ASX AGM transcript from 2000

July 9, 2008

Here is a transcript of the relevent exchanges at the 2000 ASX AGM.

STEPHEN MAYNE: Chairman, Stephen Mayne, I'm a candidate for the Board today, I'll deal with that when we get to that resolution. I'm actually a proxy holder for my wife Paula Piccinini and just have a couple of quick questions. The chief executive talked about the importance of getting access for investors. Now I actually ran for the AMP Board earlier this year and when I wanted to find out the results of the vote I had to pay $7.50 to the Stock Exchange to find out how many votes I got.

Now I would have thought something like that is a pretty fundamental market integrity issue and should be provided for free as part of the ASX role as providing the market, and I guess I've just got this philosophical concern with the Stock Exchange being a profit making body and selling information which really should be for free.

So I note that you've now gone to 20 minute delays on your web site, I have to pay money indirect to the ASX to get live prices and also on your website you've only got announcements going back one year now. Now surely in the interests of a fully informed market it would be better to have for free 10 years of stock exchange announcements. So if you're doing research on a company, if you're an investor, you can go back and see what they've done over the last 10 years.

It just seems to me that your profiting too much and the philosophy is to profit on really basic information that should be available for a free market. So I guess speaking from the perspective of a customer of the ASX, I was wondering if there's any chance that this could be reviewed to provide a better informed market going forward?

CHAIRMAN, MAURICE NEWMAN: Well first of all the market is fully informed. The information is available on our web site free of charge. If you've paid to receive the information you sought then it must have been because you requested a hard copy, this is not a profit making venture of ASX, it is simply a cost recovery where we charge for the cost of providing information. Could I also point out that ASX is not the only, or the sole source of that information. That information would have been available to you through the AMP, and information is generally available without going into that specific detail, through brokers and a number of other sources if you choose to access them free of charge.

So it is not a money making venture as you point out, it is simply a cost recovery which we think under the circumstances is reasonable otherwise the ASX would be simply a service provider to all and sundry and we'd spend half of our time just providing information for people who could have access to the information from another source, but because we were providing it free of charge we would have everybody monopolising our time, and we need to be mindful of the fact that this can be an expensive exercise which will be to the detriment of our shareholders. And I don't think that seeking cost recovery, which I might say may be less than cost recovery if you get down to it, is an unreasonable thing for us to do.

STEPHEN MAYNE: Okay, just one other question. In relation to the lifting of the shareholder limit from 5% to 15%, I guess one of the key functions of the ASX is to provide timely disclosures to the market and you are effectively policing that with other companies. I read in the press that somehow it was announced out of Canberra that the shareholder limit was to be lifted from 5% to 15% before it was announced to the Stock Exchange, and that the share price spiked and there was some 15 or 20 minute period where the market was uninformed, there was some information coming out of Canberra but the ASX hadn't been informed. It seems to me it's a little bit unfortunate that, given that we are effectively the regulator on this, that we can't seem to get our own house together on these sorts of announcements. Can you just explain what actually happened here and how it came to pass that this occurred?

MAURICE NEWMAN: Well we have no control over what comes out of Canberra, Mr Mayne, and the information was released to journalists, the media in Canberra, but was not made available to ASX until some delay and so it's not a question I think of us getting our house in order, or our act together, whatever term you used, it's really a question of Canberra recognising that certain information when it is released is potentially price sensitive and at least making that information available to ASX at least simultaneously with making it available generally to the media, or even more preferably making it available to us ahead of making it available to the media, but I don't think you can hold us responsible for information which comes out of the Minister's office but is not communicated directly to ASX.

RICHARD HUMPHRY: Chairman too, that I think Mr Mayne indicated that we were the regulator, we are not the regulator. In the case of ourselves, the Australian Securities Investment Commission is the regulator and so the information when it came, was brought to our notice we immediately put a halt on our own trading, so we intervened in a process which theoretically required the permission of ASIC to do it. So we took all steps to protect the market that we could in the circumstances, and that's been endorsed by ASIC and we have already written seeking that there be certain arrangements puts in place for future announcements that might be made from time to time by Ministers.

MAURICE NEWMAN: Could we now please hear from the additional candidate Mr Stephen Mayne.

STEPHEN MAYNE: Chairman thanks for the opportunity. My background is I run a couple of web sites, one's called, one's called and the overriding goal of these web sites is to try and create a greater culture of shareholder pressure in Australia. It seems to be one of the things in my view after 10 years going to annual meetings and 11 years as a business journalist is that there isn't this culture of pressure. So one of the things that I'm doing is standing for a few boards to try and apply some pressure where it might be needed.

So for instance any company which is still paying John Laws or Allan Jones in Cash for Comment, I've taken a view that this is a bad thing and therefore stand for their board on an anti-Cash for Comment platform, just to try and bring some pressure that they stop doing it. Same with funds management companies. If big institutions stood up at meetings and asked questions, informed questions, there'd be a much better level of debate and accountability and pressure in Australia. So any big fund that has an annual meeting, I'll stand for their board and say, you should be more activist and a vote for me is telling you a message that you should become more activist.

Same goes with AGL. We ran a candidate for the AGL Board earlier this week and the platform was, or earlier last week, the platform was they should remove the 5% shareholder limit because those limits are basically a bad thing and they allow slack boards to keep going because no one can take them over. It was a terrific result and the institutions sent them a message by voting for 58% for our candidate, which was good.

So I have to say that I'm certainly not expecting to win today. I know I'll come last by the length the straight and actually don't want to win, but I want to make a few points about the ASX as to how they can function better for the Australian market overall.

I've got a view that they've got a pretty fundamental conflict of interest being, I know they don't use the word regulator, but being regulator and also being a money making body, and I think we've had the sentiment coming out today from some people here that they are trying to profit too much from basic things like providing information to the market.

I'll just give you a couple of examples of why I think the figures bear out, that they are pretty much a rapacious monopoly that in many regards is gouging its customers. Now when the AMP listed on the market they were forced to pay a $2 million listing fee to the ASX. Now where on earth is cost recovery there with a $2 million fee? Similarly with Telstra, they had to pay $1 million each time. Now the costs would be, you know tens of thousands I would imagine and I think when I trade a share, I've probably traded 300 shares over the years, have owned about 100 stocks, every time I've got to give $5 to the ASX as a trading fee. My guess would be that the costs to the ASX would be less than $1 and I think this key statistic bears out the fact that they are a monopoly which is gouging their customers.

In 1995, if you'd taken out a membership to the ASX it would have cost you $25,000. That shareholding today is worth about $1 million. So in other words it's been a 40 fold investment return for the lucky 606 members initially. Now where has that come from? Where has this amazing 40-fold return come from? It's come from the customers. It's come from people like me paying $5 a throw, it's come from people like the AMP paying $2 million to list.

Now the other point I want to make is that I think that they've got a conflict in terms of being the regulator. There's a couple of good examples here is Computershare at the moment is putting up a resolution whereby they're making their constitution the toughest of any company in Australia for external boards to run. So if you want to run for, the external candidates to run for the board, so if you want to stand for Computershare you've now got to represent 10% of the stock and have 50 shareholders. Now in my view, the ASX should have a position on this. They should be saying, companies as a rule should encourage external directors, should encourage contestability for elections, but they're a competitor of Computershare and it would look awkward if the ASX suddenly started telling Computershare how to run their constitution because they're both in the share registry business.

In think there's also been some examples of where the ASX has taken the eye off the ball in terms of their own regulation and the best example is when three or four months after they listed, they actually informed the market that their revenues were going to be double what they said in their prospectus. Now this is a group that's meant to be keeping everyone honest, keeping companies honest in terms of continuous disclosure, but when it came to their own continuous disclosure they were way below the standards that they require of everyone else. The same goes I guess with that statement the other day is that a fairly basic communication issue about informing the market on the change of the minimum shareholder limit from 5% to 15%, and yes it might be easy to blame the Minister's office, but surely this very basic level of communication could have been sorted out.

My view is they're focusing too much on the dollars and not enough on the basics of keeping a market informed and keeping the companies honest.

There little things that do tend to frustrate me, like for instance in the UK if you're a director and you trade shares you've got to disclose that within 48 hours. In Australia you've got two weeks to disclose it. So people like the ASX should be more rigorous, more focused on these things to bring our regulatory framework up to best practice.

Now in terms of what I specifically would bring to the Board, and I know I'll probably get less than 20% so this is a moot point, but I guess I have been an active small shareholder and I think the ASX does need a small shareholder perspective. I've owned, as I've said, more than 100 shares over the years, I've worked for Jeff Kennet for 18 months.



MAURICE NEWMAN: Not up but if you -

STEPHEN MAYNE: I'll wind it up.

MAURICE NEWMAN: - wind it up.

STEPHEN MAYNE: I worked for Jeff Kennett for 18 months as a press secretary, so I have a reasonable good understanding of how government works and this is a company that has to deal with government, and I guess I've worked in the media and I've been to probably 200 AGMs over the years. I was Business Editor of the Herald Sun, the Daily Telegraph in Sydney, so I've got a reasonably good understanding of the overall business community and think I could bring something to the Board with those experiences.

I guess my last point I'd like to make is this system, and its common place in several of the boards I'm running for, this system where the board declares how many vacancies there are. Now you the shareholders should be able to decide whether you want to elect me to the Board. You shouldn't have the Board telling you there's only three vacancies. I mean anyone who gets more than 50% of a vote, you'd think, as long as it's beneath the overall cap on the size of the Board as laid out in the constitution, anyone elected who gets more than 50%, anyone who gets more than 50% should get elected. The same thing happened at AGL the other day. My guy got 58% of the vote, but the Board said there was only two spots so the other two Directors got 97% so he missed out.

So this is an example of where I reckon the ASX as regulator should be imposing best practice on companies for these sort of democratic principles, but instead they're actually indulging in this poor practice, in my view, with this sort of get off the grass requirements to keep outsiders out. So even if you did give me 60% of the vote, I'd still miss out.

So sorry for going so long. The key thing is a vote for me would send a message to the ASX to be a tougher regulator, to provide more information to the market, to keep the market fully informed and to keep therefore companies on their toes and to create a greater culture of shareholder pressure in Australia, which will be good for everyone. Thanks very much.

MAURICE NEWMAN: Thank you Mr Mayne. Mrs Walter.

STEPHEN MAYNE: Just a couple of very quick points Chairman. I think that everyone would agree the CEO's done a good job for the shareholders over the years and would support his appointment. A couple of points, the best practice is generally contracts for two to three years. I'm just curious as to why we've stretched it out to four and why we've locked ourselves in for such a long time. Also this is the third time we've come back to shareholders having a fairly complicated share options package. I would have though it would have been better if it could have been maybe wrapped up more easily with say one, or at most two times you'd come back but this is the third time in two years, I think, we've had to deal with a very complicated proposal like this.

I guess my other point comes back to some comments I made earlier is that we've got dual functions for the Stock Exchange here, why can't some of his bonus be tied up in the quality of the market surveillance and the market integrity and those other things that the Stock Exchange is meant to do. Why is it just purely a profit share price driven bonus? I mean a key role of the ASX is that surveillance, supervisory role yet there seems to be no formula whereby if he does a good job with that he gets more benefit and that's just as important as the dollars for the overall market.

MAURICE NEWMAN: Well can I take your last point first and say we totally agree with you and in fact the share, the Managing Director's bonus, that is his performance related share of compensation is very much related to the maintenance of the integrity and reputation of ASX so that he has a long list of performance hurdles which he has to jump over and which the Board has to be satisfied that he has jumped over before he receives his full entitlement to the performance related part of his compensation.

The reason that we have agreed and very readily agreed as a Board to extend Mr Humphry's term of office for four years is to, as I said in my earlier remarks to allow ASX the necessary time to bed down some of the very important initiatives which we are currently implementing. This isn't to say that in the event that Mr Humphry ceased to perform that we as a Board would have no flexibility in asking him to leave, so this is not a four year term regardless of whether he performs or not. So that, I think what we see as a Board is that Mr Humphry has been, as I said, very critical in the performance of the organisation. He has built and is building a team of first rate executives.

I mentioned in my formal remarks at the beginning of this meeting that we are in a global market place, in this war for talent and there's a real war for talent. People with the expertise that we have in running stock exchanges in the world today are very thin on the ground and Australia is, I assure you, a recognised repository of that talent and it's very important that the leader of the organisation is able to command the loyalty and the respect of the people that forms part of that executive team and it is why we as a Board continue to place emphasis not only on the succession plan for the Chief Executive but for other members of the executive team. This is why we think that what is being proposed for the Managing Director is totally appropriate, as I say we have in writing from experts, formal sign off that this is quite in accordance with practice.

So I think that the reason that we're back here again is because of the change in circumstance of the term of the Chief Executive's contract has been extended. This will be the last time that will be necessary for us to bring this matter to the attention of shareholders. Are there any other questions?

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