Failed Axa board tilt in 2001

January 14, 2008

This Tim Boreham article appeared in The Australian after the AXA Asia Pacific AGM on February 15, 2001.

AXA Asia Pacific shareholders yesterday vented their ire at the company's plans to increase the pay pool for directors and cut boardroom numbers by three directors.

Axa chairman Rick Allert was forced to call a poll after investors voted down the motion at the company's annual meeting in Melbourne. While the proposal was comfortably defeated by a huge margin with proxies, a number of shareholders questioned the appropriateness of the increase, given the company's indifferent share price performance.

The maximum collective remuneration for directors has increased from $900,000 to $1.2 million per annum. Australian Shareholders Association representative Stan Mather said this amounted to a 33.3 per cent increase against an increase last year in shareholder dividends of half a cent to 9.5c.

``The nexus between directors' rewards and shareholder rewards is just not there,'' Mr Mather said.

Mr Allert said the proposal was included ``as a matter of convenience'' to avoid the need to vote on increases at later annual meetings.

``In hindsight, we could have reduced the amount and gone back in a year or two,'' he said.

Axa also faced a boardroom challenge from corporate activist Stephen Mayne, nominated for one of three vacant board positions. His challenge was also easily defeated, by 11.8 million votes to 1.23 billion.

Mr Mayne criticised Axa's decision to support a controversial investment by mineral sands producer Ticor. Axa holds 48 per cent of Ticor, which is spending $230 million to buy a South African project from its parent, Iscor.

Describing the investment as a ``dreadful deal'', Mr Mayne said Axa's predecessor, National Mutual, had also struck problems with involvement in Ticor.

Mr Allert said the investment decision was made only after ``extensive investigations'' and that the deal was approved by 95 per cent of Ticor shareholders.

``We have had trouble with Ticor over the last few years but I don't think we have actually lost any money,'' he said.

Meanwhile, chief executive Les Owen said measures to reduce income insurance losses – a key problem area – were starting to show effects.

But, he said, these improved underwriting and claims management practices, as well as ``selective'' premium increases, would decrease revenues in that division by as much as 30 per cent.

``There's no point writing business on terms which lead to losses,'' he said.

Mr Owen also revealed Axa and its joint venture partner Minmetals had applied for a wider licence to sell life insurance in China beyond its current Shanghai concession.

Axa shares fell 6c to $2.65.