ASA reveals policy moves, Senate preferences, Coalition pokies grovel, council electoral reform and Geoff Lake

August 19, 2013

Dear Mayne Report Readers,

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Australian Shareholders' Association releases comprehensive policy discussion paper

The following press release went out from the ASA yesterday. It's important and was covered in both The AFR and The Australian this morning. Here are the key points from the release on our future policy direction:

The Australian Shareholders' Association today released a policy discussion paper ahead of the 2013 AGM season which focuses on board structures, shareholder engagement and executive remuneration.

The paper signals ASA's intention to remain vigilant on remuneration issues whilst increasingly focusing its advocacy and proxy voting on transparency, good performance, board structures, director accountability and long-term financial alignment between shareholders and the people they appoint to run public companies.

In the past, ASA's most common reason for voting against a director was caused by an excessive workload. Whilst overloaded directors are still a concern, future against voting will be more driven by issues such as performance, independence, tenure and the fair treatment of retail investors in capital raisings.

In terms of specific policy changes, some of the key shifts signalled in the discussion paper include:

# A 12 year tenure limit for both independent directors and audit firms;

# Opposition to male only boards in the sense that ASA believes all ASX200 companies should have at least one female director;

# A “two strikes” regime where ASA will vote against non-executive directors who have clearly contributed to poor performance on two separate public company boards;

# A “one strike” policy where ASA will consider opposing a long-serving CEO or Chairman of a major company who was clearly responsible for decisions which led to material losses for investors.

# ASA will increasingly vote against directors who raise capital on unfavourable terms for retail investors. The fairest capital raising method is a renounceable entitlement offer with a single book build at the end to compensate institutional and retail non-participants on the same terms;

# Acceptance that senior executives can hold a single non-executive board seat elsewhere;

# Retention of ASA's limit of 5 board seats for non-executive directors (where a chairmanship counts for 2) whilst also considering unlisted commitments when weighing up workload concerns;

# A new formula for long-term incentive schemes whereby 30% of the award can vest after out-performance (ie 50.1 percentile) and a 4 year performance period, rising in a straight line to 100% at the 85th percentile. The current policy advocates only 10% at the 50th percentile rising steeply to 100% at the 75th percentile. ASA remains opposed to performance periods of less than 4 years.

# General discouragement of short-term incentive schemes and where they do exist, support for a holding lock of at least two years and payment in equity;

# Endorsement of Relative Total Shareholder Return against a basket of industry peers as the most favoured performance metric for a long-term incentive scheme.

# A reduction in the reliance on accounting and valuation models when determining the size of long-term incentive scheme payments so that retail investors can better understand the metrics.

ASA chairman Ian Curry said the 13-page discussion paper was in no way locked in stone, but was designed to trigger vigorous discussion about ASA's voting and policy positions.

“There are always diverse views among ASA members, directors, proxy advisers and fund managers on questions of voting and we hope to receive submissions from a wide number of market participants over the next three weeks,” Mr Curry said.

“The overall message ahead of the AGM season is that ASA is increasing its focus on performance and boards, with a slightly reduced emphasis on executive remuneration and workload issues.”

“ASA is pleased to see improvements in executive remuneration structures since the advent of the successful ‘two strikes' regime but will remain vigilant in opposing pay arrangement with excessive cash components or not enough alignment with shareholders through genuinely long term incentive arrangements which reward superior performance.”

Public submissions should be emailed to where they will then be considered by ASA staff and senior monitoring personnel before ultimately being signed off by the policy committee of the ASA board.



We need strength in numbers at the ASA. Click on the image below if you'd like to get on board the campaign for stronger corporate governance in Australia:

Senate preferences and a few predictions on the outcome

The Group Voting Tickets have been lodged and disclosed for the 8 senate contests across Australia. Check them out here.

Given that we don't have optional preferential voting, these backroom deals will determine a number of senate outcomes because more than 95% of all valid Senate votes will be "above the line" and therefore beholden to the tickets which have been lodged.

We hit Twitter hard on this issue yesterday and here are a few key points that emerged so far:

* Apart from entertainment, Clive Palmer's biggest contribution to the election outcome will be minimising the chance of Coalition Senate control given that he has backed the Greens in some contests, including Tasmania.

* Family First's Bob Day is a serious change to knock off 2nd Liberal Simon Birmingham in South Australia given he is a former Liberal himself and has a very strong preference flow from the likes of One Nation, DLP, Nats, Animal Justice, Libs, Smokers, Katter, Motorists & Shooters.

* However, 2nd Labor candidate Don Farrell is also at risk, especially if the record Labor vote in South Australia from 2010 subsides with the departure of local girl Julia Gillard and the expected swing to the Liberals.

* Nick Xenophon has been smart shunning the Greens in South Australia and acting like a major party. He may even out-poll the Liberals and get close to winning a second quota, especially given his choice of pro-business running mate, being the CEO of the SA retail traders association.

* The number of Federal independent candidates is down because the duopoly conspired to make it harder to nominate, requiring 120 signatures from electors and a larger $1000 deposit.

* Despite the Xenophon set-back, the Greens in SA get support from the Democrats, Palmer, ALP and Sex Party, so Senator Hanson-Young may be back.

* The Sex Party is pushing hardest in Victoria with its strongest candidate, Fiona Patten. She got 2.7% last time and has a strong preference flow in 2013. That said, it is amazing that the Liberal Democrats, a so called libertarian party, failed to lodge a ticket in Victoria where the libertarian Sex Party is best placed. They managed it everywhere else. What is going on here?

* The Greens are stuffed in Queensland where the ALP surplus will go to Katter's man, James Blundell, who gets an excellent preference flow, including from One Nation. Stand by for our first crooning Senator.

* The WA Nats are looking good for Senate success with former West Coast Eagle David Wirrpanda receiving a much better preference flow than his Liberal rival. With Nova up in the Northern Territory, this election is looking good for Indigenous representation.

* The Libs may be in trouble in the ACT Senate contest. No Family First and both Palmer & Katter preferencing the Green Sheikh ahead of the nasty right wing Lib, Zed. It's all about keeping the Libs below a quota of 33% on the primary, which is a good chance given the huge public service cuts Abbott is set to bring in.

Coalition disgraces itself with video grovel to the pokies industry

Kevin Andrews, my local Federal member and the Coalition spokesman on gambling matters, has disgraced himself and the conservative political forces more generally with this grovelling video message to the pokies industry delivered through the notorious Clubs NSW.

It wasn't quite as bad as the now removed 3 minute grovel by Barry O'Farrell when NSW opposition leader in 2011.

The lamentable Clubs NSW boss Anthony Ball concluded the Kevin video by declaring the Coalition's do nothing policy on the scourge of high intensity poker machines "will be very well received by our industry".

The Coalition package even includes an effective $30 million tax cut at a time when the clubs industry continues to get ridiculous tax breaks already.

I was so mad about Kevin's ongoing softness to the pokies industry that I even paid for a full page ad in The Warrandyte Diary, a monthly community newspaper in Manningham/Menzies.

Alas, the ad was deemed a bit too hardline and was pulled at the last minute. Oh well.

Finally, check out the latest from Paul Bendat's Pokieact website and this package of our past pokies coverage.

And try watching this 30 second anti-pokies ad made by Paul Bendat a few years back featuring our daughter Alice, who was 6 at the time:

The shafting of Geoff Lake

Geoff Lake is no mate of mine. Indeed, we were openly in conflict during the recent Municipal Association of Victoria Presidential ballot when he actively backed incumbent Bill McArthur.

But I've also watched the bloke for a few years now and regard him as the most competent local government councillor in Victoria of the past 15 years.

Indeed, I twice watched him chair an ALGA National conference over two days with more than 500 people in attendance. Both times he ran a classy show.

He's just a good politician and, unlike most in the Labor Party, the Minter Ellison lawyer has never been a union hack.

And so we get to Kevin Rudd's ridiculous decision to disendorse Geoff Lake as Simon Crean's successor in Hotham, just because the Herald Sun beat up an 11 year old story about some inappropriate language he used against a rival Liberal councillor when he was just 22 years old.

This was the moment when I gave up on Kevin Rudd. What a stupid move. Especially when Rudd knew Lake because he was the ALGA President during his first stint as Prime Minister, which meant he was a formal voting member of COAG and attended several meetings with Rudd.

If Rudd wants some clear knowledge on what the people of Hotham think, he should go back and look at the Monash council election results in October last year.

Geoff Lake scored a whopping 48.74% of the vote in the Glen Waverley ward in a field of nine. There are very few councillors in Victoria who have received 7,722 primary vote in elections where party endorsement is rare.

These voters knew all about his ill-tempered comments from 2002 because it was a front page splash in the local paper at the time. He apologies at the time and has continued to express regret down the years. How the Sunday Herald Sun can claim this is somehow news is beyond me.

In the circumstances, Geoff Lake commendably went to ground after putting out this classy statement about his shafting.

He is now owed big time by the likes of News Ltd, Bill Shorten's dodgy AWU operators in Victoria and the broader ALP. Here's hoping the bruvvas offer him a safe seat to enter the Victorian Parliament at the 2014 state election, because this is someone who could go all the way in politics if only given half a chance by our Murdoch-distorted democratic system.

Napthine reviews local government electoral system

Governments should never be shy of reviewing important systems which they regulate, because you always need to get the incentives right.

Therefore, it is terrific that the Napthine government has appointed Petro Georgiou to lead a highly-credentialed 3 person panel reviewing the local government electoral system in Victoria.

Check out the press release.

Here are some reforms I'd like to see:

* You don't have to resign from one council if contesting an election to serve on a different council.

* Compulsory postal voting given the turn-out is larger than from attendance voting;

* Anyone involved in a legal dispute with council cannot run;

* Remove councillor involvement in the appointment of independent audit committee members and mandate the mayor to serve on the audit committee;

* Have an independent commission appoint two voting commissioners/councillors who must not have any party affiliation but instead broaden the skills matrix;

* Mandate that a CEO's job must be advertised after 5 years, thereby reducing the number of candidates who run on silly "sack the CEO" platforms;

I'll admit, some of these recommendations flow from the awful Manningham experience where a group of councillors who hated the council briefly had the numbers. The resignation letter has the details if you're interested.

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From the member edition archive

The Mayne Report goes to more than 17,000 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, 2012

The 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, 2012


Murdoch special, media inquiry, pokies, Manningham win, Zara, secretive Shortenite councillors and a Vodafone take-down
Thursday, September 15, 2011

Elected 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, 2010

Paperlinx, 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, 2010

Director rankings, Rio, Westfield, New Matilda, MAP, Manningham, Paatsch, state election, Darebin, Moreland, rich list, pokies and much more
June 9, 2010

Political 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, 2009

News Corp AGM, Packer, Fairfax, James Strong, Woolies, Eastern Golf, Kohler-Gatto and much more
October 20, 2009

Bad Bendigo, Mark Day, Manningham, pokies, NAB, Asciano, Rich List, Paladin, hostile EGMs and much more
September 15, 2009

Macquarie AGM, Melbourne's decline, Asciano EGM, capital raisings, Goyder's pokies, speeches, fire, AGM diary and much more
July 28, 2009


Collingwood AGM, Rizzo survives, ANZ shareholders MIA and Qantas delusions
December 19, 2008

ABC Learning, CBA's Centro brutality, sworn in, pokies, PacBrands and SPP plays
December 10, 2008

After 37 straight defeats, the drought is broken
December 1, 2008

71% backing at Centro, $11bn backing at BHP and huge Qantas protest
November 28, 2008

BHP backflip after $7bn backed our tilt
November 26, 2008

Combank's $700m ABC Learning debacle
November 13, 2008


Fortescue Metals AGM: time for Twiggy and FMG to grow up
Sunday, November 8, 2007, 10.30pm

How $5bn worth of votes backed us against Rupert's dodgy gerrymander
Saturday, 20 October, 2007, 7.20am

That's all for now.

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.