may counter-act that), this is how the eliminations would flow:
The Team Doyle surplus of 0.8% would be first out and they prop up Labor's Robin Matthews to 3.3% but then come to me when and if she is eliminated.
Heritage Agenda's 1% goes straight to Gary Morgan's running mate Jackie Watts lifting the incumbent "voice of the resident objector" to 6.17%, still well below the 9.54% primary vote she received in 2012.
Melburnian Voice will be third out and they, thankfully for our campaign, go to Indigenous Voice lifting them to 2.8%.
Labor's Light on the Hill then delivers its 1.29% to the Robin Matthews ALP ticket, lifting them to 4.6%.
Marcus Fielding had the benefit of the donkey vote and his 1.86% comes our way (without any negotiation or reciprocal backroom deal) lifting my total to about 6.6%. If I get back it will be all about Marcus, who stood on a platform of integrity and liked this transparency reform program over the past 4 years!
Cr Richard Foster then goes out and delivers a further 2.17% to former room mate Jackie Watts, lifting her to 8.3%.
Animal Justice is next out, electing the second Green Cathy Oke with its 2.26% vote and possibly then sending a small surplus on to Indigenous Voice, before it later flows to the Robin Matthews ticket and then onto me.
Next out is probably Brooke Wandin from Indigenous Voice and her 1.8% primary comes to me, assuming that the Greens are out of the race. The 1% she collected from Melburnian Voice would then go to Jackie Watts and the Greens surplus would go Robin Matthews.
That would leave the fight for the 10% quota to secure the final three spots ranked as follows:
Jackie Watts: 9.3%
Ken Ong ticket: 8.8%
Stephen Mayne: 8.4%
Phil Cleary ticket: 8.32%
Robin Matthews (ALP): 5.6%
When Robin Matthews goes out, I would pick up some Green surplus, the 1.3% from Light on the Hill goes to Team Doyle and if that gets Susan Riley over the line courtesy of a 40% vote, a touch of Doyle surplus could also be coming my way. The 2.54% primary from Robin Matthews goes to Cleary's man Michael Caiafa, a QVM trader who won't be able to vote on anything to do with the market for the next 4 years due to a conflict of interest. The surplus from Cleary's election would go to Jackie Watts but might not be enough to get her elected.
Then it would be a question of who goes out between Jackie Watts, myself and Phillip Liu on Ken Ong's ticket and we won't know the answer to that until the weekend. This will be the key exclusion that determines the final outcome.
I've been in these situations before, particularly in the 2010 state election when balance of power in the Victorian upper house was in play for a few days, before slipping away.
We genuinely won't know the outcome until the button is pushed at 5pm next Saturday and all these preference distributions will no doubt be influenced by the circa 20,000 votes still to be counted, including 7,000 postals which arrived yesterday.
There was 4804 below the line votes opened on Saturday which have not yet been counted. In 2012, I had the highest proportion of below the line votes at 17% followed by 10% for Richard Foster, 9% for the Greens, 8.15% for Ken Ong and just 4.2% for Team Doyle. This is encouraging.
It terms of the percentage share of below the line votes in 2012, the Greens just shaded Team Doyle with a touch over 17%, I was on almost 12% while Jackie Watts and Ken Ong were both around the same.
It also suggests the Team Doyle vote may drift lower over the course of the week, but Susan Riley will still almost certainly be elected on the back of preferences from the Labor-aligned Light on the Hill ticket which will deliver them 1.3% once Robin Matthews has been eliminated. However, they could still be left stranded on 39.9%, although it is unlikely.
There's also a credible theory that the Ong and Team Doyle votes will strengthen slightly over the coming week as votes trickle in from offshore property owners.
In 2012, there was 63,664 formal votes. The roll has grown by 22% in 4 years to 133,000 and all the figures above are based on these 51,156 above the line votes counted on Saturday.
The turnout should be up this year given the extra 5 days allowed for postal votes to trickle in until noon on Friday. About 7000 arrived in the mail on Monday. Throw in the 22% expansion in the roll and we should be looking at about 75,000 formal votes.
With only 51,194 votes counted so far, it is way too early to be making any definitive calls except to say that Robert Doyle is Lord Mayor for the next 4 years and he will have at least 5 votes out of 11. The Greens will have 2.
After 8 years in local government, I'm relaxed either way about winning or losing. However, our local government connection is likely to continue come what may as the better half, Paula Piccinini, looks a very good prospect to be elected in Manningham's Heide ward. Go Paula! She's the successful member of the family!
ASA having a good AGM season
Any retail investor worth their salt should be a member of the Australian Shareholders' Association, which is having a strong AGM season in 2016, as can seen from this long list of recent media mentions.
ASA has been on the money with remuneration report strikes against the likes of CSL and AGL. We were also arguing for the departure of Slaters chairman John Skippen from Super Retail before it actually happened yesterday.
I'll be representing ASA at 3 AGMs in Sydney on Thursday: Cardno, Whitehaven Coal and APA Group.
Cardno has been a shocker in the way they've treated retail shareholders in two capital raisings over the past year.
Whitehaven Coal is less contentious from a financial point of view as the share price has more than doubled in the past few weeks.
And with APA Group we are saying that we'll only vote in favour of remuneration committee chair John Fletcher if the board publically agrees to put its remuneration report to the vote at next year's AGM. The history of how they are able to avoid this is explained in this voting intentions report.
Finally, the ASA website has an interesting package of research lists, some of which are member-only behind the paywall. Here are a few favourites:
Longest serving ASX 200 directors
New CEOs who embrace write-offs
Measuring independent chairs for "skin in the game"
Capped SPPs which were then expanded
How retail investors do worse with separate bookbuilds
The 100 most important remuneration protest votes
30-plus examples of where retail investors gathered 100 signatures
And if you want to see all the research plus the full archive of AGM reports and voting recommendations since 2009, you really should become a member. Click here.
Fighting the pokies - will Team Doyle be conflicted?
The Alliance for Gambling Reform is cranking up the media around the Maurice Blackburn-backed case against Aristocrat Leisure and the pokies in the Federal Court.
City of Melbourne is spending $25,000 this year as a tier one member of the Alliance and if Robert Doyle wins a majority on the next council, I'm sure he'll be under pressure to pull that funding in 2016-17.
Alas, the Team Doyle campaign accepted a $20,000 donation from the Australian Hotels Association and $10,000 from Crown Resorts director Harold Mitchell. In my opinion this will see all Team Doyle councillors conflicted out on poker machine issues and matters related to Crown for the next 5 years.
With officer support, this would hopefully see ongoing support for the Alliance continue pressuring the AFL and its constituent clubs into reducing their reliance on pokies addicts to sustain their industry.
Finally, listen to this campaign speech from the 2008 Woolworths AGM for a solid example of straight-talking pokies activism which has seemingly had little impact on our biggest pokies operators.
And try watching this 30 second anti-pokies ad made by Paul Bendat a few years ago featuring our daughter Alice, who was 6 at the time:
Keeping an eye on the directors club
Slater and Gordon chairman John Skippen quit the Super Retail board yesterday after only 49 million of the 197 million shares on issues were voted in favour of his re-election by way of proxy.
Skippen has done nothing wrong at Super Retail which has performed well during his 8 year stint on the board.
So, if Skippen has been ousted because of his record as chairman of Slaters and Gordon, why is he still leading that particular board? Probably because no-one else is prepared to step up and take the job.
In other director news, the arguably over-worked Gordon Cairns was comfortably re-elected at Origin Energy despite the company trading at a $5 billion discount to book value.
Former ABC Learning chairman David Ryan is seeking another 3 years term at Lend Lease next month. We've said plenty about him in the past, including this piece on Transurban and this Crikey piece. It should be noted that Ryan's decision to resist those earlier Transurban take over bids was inspired, in hindsight.
Finally, here are links to some interesting lists related to directors:
Surprising lack of protest votes against non-independent executive chairs
ASX-listed chairs rushed into the job from outside
Tracking tenure and gender balance of AFL club boards
Companies which tried to make it harder for outsiders to run for boards
What happens to directors in takeovers
Fighting for a fairer deal in capital raisings for retail shareholders
It has been a sometimes lonely battle but here are links to 9 years worth of articles about how retail investors get ripped off by Australia's capital raising system. There has been very little regulatory reform over that period, which means we're still getting lots of placement approval resolutions this AGM season, plus dubious under-writing arrangements by the likes of Gerry Harvey at Harvey Norman and Crescent Capital at Cardno, both of which squeezed out and diluted retail investors.
The Mayne Report loves lists and here are a few favourites
We love a good list at The Mayne Report and here are a few favourites we've worked up over the years:
18 years of remuneration excesses by the Murdoch family
150 local govt councillors who made it into Parliament
The great honorary doctorates list
Prominent Australians who have sued for defamation
Claimed assets of companies at time of collapse
The great Australian cheque-book journalism list
The Mayne Report Rich List (needs updating)
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