Dear Mayne Report subscribers,
Kerry Stokes suffered a humiliating defeat at the WAN News AGM yesterday when less than 20% of the independent shareholders backed his aggressive campaign for a board seat.The Australian's
John Durie produced this early commentary
which was far too generous to Stokes.
The billionaire was comprehensively vanquished. After waging a huge and expensive campaign, complete with 9 separate aggressive legal threats to various opponents plus plenty of “you'll never work for me again” phone calls, Stokes finished in the back half of the field and didn't even crack 40% based on the rounded figures provided by WAN chairman Peter Mansell at the end of the meeting.
Here's how the 15 candidates rated in the popularity stakes:
- Mel Ward: 61.5%
- Erich Fraunschiel: 61.5%
- Jenny Seabrook: 54.5%
- Peter Mansell: 53.5%
- Margaret Seares: 47.1%
- Peter Abery: 46.8%
- Peter Gammell: 39.8%
- Kerry Stokes: 39.8%
- Steve Harris: 9.78%
- Stephen Mayne: 7.6%
- Max Brewer: 7.5%
- Keith Bales: 6.6%
- Aiden Montague: 6.5%
- Kevin O'Keeffe: 6.5%
- Sharon Armour: 5.9%
WA News shares should rise strongly today because a takeover premium will once against be priced into the stock. Stokes has taken such a humiliating home town hit that some observers reckon he could just come out and bid for the whole company with that $2.6 billion of cash sitting on the Seven Network balance sheet.
A more likely scenario is that he will creep by another 3% in June to 23%, but that won't be nearly enough.
Stokes personally received 57 million votes in favour and 86 million against as 143 million of WAN's 210 million shares were voted – a solid turnout of 68%.
The institutions clearly all opposed Stokes despite his claims during his formal address that every one of them he'd spoken to agreed with the concept that Seven deserves board representation.
Even the 30,000 mum and dad shareholders strongly backed the board as chairman Mansell received support from 9,011 proxy voting shareholders, compared with 3,572 that were against. Stokes himself was only backed by 3,693 shareholders through proxy votes whilst 8,885 were against him.
Seven controls just over 40 million shares so creeping by another 3% will lift this to just 47 million shares. Buying another 6 million isn't much good when you are 29 million short of a majority.
At this rate, Stokes would need to get to 29% before the numbers would stack up and this would take until June next year under the six monthly creep provisions.
A more likely scenario is that WA News will offer Seven a compromise board seat, but it can't be an executive. Step forward Dulcie Boling, Peter Ritchie or one of the other non-executive directors of Seven.
It was telling that Stokes refused to commit to having an independent non-executive chairman when I asked the only question on the resolution dealing with his own election to the board.
Both Stokes and Peter Mansell said the chairmanship was a matter for the board, but Stokes clearly wants to be perceived to control the company by being a dominant chairman.
He gloated about being able to fix the distribution issues within two weeks, as if to suggest he would almost become an executive chairman and take over commercial negotiations from CEO Ken Steinke.THE FUTURE OF PETER MANSELL
The incumbent directors had a pretty big win over Stokes but chairman Peter Mansell still wasn't looking happy after the meeting.
Institutional investors clearly sent him a strong protest message voting 10 million shares against him and fellow director Jenny Seabrook and in favour of the two Seven-endorsed independents Peter Abery and Margaret Seares.
I spoke against Mansell on the grounds that he had mishandled the situation and he was the chairman who presided over the $60 million Hoyts loss and the complete failure to rein in The West Australian's
cavalier editor Paul Armstrong.
Mansell's ridiculous workload chairing 5 companies and sitting on 3 other boards was also mentioned as a reason to give him the flick.
Peter Abery was easily the most impressive speaker on the day and I reckon he'd make a perfect replacement chairman for Mansell who, tellingly, didn't answer the question about his intentions to serve out his three year term as chairman.
Replacing Mansell with Abery and then adding one less conflicted and belligerent Seven Network represent would lift the overall board to six. That would be a perfectly reasonable 16.66% of the board seats for a shareholder with 19.4% of the stock.
If Seven then crept to 23% in June, you could add a second Seven representative along with another independent. The absent Steve Harris would be perfect at that point, once he gets back from Europe and personally meets the various players. This would leave Seven with two spots out of eight – 25% of the board and 23% of the stock.SLUGGING IT OUT WITH KERRY STOKES
I went into the meeting leaning towards voting for Stokes and Gammell but ended up voting against due to the billionaire's belligerent performance.
After instructing Freehills to fire off threatening legal letters all over the place, Stokes leapt to his feet to attack me after the formal 5 minute presentation.
My sin was pointing out that he had a potential conflict of interest on an issue like the state government's current ban on uranium mining, which holds back the profits of his booming Caterpillar franchise in WA.
This was spelt out
in Crikey yesterday but Stokes misconstrued my words. He though I was saying Stokes would order journalists to run pro-uranium stories when the point actually was that The West Australian's
journalists and editor might voluntarily take a pro-uranium position in an anticipation of what their billionaire chairman would want without a director order having to be given.
This then led to a slanging match where we slugged it out over what happened on Today Tonight
12 years when the Jeff Kennett share dealing story was pulled by management at the last minute, triggering the on-air collapse of presenter Jill Singer and a subsequent Four Corners investigation.
I alleged that Stokes and Seven wilted in the face of pressure from Kennett and when Stokes denied this, I asked him why all the relevant journalists were sacked and he claimed it was due to poor performance rather than any political pressure.
One of the insiders commented after the meeting that this did not reflect at all well on Stokes. When the billionaire made the patently false claim that none of the existing directors had even run a business, former Telstra CEO Mel Ward bit his tongue and let it slide.
Yet when Stokes didn't like one of my lines, he was on his feet making more legal threats.
Here was a billionaire sitting in the audience getting into a slanging match with a pissant who was up on the stage for just 5 minutes making a pitch to lift his single-digit proxy vote.
Let it slide Kerry, don't demonstrate that notorious glass jaw and sensitive ego.HOW THE MEETING UNFOLDED
Kerry Stokes descended from a private room on the first floor about 10 minutes before the meeting started with 10-plus entourage that even included former Liberal Premier Richard Court and former Howard Sports Minister Warwick Smith.
The board's decision to reveal the proxies at the start of the EGM clearly took the edge off proceedings because it only lasted for two hours and 10 minutes. I immediately demanded a full printed version of the proxies, complete with a breakdown of the undirected proxies.
These showed that a whopping 35% of the votes for the seven least popular candidates were with the chairman as undirecteds and the board was clearly embarrassed by this because they weren't voted in the final poll, despite the formal documents suggesting otherwise.
About six shareholders spoke in the opening skirmishes before we moved to the first resolution - the removal of chairman Peter Mansell. Stokes took to the stage for about 10 minutes to provide one contribution on all six resolutions that he had proposed.
His offsider Peter Gammell didn't say a word for the whole meeting and neither did directors Jenny Seabrook and Mel Ward because no shareholder bothered to ask anything and they didn't want to add to the written material.
As a candidate, it was tricky for me to get up too often but there were questions for both Stokes and Mansell, neither of whom provided much in the way of answers.
Stokes was criticised for seemingly praising The Sunday Times
at that WA Business News breakfast on April 2 and he once against pointed to the circulation stats showing that the News Ltd paper has doubled circulation in a decade and is now very close to passing The West Australian's
There was a one hour delay waiting for the result of the poll but Stokes emerged very briefly before this to accept defeat. He refused to answer questions but did confess to being "disappointed" with the lack of support.
Seven will clearly need to spend at least $200 million more before Kerry Stokes can fulfill his dream of becoming the most powerful man in Perth by chairing WA News. In the mean time, he will be stewing because yesterday was a major hit to his pride.
We'll have more from Brisbane tomorrow after the Rio Tinto AGM.
Farewell from Perth airport and do ya best, Stephen Mayne * The Mayne Report is a multi-media governance website published by
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