We're back: inside a post-ASA election season blitz

September 18, 2014

Dear poorly serviced Mayne Report readers,

Firstly, apologies the offerings have been so threadbare in recent times. The previous bumper email edition was December 23 last year. Oh dear.

As you may have read in the press, I've opted not to renew the latest short-term contract with the Australian Shareholders' Association in order to contest a few elections, put more time into City of Melbourne matters and even do a bit more journalism. The ASA press release is the honest truth of the situation.

We may re-connect in some way some time in 2015, particularly as Melbourne is hosting the big 3-day bi-annual ASA conference next May, but we've explicitly parted on good terms with no future commitments.

Interestingly, ASA is now advertising for a full-time CEO in Sydney. With a budget of 150k, it should hopefully attract a strong field.

An AGM season with Crikey

After more than 3 years in the trenches at ASA as both a director and then a consultant, it will be quite a different experience writing independently about the forthcoming AGM season for Crikey, running for a few boards and attending some smaller company AGMs along with a few old favourites.

I've agreed to produce at least 50 Crikey pieces by Christmas and the first appeared today looking at all the governance issues around James Packer and Crown Resorts ahead of their Perth AGM on October 16.

Crikey has an excellent monthly subscription offer these days which costs just $15.90 and is worth a whirl if you want to enjoy some comprehensive journalistic coverage of this year's AGM season. Click here for details.

Explaining the board tilts: why CBA?

There was a short piece in The Australian on Friday about the Commonwealth Bank formally accepting its first external board nomination in many years.

The November 12 CBA AGM in Melbourne should be an interesting affair as a group of green shareholders have also proposed a constitutional amendment that the board report back to shareholders on its management of greenhouse emissions.

As this ASA research shows, there have been only 30 other occasions when 100 shareholders of ASX 200 companies have gathered the necessary 100 signatures to cause an action at a public company AGM in Australia.

Industry newsletter Banking Day took a cheap shot at both these CBA activism initiatives in its Friday edition, but they've obligingly published the following letter today:

Stephen Mayne, publisher of The Mayne Report and nominee for CBA board, writes:

For a journal which bills itself as an "industry bible" and a "trusted source", it was surprising to read Friday's item "Carbon and Mayne dog CBA" and particularly the erroneous final sentence: "Both are ritual acts of a kind, each with a history of drawing scant shareholder support."

For the record, the last time I stood for the Commonwealth Bank board in 2000, 39 per cent of the directed proxies were cast in favour. In today's dollars, this "scant shareholder support" was worth A$7.2 billion.

Similarly, when the Wilderness Society proposed an amendment to the Commonwealth Bank constitution in 2002, it was supported by 25.2 per cent of directed proxies. At today's share price those supportive votes are worth $7.6 billion.

The level of support on both resolutions will almost certainly be down at the 2014 AGM on November 12 in Melbourne.

And this is the full version of the final paragraph which was edited back to exclude the explanation of the tilt:

The level of support on both resolutions will almost certainly be down at the 2014 AGM on November 12 in Melbourne but if you want to talk about “history” let's at least get the facts right. I would have also though that serious issues such as a bipartisan Senate Committee recommending a Royal Commission should not be dismissed as “grandstanding”. The CBA board is ultimately responsible for the financial planning transgressions and the AGM is where that accountability ought to be resolved.

Ardent Leisure lifts SPP cap after board tilt discussed

Whilst it would be great to one day get elected to a public company board, many people misunderstand the broader strategy of running hostile for multiple boards.

Board tilts are not about winning but rather highlighting an issue and hopefully prompting change by an issuer.

For instance, Ardent Leisure has just completed a $70 million capital raising to fund the acquisition of Fitness First's WA portfolio.

ASA policy is that these capital raising be done by way of renounceable pro-rata entitlement offer, preferably with a single book-build at the end to deal with any shortfall.

Alas, like so many other companies, Ardent instead did the old overnight institutional placement, which fundamentally offends the property rights of existing shareholders. Australian law is incredibly lax in this regards, allowing issuers to place 15% of a company's stock to whoever they like each year.

After raising $50 million from institutions, Ardent Leisure then announced a Share Purchase Plan in which all retail shareholders, no matter the size of their holding, were offered an opportunity to buy up to $15,000 worth of shares at the same price of $2.40.

Retail investors owned 38.75% of Ardent Leisure before the capital raising but the board proposed capping the SPP at just $15 million. In other words this was forced dilution of the retail shareholder class given that they were only being offered a maximum of 23% of the new shares.

ASA entered the fray in late August with what is now a standard letter for these situations citing all the precedents of companies which have announced capped SPPs but then expanded them in the face of over-subscriptions.

Unlike QBE, Ardent Leisure did agree to ASA's request to send a reminder email to shareholders, which always serves to increase participation when an SPP is in the money.

However, there was no indication that the board was open to expanding the SPP. That's when I decided to lob a conditional board nomination at them which would be withdrawn if retail shareholders were treated fairly.

We had a little bit of argy bargy and in the end I withdrew the nomination and the board expanded the SPP from $15 million to $20 million, as was explained in today's ASX announcement.

Given that the stock is trading at $3.11 today, this extra $5 million allocation represents a paper profit of $1.48 million for participating retail shareholders. If board tilts or the prospect of a board tilt can help deliver this sort of outcome, then surely it's a tactic which should be pursued more not less.

Examples of board tilts that achieved outcomes

Australia has the world's best system of shareholder engagement and this leads to better governance outcomes. A permissive regime for external board nominations is a key part of this.

The easy joke is that no-one else can claim they've had almost $300 billion worth of stock voted against them across 40 public company boards tilts, but quite a bit has been achieved doing this over the past 15 years.

For instance, the early tilts often revolved around companies that still had cash for comment contracts with controversial shock jocks Alan Jones or John Laws. None of these contracts were subsequently renewed as the likes of CBA, IAG, Qantas and Optus knew there'd be a hostile board tilt coming if they did.

Similarly, Westfield only announced this 2009 share purchase plan for retail investors after an institutional placement to avoid a board tilt at the AGM which was just a few weeks away.

It will be interesting to see what decision QBE makes this week after its unfairly capped $160 million SPP was heavily over-subscribed. We've been in communication! The AGM is next April.
Another good example was Steve Vizard's conflicts of interest as a Telstra director. I nominated in 2000 on a platform opposing his re-election and citing his competition against Bigpond in two separate business ventures. Rather than face a messy public debate, he resigned 9 days later.

The situation with John Gay at Gunns was also improved by a board tilt. Along with Rupert Murdoch, Gay was exploiting the exemption from elections that CEOs are given in Australia, even though he was executive chairman.

I told Gay he'd cop a board tilt every year until he joined the likes of other executive chairs such Kerry Stokes, James Packer and Gerry Harvey and put himself up for election. He caved the following year, although shareholders blundered in not voting him off the board given the disaster which later unfolded on his watch.

Rupert delays both his AGM date release and finalisation of our board tilts

The plan is to run for 6 boards between the Fairfax Media AGM on November 6 and the Ten Network Holdings AGM on December 6.

The Fairfax Media and Commonwealth Bank nominations have both been completed because they are the first two with the earliest deadlines.

Ten Network Holdings is all about opposing Gina Rinehart's re-election and forcing the Murdoch and Packer families to vote against something (my election) in public together for the first time in history. I'll be saying that Ten should be independent of the Murdochs and News Corp supplied programs such as The Bolt Report should not be allowed to degrade the Ten offering. Wonder if that will make it into the Notice of Meeting? Free speech anyone?

Unfortunately, I can't finalise the other three board tilts until Rupert Murdoch finally releases his AGM date for News Corp, which last had an AGM in October 2012.

News Corp director Peter Barnes replied to an email query in July as follows: "For planning purposes November is the month set down for the stockholders meeting. The day and city are under discussion at the present time. Will let you know once finalised."

It's now September 15 and there's still no word. New York spindoctor Ashley Huston replied to an email query last Thursday as follows: "Haven't released it just yet. Will be in touch. Thanks!"

This is just garbage. ASX 100 companies typically include their AGM date in the calendar of events on their website at least 6 months before the meeting.

If you look at the ASA website section on "upcoming AGMs" you can even see that Orica has already advised shareholders about their next gathering is on January 29, 2015.

No major company leaves the finalisation of its AGM details this late, so Rupert is simply deliberately trying to make it more difficult for shareholders to arrange travel to attend. As usual, he displays worst practice on governance matters.

That's why I can't yet reveal the three other board tilts as I'm also hoping to make the inaugural News Corp AGM since it become primarily a legacy print business in terms of revenues with a majority of its profit-based equity value coming from Foxtel, Fox Sports and REA Group in Australia.

If you run for a board, you should show up at the AGM and you can't do that if you're in LA or New York having a pleasant catch up with Rupert.

There is also a wide range of interesting options in terms of board tilts. Here's six that are prospective although a couple more likely candidates have been not included to retain an element of surprise:

Harvey Norman: completely hopeless at corporate governance, haven't appointed a new director in 7 years, don't even have an investor relations section on their website and refuses to engage with proxy advisers. No wonder they had director protests above 20% last year.

Greencross: just made it into the ASX200 after latest petshop acquisitions and capital raising. Owes its retail shareholders a share purchase plan after doing a recent discounted institutional placement at $8.45 with no subsequent SPP for retail investors despite a written request.

BHP Billiton: time to unwind the dual listed company structure and return to a primary listing in Australia.

National Australia Bank:
continued poor management of its UK banks which should have been sold years ago.

Aurizon Holdings: time for chairman John Prescott to retire.

Bank of Queensland: poorly managed exit of CEO Stuart Grimshaw.

Herald Sun disgrace over East West Link coverage

The Herald Sun has been an embarrassment to journalism with its partisan distortions over the past few days.

I'm no great fan of Victorian Labor leader Daniel Andrews but he is completely within his rights to say Labor will not support the completion of the East West Link if it wins the November 29 election, even if the Napthine government rushes to sign a $6 billion contract with a Lend Lease led consortium shortly before it goes into caretaker mode next month.

The key point here is that, just like with Julia Gillard's carbon tax, the Napthine government has no mandate to sign up taxpayers for the most expensive road contract ever let by an Australian state.

The Liberals went to the 2010 Victorian election promising not to build this project. Instead, there was all this talk about Doncaster rail.

Now that Labor has made its position absolutely clear, the Herald Sun should be calling for the Napthine government to "let the people decide" rather than rushing into a dubious unsupported contract which potentially triggers large compensation payments if the government falls.

There is no contract signed today and that should also be the case when Victorians go to the polls on November 29.

City of Melbourne may very well formally adopt such a position at the forthcoming September council meeting, although internal discussions on this point won't kick off in earnest until tomorrow.

Council update: CEO exits after 6 years

It's busy busy busy at City of Melbourne at the moment and that's before considering big issues such as the East West Link and the forthcoming state election.

Firstly, the City's excellent CEO, Dr Kathy Alexander, has decided to retire from executive life on December 3, her 60th birthday.

We didn't get a chance to talk her out of it as I was told the news by 774 ABC Melbourne morning presenter Jon Faine when he rang after reading the press release that none of us knew was going out. Dr Alexander would make an excellent non-executive director if anyone out there is in the market.

The recruitment process for a successor has been and will continue to be quite intensive over the next few weeks. We've appointed a 4 person CEO Employment Matters Committee which is chaired by an independent and includes the Lord Mayor, Cr Cathy Oke and myself. An international recruitment firm has also been selected and an advertisement is being prepared for The Economist which will say something like: "The World's most liveable city (as decreed by The Economist for the past 4 years) is seeking a new CEO."

After that we'll be into the selection process which should attract a strong field of candidates, both internal and external.

Unprecedented community panel advising on 10 year plan

In other matters at council, we're embarking on a world first community consultation process around our inaugural 10 year financial plan which John Brumby's former chief of staff Nicholas Rees summarised as follows in The Age recently.

Getting 46 people to commit 5 full days is a big task and I spent 4 hours at Saturday's second session, which included a one hour opportunity for councillors and senior execs to make direct suggestions to small round-tables of the panelists in 6 minute bursts.

The Herald Sun, 3AW and the IPA have been predictably critical, pushing lines about wasting $150,000 and hiring punters to do our job, but I'm optimistic the panel will come up with some bold and brave recommendations and that they will have some political momentum behind them given they will have come from the community after a period of intensive study and debate.

It also helps that we've never done a 10 year plan before so there is no legacy or existing position to be defended.

Luca Belgiorno-Nettis should be commended for putting a few million dollars into the New Democracy Foundation which City of Melbourne is using to run the panel process. It's a much better contribution to the democratic process than political donations, which is the way many other Rich Listers choose to do it.

Interestingly, Luca's family finally exited the Transfield register last week, in a $96 million sale.

CoM accounts approves, parking revenue jump stuck out

The annual accounts were approved at a special council meeting last Tuesday night and on a subsequent slow news day this lead to a defensive chat with Channel Nine about our record $51 million parking fees haul in 2013-14.

It's much easier criticising others on the corporate governance front than defending a $7 million jump in parking fees, but these were some of the lines:

* We might be $5.50 for one hour in the CBD but Sydney is $7.

* Off street private car parks are up to 20 times more expensive.

* Yes the increases were substantial in July 2013 but this will be a one in eight year change.

* Car numbers in the city have been declining since 2003 and this will continue as more people use alternative transport modes.

* Parking revenue has helped us keep the rates down - indeed when measured by the "rate in the dollar" they are down by almost 70% since 1996.

Pokies update

It was a pleasure to listen to Tim Costello recently launch Gabi Byrne's Dare to Connect North West program at the Brunswick Town Hall.

It's a state-supported program backed by a range of councils in Melbourne's north and west which aims to build greater community connection for those who've previously battles with pokies addiction and isolation.

Check out this coverage in the Moreland Leader.

Also, check out this package of our past pokies coverage.

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

The Mayne Report Rich List

BRW magazine used to do a great job with its various Australian Rich Lists but since the print version was closed, it has fallen away, as was explained in this recent Crikey story.

Back in the early days of The Mayne Report we broadened BRW's efforts to track any Australian who has ever been worth more than $10 million. We've got more than 1500 names with those who've fallen back below $10 million now italicised. Below are a few new additions, largely from Sydney's Eastern suburbs:

Avi Spyrides: a former head of Glencore's coal division now living in a big Sydney mansion. Thought to be worth north of $300 million.

Vaughn Blank: ex CEO of Glencore Australia. Worth around $200 million, including Sydney mansion worth more than $30 million.

John Landerer: lawyer and former professional director whose Sydney house alone is worth more than $30 million.

Neil Miller: tech entrepreneur who recently sold his Sydney house for more than $30 million.

Kevin Bermeister: Skype and Kazaa co-founder whose Sydney house is also worth more than $30 million.

Bruce Solomon: Sydney hotelier who owns The Sheaf amongst others. Thought to be worth more than $100 million.

Clive Isenberg: Founder and ex owner of Scottish Pacific, which was sold to St George in 2000 for nearly $50 million. Has a new finance company called Octet with Peter Gammell, former CEO of Seven Group Holdings.

Crikey yarns since last edition

Whilst The Mayne Report hasn't come out all year, there have been occasional Crikey stories although this will crank up over the next three months. Here are the Crikey stories so far in 2014:

Murdoch family civil war - don't write off Rupert yet
Crikey, January 20, 2014

Conflicts of interest and financial services inquiry
Crikey, Monday, February 10, 2014

Abbott ditches Qantas, watch the share registers
Crikey, Monday, March 3, 2014

Shareholder activism harder than you think
Crikey, Wednesday, March 19, 2014

Lachlan lured back but which office does he get?
Crikey, March 27, 2014

Why last week's Westfield vote should stand
Crikey, June 3, 2014

Compulsory civic service not such a bad idea
Crikey, Wednesday, June 18, 2014

How Labor could have headed chaplains off at the pass
Crikey, Thursday, June 19, 2014

Fairfax's latest Rich List a bit lightweight
Crikey, Friday, June 27, 2014

Rupert's outrageous gerrymander in Time Warner play
Crikey, July 18, 2014

Woodside discloses proxies early, Shell deal headed for defeat
Crikey, July 31, 2014

170 business losers take out the trash
Crikey, Monday, September 1, 2014

Governance questions for James Packer at Crown AGM
Crikey, Monday, September 15, 2014

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From the member edition archive

The Mayne Report goes to almost 18,000 people but if you're a relatively new reader, here are links to some of the more interesting email editions sent out over the past six 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

Mayne family news

All is good on the home front.

Laura and Alice have settled in well at their new school this year.

This winter has been huge for sport with 7 different commitments each weekend.

We had fun season of competition tennis earlier in the year which was the three Mayne kids coached by Dad.

Laura loved playing U15 AFL and was even thrown into the ruck occasionally even though she's only just turned 13.

They are all still learning piano off my mum, but none of them are yet interested in coming to watch council meetings.

Paula's family mediation work is going well - she loves it and it sure beats selling ads for Crikey or trying to assist managing the paper deluge of the world's biggest small share portfolio.

That's all for now.

Do ya best, Stephen Mayne

* The Mayne Report is an email newsletter which seeks to promote transparency and good governance in the corporate, political and media worlds. It is published by Stephen Mayne, the founder of Crikey.com, shareholder advocate and City of Melbourne councilor. To unsubscribe from this email list, click here.