Dear Mayne Report Readers,
Greetings for the first time since our last email edition
on April 22. If you'd rather not receive these monthly newsletters, click here
This is not a bumper edition and there's much more that could be said, but with just 9 days until the Westfield AGM, it was important to spread the word on plans to negotiate down excessive Lowy family pay on the floor of the May 29 AGM.Finishing AGM mini-season with Boart brickbats and a strong Westfield campaign
The AGM mini-season for companies with December 31 balance dates is drawing to a close and the Australian Shareholders' Association has been actively prosecuting its positions with major companies such as AMP, Rio Tinto, Caltex, Santos, Alumina and Woodside Petroleum.
Tomorrow's Boart Longyear AGM in Melbourne should be a doozy as we're recommending against
two long-serving directors who've been on board as $3 billion has disappeared in the most disastrous IPO ever produced in Australia.
Those bearing the scars should not forget that Macquarie Bank made about $500 million flipping this business to Australian investors in April 2007. Check out our Voting Intentions report.
However, the most interesting engagement of the season will be the Westfield Group AGM on May 29 after we published these voting intentions
felt it worthy of the lead story in its property section on Saturday and The Weekend AFR
also published a story on page 39 headlined "ASA pushes Westfield on 'excessive' bonuses".
The key extract from our voting intentions
relates to the re-election of 82-year-old founder and non-executive chairman Frank Lowy, which reads as follows:
Frank Lowy is one of the highest paid non executive chairs in Australia ($750,000 PA) and has overseen the continued payment of excessive bonuses to executive staff over a long period of time. Indeed, he has personally received more than $100 million in cash salary payments from Westfield entities over the past 20 years and his children have collectively received more than $150 million over the same time frame.
The projected distribution on the Lowy family shares for the 2013 year will be $91.6m. The family does not need to continue drawing excessive remuneration, whether as executive directors or as the non-executive chairman. ASA notes that both James and Kerry Packer have never drawn salaries or director fees from Crown Ltd or its predecessor bodies. The dividends are enough and we encourage the Lowy family to take note of this precedent. We fully recognise that Frank Lowy is the hugely successful founder of the company and without him it would not be in existence today.
However, after the latest share sale by the family, Westfield Group is a widely owned global listed company which should reform the executive pay arrangements of its founding family. If Mr Lowy undertakes at the AGM to revise down cash payments to his family members in future years, ASA will support his re-election.
If not, we will vote undirected proxies against his re-election.
ASA had approximately 2.5 million undirected proxies (worth approximately $30m based on the current share price) at the 2012 Westfield Group AGM and encourages retail investors to appoint us as proxy for the forthcoming Westfield AGM. This will increase our voting leverage to help secure long overdue pay reform.
ASA also calls on proxy advisers and institutional investors to join this campaign which is now a realistic prospect under Australia's two strikes regime where the Lowy family can no longer vote their shares in favour of the remuneration report.
A "first strike" based on excessive Lowy family salaries, along with a protest vote against the chairman, should be enough to empower the independent directors to intervene on this important issue.
Westfield has consistently had solid protest votes against its remuneration report and certain insider and long-serving directors over the past decade. Here are the figures going back to 2004:
no remuneration vote but long-serving director John Studdy received 13% protest vote.
120 million votes against rem report equivalent to almost 12%. No protests against directors.
172m votes against rem report as protest rose to almost 17%. Protests of 6-7% against two rem committee members, David Gonski and Fred Hilmer.
180m votes against rem report as protest pushed 18%. Director protest peaked at 16-18% against Gary Weiss and Fred Hilmer.
rem protest dropped to 100m votes or 7.7% as director protests against David Lowy and David Gonski reached double figures and Frank Lowy suffered biggest ever protest at 7%.2009:
rem protest back up to 122 million votes and former CFO Stephen Johns suffered biggest ever director protest at 35% or 500m votes. Stephen Lowy hit with 100m protest or 7%.
rem protest back up to 225m votes or 16.2% but Frank Lowy only opposed by 3% as Fred Hilmer hit with 13% protest.
: rem protest 177m shares or 11%. More opposition to former CFO Stephen Johns and still no poll on any resolutions.
16% against rem report as all independent directors strongly supported.
If the institutions and proxy advisers get organised, 2013 will be the year when substantial change finally happens. We will also see our first remuneration report poll so that the 1000-plus shareholders who give ASA undirected proxies can actually see these vote cast. If you know anyone who owns Westfield shares, encourage them to appoint ASA as their proxy.
The biggest players on the Westfield register after the Lowy family are the giant US index funds Blackrock and Vanguard, who could easily deliver a first strike if they teamed up for the first time and opposed the remuneration report. We'll be asking them to get on board the reform train.Firing up on local government referendum
Once the ASA consultancy wraps up on May 31, it will be full steam ahead on politics for the next 4 months, including the Federal election and the referendum on local government funding, not to mention final approval of City of Melbourne's 2013-14 budget and the 4 year council plan.
I've been surprised how many city-based conservatives, especially John Roskam's IPA dancing bears, have launched unhinged attacks on the minimalist house-keeping proposal to add just 17 words to the constitution so that Canberra can continue its long-standing practice of directly funding local government to deliver services and projects.
After first weighing in with this Crikey story
on April 29, yesterday there was a lively debate
with Greg Craven and Prof George Williams on Radio National's Sunday Extra
Greg Craven was particularly unhinged and condescending, claiming that local government had an "er*tic" fantasy to get constitutional recognition. Surely his masters at the conservative Australian Catholic University will counsel their mad professor against such prurient and sensationalist tabloid language. Have a listen to the full donnybrook here.
Should City of Melbourne be granted an MAV board seat?
Here is an edited down version of an email sent to the other 78 council delegates who were entitled to vote at the Municipal Association of Victoria state council meeting last Thursday:
Dear MAV delegates,
tomorrow's state council meeting at The Sofitel should be an interested exercise given the diversity of business on the agenda
and the fact it is the first decision-making forum since the recent council and MAV board elections.
As the City of Melbourne delegate, I thought it best to make contact regarding motion 58 on page 83 of the papers
which reads as follows:Motion 58: Capital city membership on the MAV Board
Submitting Council: Stonnington City Council
Motion: That the MAV change its constitution to provide for a Councillor from the City of Melbourne to sit on the MAV Board. The Councillor is to be nominated by Melbourne City Council every two years in line with MAV elections.
Submitting Council Rationale: In every other State the capital City Council is represented on the equivalent of the MAV. This used to be the practice in Victoria however with a change in the MAV Constitution this automatic right of the City of Melbourne to a position on the MAV Board was removed. It is important that the Melbourne City Council, as Victoria's Capital City Council be represented on the MAV Board.
City of Melbourne only rejoined the MAV after a three year absence in November last year.
The history of all this is that City of Melbourne resigned from the MAV in 2009 following these three events:
# City of Melbourne councillor Peter Clarke ran for MAV President in 2009 and received seven votes;
# MAV Procurement was established in competition with Procurement Australia which is majority owned by City of Melbourne; and
# There was a personality clash between the respective leaders of both organisations.
I believe the sector needs to come up with one procurement offer to secure the estimated $350 million in savings that Ernst & Young identified a few years ago. This could be explored if City of Melbourne had a greater sense of commitment and involvement with the governance of the MAV.
As a sector we also need to be united to maximise our position on issues such as constitutional recognition, the fire services levy, superannuation liabilities, planning reform and infrastructure investment.
This is why I support Stonnington's motion which was submitted without any prompting by anyone at City of Melbourne.Why Melbourne should be in the tent
Melbourne is the fastest growing city in Australia and City of Melbourne is now one of the 10 fastest growing municipalities in Australia with more than 800,000 people coming into the city each day.
These people live in municipalities right across Victoria, but have a vital interest in the prosperity, good governance and administration of our capital city council. Many of your residents also own property in the City of Melbourne.
At the moment, Melbourne is attempting to re-engage with the MAV, but Lord Mayor Robert Doyle is far more active in the regular meetings of the Capital City Lord Mayors group which maintains a secretariat in Canberra and this website
The Lord Mayors have enjoyed good recent access to the Prime Minister on issues such as constitutional recognition.
City of Melbourne gets access and insights unlike any other Victorian council and, in my opinion, we'd all benefit if this was fed directly into MAV board deliberations.
For instance, we recently hosted 10 state MPs, including the speakers of both houses, at a three hour briefing at Town Hall. They were impressed with the scope and scale of Melbourne's information and operations, which includes 100% ownership of Citywide, a business with more than 1000 staff which services councils right across Australia. Citywide is chaired by Mark Birrell and John Brumby is also on the board.How might automatic board representation for Melbourne work
The MAV board currently comprises 6 regional and 6 metropolitan members, plus a directly elected President. With 13 representatives it is arguably already too large.
If Stonnington's motion passes, there would then need to be a specific constitutional change to consider at the AGM later in the year.
Therefore, supporting Stonnington's motion would only serve to facilitate a future debate which would need to deal with a number of issues.
For instance, I would support a proposal that if Melbourne was the only Victorian council given automatic MAV board representation, then as a quid pro quo it should also be the only Victorian council not allowed to hold the Presidency as that would represent double dipping.
As for the timing of such a move, it probably should not come into effect until the next board election cycle in early 2015. That would allow time to evaluate whether there should be a broader redistribution of the 12 regions. Better transparency and disclosure
Finally, I'd also like to update delegates about one of City Melbourne's motions up for debate tomorrow which reads as follows:Motion 62: Website disclosure of council leasing arrangements
Submitting Council: Melbourne City CouncilMotion: That the State Council:1. embraces the concept of open government through the systematic release of more data and information by member councils about their operations; 2. commends Manningham City Council for being the first Victorian council to comprehensively disclose on its website the terms on which third parties lease council land and buildings; and3. encourages other Victorian councils to follow Manningham's lead and publish a lease register online which allows the public and all stakeholders to understand who has access to ratepayer owned land and buildings, for how long and on what terms.
City of Melbourne released its draft budget
last Thursday and we included, for the first time, public disclosure of our lease register. You can inspect the data starting on page 129 of 143 of the draft budget.
There has been some positive media coverage of this development, including a story in The Age
, an interview on 774 ABC Melbourne and the following story on an industry website:Australia Post's 999 year lease in North Melbourne revealed by City of Melbourne
Victoria has enjoyed the best governed and structured local government sector in Australia for the past 20 years and leading the way on disclosure would help retain this position.
If anyone would like to discuss either the Stonnington motion or the lease register proposal, feel free to call or reply to this email.
Cr Stephen Mayne
Chair City of Melbourne Finance and Governance Committee
City of Melbourne MAV delegateDonate to help keep us going - developers keep awayThe Mayne Report
has wracked up losses of more than $300,000 since we launched in October 2007 and we moved to a free model in June 2009 after struggling along seeking subscriptions for the first 21 months.
It has been nice to receive more than $20,000 worth of donations over the past four years and if you fancy giving us a hand to help fund our political activism over the next few months, particularly on the local government referendum, then just click on the image below:
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From the member edition archiveThe Mayne Report
goes to more than 16,000 people but if you're a relatively new reader, here are some links to some of the more interesting email editions sent out over the past five years.
Backing Rudd, Lachlan Murdoch, Bob Brown media debate, Manningham governance, Gunns, Darebin, Lend Lease and St Kilda AGM appearance
Monday, February 20, 2012The OZ goes mad, Murdoch piracy, AFR, pokies double rate, Gina unfit for Ten, council super blowout, BoQ rip-off, power speech and AGM mini-season
Wednesday, April 4, 20122011
Murdoch special, media inquiry, pokies, Manningham win, Zara, secretive Shortenite councillors and a Vodafone take-down
Thursday, September 15, 2011Elected to ASA board, pokies, Rio, Santos, RHG, Hartigan, Manningham, capital raisings and Rich List
Thursday, May 19, 2011
Election wash-up, Mayne Report strategic review, Manningham, Ten, Gina, Falloon for Fairfax, Orica AGM, ABC year-ender, Cornwall, Rich List and then some
Friday, December 17, 2010
Woolies anti-pokies campaign speech, Manningham mayor boxes on, campaigning for women, Bob Brown, pokies forum, HTVs, Rich List and then some
Thursday, November 18, 2010Paperlinx, Packer, Murdoch, Manningham, pokies, Rich ex wives, foreign takeovers and much more
Saturday, October 23, 2010 DJs, legislate women on boards, ex Lib goes no pokies, preferences, Pratt-Shorten, Labor's debt, AG's report, Manningham council audio and then some
August 3, 2010Director rankings, Rio, Westfield, New Matilda, MAP, Manningham, Paatsch, state election, Darebin, Moreland, rich list, pokies and much more
June 9, 2010Political donations, Stokes, Westfield tower, Richard Colless, Manningham nursing home, state debt, Rich List, Grand Prix and more
February 23, 2010
Woolies, Higgins, Manningham, upcoming elections, Fairfax, Centro, Rich List, Rams, Fitzie and much more
December 6, 2009
Seven AGM, crazy Perth visit, Fairfax, Telstra, Transfield, capital raisings and much more
November 9, 2009News Corp AGM, Packer, Fairfax, James Strong, Woolies, Eastern Golf, Kohler-Gatto and much more
October 20, 2009Bad Bendigo, Mark Day, Manningham, pokies, NAB, Asciano, Rich List, Paladin, hostile EGMs and much more
September 15, 2009Macquarie AGM, Melbourne's decline, Asciano EGM, capital raisings, Goyder's pokies, speeches, fire, AGM diary and much more
July 28, 20092007
Fortescue Metals AGM: time for Twiggy and FMG to grow up
Sunday, November 8, 2007, 10.30pmHow $5bn worth of votes backed us against Rupert's dodgy gerrymander
Saturday, 20 October, 2007, 7.20amMayne family news
Laura, Alice and Philip are all playing club Aussie rules this winter and Laura brushed off a couple of tackles to kick her team's only goal today in just her second game. Very excited!
Philip received the encouragement award from his former North Melbourne player coach last week and Alice is just loving running around with some girls who are almost twice her size.
Meanwhile, Paula's sister Patricia Piccinini has been making plenty of headline
s with her fabulous contribution to Canberra's centenary celebrations.
Our kids loved seeing their cousins Hector and Roxy in the video
made as part of the Skywhale project.
That's all for now. Better fly as there's an early flight to Sydney to catch this morning for the Leighton AGM and then a handover day with Dr Carolyn Currie
, ASA's new full-time Research Manager.
And don't miss Inside Business
next Sunday as we'll be on the couch with guest host Virginia Trioli (filling in for Alan Kohler) and there'll be much to talk about as the AGM mini-season season wraps up.
Do ya best, Stephen Mayne
* The Mayne Report
is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.