Initial Woolworths 2010 AGM report

November 19, 2010

Dear Mayne Reporters,

Thankfully the press haven't reported it today, but the actual result in the Woolies board tilt yesterday wasn't too flash with only 6.7% of the vote in favour.

Still, this was an improvment on the miserable 3% in 2006 but nothing like the record 55% of the directed proxies who backed our 2000 Woolies board tilt.

The total support amounted to 31 million shares worth just over $1 billion and it would have been more if there had been a recommendation in favour support from the Australian Shareholders' Association which held proxies over more than 8 million shares worth about $250 million from thousands of small shareholders.

Leaving the votes aside, the actual meeting itself went well and here is a summary of the 9 exchanges we had along with audio that is worth listening to. The audio link is the headline:

Moreland City Council and a possible Supreme Court challenge over differential pokies rates
A very interesting back and forth exchange with chairman James Strong that will be of interest to councils across Victoria. CEO Michael Luscombe eventually claimed there was no agreement with the Victorian Government to remove the rights of councils to impose differential rates of up to 400% on pokies venues. However, Mr Strong explicity reserved their right to challenge again in the Supreme Court.

Why are you taking Manningham to the Supreme Court over ALDI supermarket?
Nailed Woolworths for complete hypocrisy in the way it does group development deals with the Victorian Government side-stepping councils but is then rushing off to the Supreme Court to delay a proposed ALDI supermarket in Manningham that both the council and the community want after the retailing giant converted their Safeway supermarket into a giant Dan Murphy's grog shop. Strong made a crack about this being the Woolworths AGM not the City of Manningham AGM, so I promised not to mention council against after that.

Are there any pre-emptive agreements with Mathieson and Lowes?
Confirmation that if Woolies wants to exit the pokies industry it must first offer the assets to Alan Bond's former business partner Bruce Mathieson on a pre-determined basis.

Have you changed your policy regarding political donations?
Woolies is clearly getting around its "no donations" policy by filtering payments to political parties through the Australian Hotels Association where it is the largest member. However, it was good to get them to explain a $20,000 donation to Queensland Labor from its pokies division during the last state election.

How do you manage the colourful Bruce Mathieson?
There was no explanation or apology for Mathieson's "three imbeciles" attack on Nick Xenophon, Tim Costello and Paul Bendat but Luscombe gave a detailed, if somewhat stuttering, explanation of this story in the Herald Sun. The billionaire had created the distinct impression he was doing his football club Carlton a huge favour, but his CEO is now saying it was strictly a commercial deal.

Are there incentives for your executives to increase diversity within the company?
Woolworths has done good things on gender diversity so gave them a solid pat on the back.

Speaking in favour of new female director and exploring James Strong link

Backed the new director but got Strong to explain how she appeared to simultaneously got two jobs connected with him at the same time.

Three minute No Pokies campaign speech

The prepared speech was too long and I forgot to bring a print out. Besides, the board knew what was coming so the element of surprise was lost. Therefore, ended up winging it and opened up with a solid burst at the board for its long and disappointing record when it comes to running unfair electoral processes. The only regret was not inviting Mathieson and some directors to next Tuesday's pokies forum in Melbourne which Gaming Minister Tony Robinson has now agreed to attend.

Supporting fees increase for non-executive directors
You can't be against everything and non-executive directors are still relatively underpaid compared to their CEOs in Australia.

What happens next?

In terms of media impact, it was certainly much reduced on what happened last year when Paul Bendat, Tim Costello and Nick Xenophon were all more directly involved as you can see from this package.

We did have this 10 minute chat at 5.10pm yesterday on 612 ABC Brisbane talking about the pokies, but the coverage elsewhere was pretty sparse, although it was good that The AFR's Rear Window mentioned that some pokies were issued raised.

That said, we're just working up the transcripts now which will be very useful as the campaign moves forward.

We'll be back with more detail soon but for now it's time to get into the city for the Telstra AGM.

Do ya best, Stephen Mayne

* The Mayne Report is a multi-media governance website published by shareholder activist, local government councillor, Crikey founder and political candidate Stephen Mayne with regular email editions. This email was authorised by Paula Piccinini of 205 William St, Melbourne 3000. To unsubscribe from the free emails click here.