James Hardie giveaway backed in a landslide

By Stephen Mayne
January 14, 2008

A special meeting of shareholder approved the James Hardie compensation deal on February 7, 2007, and this was sent to Crikey subscribers the following day.

We're used to directors getting re-elected with more than 99% but who would have thought a voluntary proposal to give away $1.5 billion of James Hardie shareholders funds to asbestos victims would be endorsed by 99.95% of shares voted.

That's what happened at the James Hardie shareholder meeting in Amsterdam last night, sparking much celebration from ACTU secretary Greg Combet and asbestos campaigner Bernie Bantum.

I told the James Hardie information meeting in Sydney last Thursday that even Gordon Gekko would struggle to vote against the asbestos compensation proposal given the enormous political, media and customer backlash that Hardies faced for trying to walk away from its dying victims in 2003.

And so it was with 276.2 million proxies in favour and just 119,531 against in what was a healthy turnout of about 60% of the shares on issue.

Given it was a secret ballot, you would have thought some heartless hedge funds would have voted against the globally unprecedented proposal, although the independent experts report by Lonergan Edwards was emphatic in its endorsement of the deal.

This was because Hardies faced a punitive legislative response from the heavily union-influenced Labor government in NSW, as this passage from the explanatory memorandum outlines:

On 30 November 2005, the NSW Government introduced a bill into the NSW Parliament known as the James Hardie (Imposition of Corporate Responsibility) Bill. Although the Final Funding Agreement was in fact signed the next day, the introduction of the bill demonstrated that the threat of adverse legislation was both imminent and material. James Hardie is not aware of the contents of the bill, as they were not made public, and the bill was withdrawn after the Final Funding Agreement executed.

They play hard in NSW but James Hardie deserved everything it got. Chairman Meredith Hellicar was trying some heroic spinning on AM this morning in claiming the shift to the Netherlands had nothing to do with dodging liabilities and emphasising that every proven asbestos claim had been paid.

Yes, but she was on the board that in 2003 refused to top up the rapidly diminishing asbestos fund and allowed CEO Peter Macdonald to declare this was now the government's problem.

With the deal done, the next items on the agenda should be a formal move to America, a new chairman and perhaps even a name change.