Media backs 2003 AMP tilt

By Stephen Mayne
January 8, 2008

The media won't usually go out of its way to do us any favours but the coverage ahead of the 2003 AMP board tilt was the best we'd ever received. Shame it didn't translate into more than 11.83% of the vote.

The media has a love-hate relationship with Crikey, with more journalists hating us than loving us. Being a media critic makes it very difficult to then get a good run in the media as an activist running a campaign.

To run a good AMP campaign you need media coverage but many journalists have their noses out of joint from things we've said about them wearing our media watchdog hat. Therefore, they don't want to do us any favours no matter what the merits of the campaign which, in the case of AMP, are very strong.

In this context it is interesting to analyse exactly what the media has said about Crikey's current tilt for the AMP board. Some of this is from recent sealed section emails to subscribers and some is additional material we have pulled in for his analysis.

The appearance as a candidate on the notice of meeting in early April received a couple of one line mentions but there was no interest on what the platform would be and no-one called at the time.

Crikey then sent out a detailed press release on Sunday April 6, explaining the platform and the fact that we'd be running a negative campaign against audit committee chairman Richard Grellman. It received no coverage and you can view that press release and original 10-point platform here.

Investor Weekly opens the batting

The first exposure came in the trade magazine Investor Weekly which is widely read by fund managers. While the war on Iraq is still wreaking havoc with the world markets, even we were surprised to see the magazine lead with our AMP campaign story.

When Crikey's edition arrived at the bunker, who's smiling face was beaming from the front cover - yours truly. Splashing with a flattering cover blurb - "dressed to impress" - accompanied by a pic taken on our wedding day that was provided for a headshot.

Reporter Martin Lawrence highlighted our push for a full and independent inquiry into why AMP's UK investments went so badly wrong.

Lawrence wrote that there are whispers "Mayne may do surprisingly well" but he also quoted me saying "I have a snowflakes chance in hell of getting up". That was before the shock capital raising and $2.6 billion write-off on May 1.

However, Lawrence also mentioned the point about AMP becoming "the new Perpetual" in terms of speaking out on corporate governance and he explained the voting rorts with open proxies and no board vacancies.

Weekend Australian first mainstream coverage

The Weekend Australian carried a piece previewing the mini-AGM season on April 15 and it included these lines about Crikey's AMP tilt:

"The companies about to hold annual general meetings are those that use the calendar year as their accounting period.

Among them are insurance and financial services giant AMP, gas producers Woodside and Santos, French insurer Axa and troubled pokie maker Aristocrat.

Mayne intends casting some light on the recent poor performance of AMP.

He is lobbying institutional investors of AMP to support his bid to replace director Richard Grellman at the AGM on May 15. As chairman of the audit committee, he is culpable for the disastrous performance of AMP's UK insurance operations, Mayne charges.

The demutualisation of AMP in June 1998 gave many Australians their first experience of share ownership, and they have watched as the share price has fallen from $11.80 at issue to below $8.

Mayne's platform for election resembles his wider aims of fostering an engaged shareholder community, but by his own description he faces huge challenges. ``Its a self-perpetuating system dominated by a well connected old-boys network and an apathetic shareholder base. The bottom line is there's no culture of shareholder pressure in Australia.''

Courier Mail buys into the argument

Courier Mail reporter Guy Mosel wrote a piece about the mini-AGM season on April 21 and concluded it as follows:

"Shareholder activist Stephen Mayne is also keenly interested in the AMP meeting – so much so that he has nominated himself for one of seven vacant board positions.

Mr Mayne says he is running an election platform that AMP agree to hold an independent inquiry into how the company lost $7 billion in the UK and that its fund management arm pledge to become a more ``activist investor''.

``At the moment Perpetual is probably the most prominent large fund manager in the country in terms of speaking out.

``AMP, because they are independent, should stand up and speak as opposed to doing all of their negotiations and complaining behind closed doors.''

The same piece also ran in the Daily Telegraph and the Herald Sun, although naturally the references to Crikey were excised from the Hun's article.

Tony Harris and the Fin Review

Former NSW Auditor General turned Fin Review columnist Tony Harris hopped into the issue in his April 29 column:

"Because large shareholders support boards, and because boards have little patience for iconoclasts, there is scant prospect that Mayne will be elected," Harris wrote.

Taking on board next month's AGM, Harris noted "AMP's original notice to shareholders said there were six candidates: five directors seeking reappointment and a newcomer, Stephen Mayne, known for his shareholder activism and his critique of company boards."

"All could have been elected. This must have rung alarm bells. Why else did the AMP board - after finalising the notice - enlarge the board by adding two more directors, even though their imminent reappointment would be subject to shareholder approval?"

Crikey on Lateline and Today

It wasn't until after the AMP's bombshell $2.6 billion write down and $2 billion capital raising announcement on May 1 that the media really started to focus on what is a huge story.

On Monday May 5 there was an interview with Tony Jones on Lateline. The transcript is here.

And this is the Steve Letts piece which led into the Lateline interview which included some grabs from Crikey and can be viewed here.

The following morning there was a brief appearance with Steve Liebmann on Channel Nine's The Today Show and then it was time for the Terry and Crikey show to begin.

Terry McCrann backs Crikey's tilt

On Tuesday May 6 in the News Ltd tabloids, Terry McCrann called for the resignation of Richard Grellman, chairman of AMP's audit committee for the past three years and target of Crikey's AMP board tilt.

McCrann's article is not online but here are a few choice quotes:

"Richard Grellman cannot continue as a director of AMP. He would be well advised to resign immediately."

"... shareholders should sack him by acclamation."

"At the moment there is only one alternative to the board's carefully crafted "in club" ticket: corporate activist Stephen Mayne. Failing others, shareholders should arguably elect him in specific alternative to Grellman. At the very least, they cannot sensibly re-elect Grellman."

Considering we had recently fallen out with McCrann, this came as quite a surprise and suggests that McCrann has that rare journalistic ability to put personal enmity aside and simply call a situation as he sees it.

McCrann and Chanticleer come out simultaneously

Terry McCrann came out firing again on May 7 in the News Ltd tabloids calling on AMP Chairman Peter Willcox to postpone the AGM for a month in order to let the nominations for directors be re-opened, or to announce he will not vote open proxies on the election of directors.

Here is some of what McCrann had to say:

"It would be fundamentally unacceptable for Willcox to use his open proxies to ensure Grellman's survival, and Mayne's defeat."

"In my judgment, they should vote now for Mayne. And at the very least force Willcox into the embarrassing position of having to use the proxies to defeat him and keep Grellman."

"[Mohl and Yates should ] also give [Wilcox] enough breathing space to accommodate Mayne. The activist should join his first board."

Meanwhile over at the Fin Review, John Durie wrote:

"Lord Killearn and Richard Grellman, were the finance and audit committee chiefs respectively. This meant they were directly responsible for overseeing the debacle that has unfolded and on these grounds alone should be voted out by shareholders."

"This would leave the somewhat extraordinary position of potentially giving corporate gadfly Stephen Mayne an armchair ride to a seat at he board of Australia's 20th biggest company."

"As much as Mayne may revel at the chance of election and with due respect to the excellent role he preforms as a gadfly, the mere possibility that he could land on the board should give him cause to reflect on his competence for the job."

"One could respectfully suggest, if he seriously thinks he is competent, it is a sad reflection on his own level of thinking about the role of boards and directors."

McCrann repeats the dose in the Weekend Oz

With the exception of Terry McCrann in the Weekend Oz, none of the Saturday papers really focused on the only issue that remains up in the air at the AMP AGM now that the executive pay resolutions have been withdrawn. That is the question of the contested board election and whether the Australian market follows several other jurisdictions and appoints its first activist to a major public company board.

If Richard Grellman loses, he would also be the first establishment directors tossed from a major public company board when backed by his other directors. Mark Leibler is the only one who has ever gone close at Coles Myer last year and that was because he was associated with Solly Lew who the rest of the directors were opposing.

McCrann's Oz column on page 6 of business carried the headline "Crikey! AMP must embrace Mayne line."

This is the third time in a week McCrann has called for Richard Grellman and Lord Killearn to be voted off the board - a move that would leave the board with no corporate memory beyond six months once Sir Malcolm Bates (the ill-fated Pearl chairman) and Ian Renard bail out in August.

In spite of the headline, McCrann doesn't endorse the Crikey platform but he does say the following:

"Voting against Grellman and Killearn does not oblige a shareholder to vote for the only outside candidate, AGM activist Stephen Mayne. The shareholders are perfectly entitled to leave some seats unfilled. But again, in these extraordinary - and increasingly outrageous - circumstances, shareholders should elect Mayne."

He goes on: "It would be in the interests of shareholders to send Mayne into the cosy AMP boardroom. If for no other reason, they can't send anyone else."

And he finishes with a little bit of a sting: "It (electing Mayne) would rather neatly call Mayne's bluff. For the first time, he would see the pressure on, and responsibilities of, a public company director from the inside."

Two recommendations on Sunday morning television

Crikey was at the florist on Mother's Day when McCrann gave us his fourth plug during his weekly spot on Business Sunday.

Two hours later it was the turn of Inside Business host Alan Kohler to editorialise in favour of a vote for Crikey and against Grellman and Killearn - although he did say I was a bad dresser.

This is precisely what Kohler said:

"On Thursday AMP shareholders will get a chance to express their feelings about losing $16 billion in a year and $4 billion in the past week.

"It must be said that few though are likely to be grateful, as Marcus Padley suggested today, that, at least for a while, they had a chance to sell for more than the company was worth. No. They're going to complain long and loud on Thursday and then do the only concrete thing they can, vote off the two directors standing for re-election - Richard Grellman and Lord Killearn.

"Grellman especially should go, as chairman of the audit committee that has presided over a shocking series of write-downs. But the situation puts chairman Peter Willcox in a very interesting position because he will hold a lot of undirected proxies, to vote as he sees fit.

"The only alternative candidate is Stephen Mayne, shareholder activist and website operator. He has put up an election platform that has mostly been adopted by the company already - including the demerger of the UK and Australian businesses.

"The only substantial thing left on it is an independent inquiry into what happened in the UK, which would probably be a waste of time and money. And Stephen Mayne has said he is only a temporary change agent and won't stay on the board after the demerger.

"Peter Willcox may well have the casting vote between Grellman and Mayne and, although his heart would probably say Grellman, he should listen to the shareholders who turn up on Thursday. If that means having a tall, badly-dressed nuisance on the board for six months, then so be it. It might do the company good and it might also give a few other cosy boardrooms a fright as well."


Both gentlemen recommended institutions take this course and also frowned upon the notion of chairman Peter Willcox using open proxies to save Grellman. Crikey has been discriminated against many times with the use of open proxies as is explained here.

Amazingly, AMP turn out fell after $10bn UK loss Crikey remains absolutely gob-smacked after AMP company secretary Prue Milne told us on Friday that less shareholders bothered to vote at last Thursday's AGM than in 2002.

The figures were as follows:

In 2002 45,887 shareholders voted 316 million shares representing 27.7 per cent of the 1.16 billion shares on issue at the time.

In 2003 45,123 shareholders voted 377 million shares representing 26.9 per cent of the 1.402 billion shares on issue.

So why was there such apathy given all the publicity and disasters? For starters, the proxy forms were sent out well before the bombshell announcement on May 1 so some shareholders might have simply misplaced it.

Maybe there was a sense of powerlessness and people took less of an interest because the value of their shareholding had fallen by two-thirds since the previous AGM. Perhaps they just threw the paperwork out in disgust.

AMP will have 900,000 Australian and New Zealand shareholders to offer the upcoming $5000 share purchase plan to as it tries to raise a further $750 million, $500 million of which is underwritten by UBS Warburg.

However, given the amazing apathy from mums and dads, AMP really should move to dramatically reduce the size and expense of its register by taking out those shareholders with an unmarketable parcel.

Given that Mayne, Axa and BHP Steel have all done this over the past two tears, it would not surprise to see AMP follow the same course. Afterall, Peter Willcox chairs Mayne and AMP.
They really should try to reduce the register to about 600,000 by the time of the demerger to save on the admin of reducing both sets of registers in the future.

Think of it in these terms. The punter who received 200 shares worth $4600 after the first day's trade in 1998 will next year find themselves holding two piece of paper with one worth $400 and another worth just $600.

When you reduce the value of something by 75 per cent and then break it in two, you literally create hundreds of thousands of unmarketable parcels of shares.

AMP is already Australia's biggest ever manufacturer of unmarketable share parcels and they are set to double the number. Rather than doing this, AMP should move smartly to take this people out with a generous offer.

If you don't want to be taken out, take up the $5000 AMP share offer as Crikey will do if there is enough credit card capacity in a couple of weeks.