Dear Mayne Report readers,
After a whirlwind 3 days in Los Angeles, here is an update on what happened with Rupert courtesy of your generous donations to fund the trip. The big additional piece of news that hasn't been reported by the mainstream media yet is that Rupert sat on these voting results
from the News Corp AGM for 24 hours because they showed the biggest across the board protest votes he has ever received during his 60 years in charge.
The shareholder proposal to unwind the undemocratic dual class voting gerrymander only went down 79 million votes to 86 million
. It's never been this close as News Corp's second biggest shareholder, US fund South East, is clearly hostile as it appears to have also voted against most of the directors, including Rupert himself.
Institutions and proxy advisers are clearly furious that News Corp, on top of the dodgy dual class gerrymander which denies a vote to 70% of the shares on issue, introduced a "poison pill" to fend off South East. This effectively bans the fund from adding to its existing 15% voting stake. No doubt Darren Davidson and Sharri Markson will report on all this interesting news in The Australian's
media section tomorrow.
Having just listened to Andrew Bolt ranting about ABC Managing Director Mark Scott refusing to come on his show and answer questions, the hypocrisy of Rupert's extraordinary resistance to questions at his AGMs this week is stark indeed.
Have a listen to the webcasts from the links below while you can. There were about 10 separate attempts to shut down or discourage debate during the two meetings which attracted just 16 shareholders in total and lasted for a total of 67 minutes. A complete joke from a paranoid, unaccountable, hypocritical dictator who should retire. Below are the two detailed accounts of both meetings published by Crikey.
If you're not a Crikey subscriber (and you should be - go here
to sign up), here is what Crikey ran
in Thursday's edition after the 21st Century Fox AGM:
Mayne takes on Murdoch in fiery Fox AGM in LA
By Stephen Mayne
Rupert Murdoch has done a lot of ducking and weaving to avoid answering questions at his AGMs over the years, but this morning's effort at Fox Studios in Los Angeles was arguably his most brazen.
Only about 10 retail shareholders bothered to go through the rigmarole of registering at the Century Park West car park opposite Westfield's impressive Century City shopping centre before taking the company shuttle. Four buses were lined up, but only one was needed.
I was first to register at 9am for the 10am 21st Century Fox AGM and scored a personalised bus trip as the only passenger.
We saw a bit of Modern Family
activity on the way through Fox Studios, but it was obviously too much effort to offer shareholders a tour of the sprawling 20-acre site.
There was a reasonable spread available before the meeting but no directors or senior execs circulated with shareholders and the food was gone when the meeting finished after just 27 minutes. The 10 shareholders and one reporter from the LA Times
were shuffled onto the bus straight after the meeting and off we went back to the parking lot. At least the driver was good enough to drop me at The InterContinental.
On entering the Zanuck Theatre, shareholders were handed the “rules and procedures” that would apply. They included the following: “Each speaker is limited to a total of no more than two questions or comments that must … be no more than one minute in length.”
Many companies attempt to apply some form of informal limit, but this is usually for each visit to the microphone and only applies after debate has been going for more than an hour.
Australian law also requires discussion and debate on each separate resolution. Murdoch relishes the lax American system, which tolerates debate on all resolutions being done as one job lot.
Rupert verbally reminded shareholders of the limit during his initial 15 minutes in charge of the microphone, and when I stepped up as the first questioner, general counsel Gerson Zweifach, who is not even a director and shouldn't have been on the stage , firmly repeated the rule and said it would be enforced.
The opening questions focused on the Murdochs: how was Rupert splitting his time as executive chair of two companies? How were things working out with Lachlan as co-chair — would he be running part of the meeting? And why did the family take out a record salary of $64 million in 2013-14?
Remuneration committee chair James Breyer was a no-show, so Sir Rod Eddington chimed in saying Rupert was paid less than other big media CEOs. Proxy adviser Glass Lewis recommended a vote against, but ISS was in favour and shareholders weren't given the precise voting numbers — though they were assured there were no meaningful protest votes on any resolution.
Despite claims from the top table that all resolutions were overwhelmingly supported, about 20% of the non-Murdoch votes cast
opposed the re-election of James and Lachlan Murdoch.
Audit committee chair and former News Corp exec Sir Rod Eddington was the next most unpopular director and the remuneration would have gone close to a 25% strike had the Murdochs not been able to vote for their own pay as is prohibited in Australia.
The Lachlan question was ignored and when prompted Rupert said the two jobs was fine as all the key execs — James Murdoch, Chase Carey and Robert Thomson — had their offices in New York next to his.
I then sat down so another shareholder, Aaron Epstein, could ask a question and he got a laugh saying he hadn't come from Australia but rather North Hollywood.
When no one got up and we were still just 20 minutes into the meeting I returned to the microphone and management, in the form of Zweifach again, attempted to prevent any more discussion saying I was already in breach of the rules having asked two-and-a-half questions.
“I guess we'll see you tomorrow [at the News Corp AGM] for two more,” he bluntly declared.
I blustered through, appealing for fairer treatment and the company's great track record on free speech. Rupert reluctantly agreed to one last question, which turned into an omnibus about the delisting of Fox from the ASX and the Time Warner takeover bid.
Rupert said the company had been expecting a deluge of Australian selling but had been surprised that many had instead chosen to hold on.
And on Time Warner he dismissed the question about why voting shares hadn't been offered, saying it wasn't an issue that came up with the directors. The bid failed because he wasn't prepared to increase it by US$10 a share.
After I sat down, security promptly whisked away the fixed microphone I'd deliberately sat next to in the left aisle.
But there was still one in the right aisle, and an elderly shareholder got up and asked about the potential for higher dividends.
With no microphone to use and as Rupert then proceeded to close the meeting, I shouted out a question: “Any plans to retire, Mr Chairman?”
This does not come through on the webcast of the meeting
, which should be listened to as a case study for chairs on how not to facilitate shareholder engagement at AGMs.
Rupert soldiered on and quickly adjourned the meeting when he meant to close it.
A slightly sheepish Sir Rod Eddington popped over for a quick chat on remuneration after the meeting, and he agreed that time limits should apply to the meeting as a whole — not the way dictatorial Rupert played the game after just 27 minutes of action.
I told Eddington to tell Jac Nasser that if a similar paranoid regime presides over tomorrow's News Corp AGM I would run against him at next year's BHP Billiton AGM on a platform highlighting his complicity in the undemocratic fiasco of this morning. They can't say notice hasn't been given.
Before entering the AGM, I overhead one Fox staffer say to a colleague, “We have perfected the art of making this meeting as boring as possible.”
For a public company which makes billions out of free speech and open communication, that's a very sad thing to be proud of.
So next time an elected official comes under sustained questioning from a News Corp hack such as this
, someone like Clive Palmer could quite credibly restrict the questioner to just two questions over two minutes before removing the microphone.
A great censorship-busting journalist like Sir Keith Murdoch would be turning in his grave if he knew how controlling and undemocratic his son had become in his old age.
And it was most disappointing to think that Keith's two grandsons were sitting mutely on stage alongside their father as he embarrassed the family yet again.
What's to worry about a fast-paced one-hour AGM with 45 minutes of debate? Having handled more than eight hours of public questioning over phone hacking and almost four hours of debate with me during 12 encounters over the years, it's such a shame the leader of the world's most powerful family is seemingly running scared from scrutiny.
* Stephen Mayne will be attending the News Corp AGM in Los Angeles tomorrow. Listen live to the webcast from 5am AEST.
And here is the piece Crikey ran
on Friday after the News Corp AGM
Rupert talks about those famous Crikey leaks at News Corp AGM
By Stephen Mayne
Rupert Murdoch has finally personally addressed those Crikey News Corp leaks
at News Corp's fiery AGM yesterday.
After just a 27-minute 21st Century Fox AGM
on Wednesday, four News Corp shareholders managed to extend proceedings at the company's AGM at Fox Studios to 40 minutes.
Only six shareholders bothered to go through the rigmarole of registering at the Century Park West car park, and we all thought it was such a joke we got the AAP reporter to take a photo of the six of us when the shuttle bus dropped us back at the parking lot after the meeting finished.
I was the third shareholder to register at 9.15am and scored a private trip on one of the two shuttle buses available, down from four yesterday, when only 10 shareholders showed up.
Having made it through the over-the-top security arrangements, with screening and bag checks at the parking lot and outside the Zantuck Theatre, I tucked into some breakfast and got chatting to fellow shareholder Jim McKenzie.
He agreed the questions regime was paranoid, so he would ask a couple himself and also second my proposed amendment to the rules of the meeting, which would lock in a minimum of 30 minutes of debate and make the two-question limit apply to each of the six resolutions rather than the meeting as a whole.
Audit committee chairman Peter Barnes and the boss of investor relations both popped over for a chat before the meeting and were told that the amendment was coming so the directors of this famous media company themselves would all have to raise their cards and vote in favour of suppressing free speech and public debate.
In the end, I didn't move the amendment to the meeting rules because the shareholder proposal to end News Corp's gerrymander changed the dynamics of the meeting and there was an opportunity to have three solid runs at the microphone, which elicited plenty of interesting responses.
Despite knowing that a BHP-Billiton board tilt against 21st Century Fox independent director Jac Nasser was riding on it, Rupert Murdoch decided to hold the line on the two-minute speaker limit.
Indeed, he cranked it up even more. Listen to the webcast
and the first thing you hear is an announcement over the loud speaker reminding everyone of the speaker limitations. This was not done at the Fox AGM.
Bizarrely, the 2013 demerger of News Corp from 21st Century Fox has not led to the two separately listed companies having their own general counsel. The heavy-handed enforcer reported on in yesterday's Crikey
, Gerson Zweifach, was up on the stage doing Rupert's anti-free speech dirty work again.
Rupert and Gerson are the only two executives common to both companies, and the only other personnel duplication comes from Lachlan and James Murdoch sitting on both boards.
Despite a scheduled News Corp board meeting in LA after the AGM, James Murdoch was a no-show today. Rupert said he had an unbreakable charitable commitment in New York. Poor form.
Bill Dempsey from the Nathan Cummings Foundation, which put up the shareholder proposal to end Rupert's gerrymander, blasted the three absent directors.
Rupert only had specific reasons for son James but defended the absent John Elkann on the basis that the two men spoke on the phone every week, along with Elaine Chao, the wife of incoming Republican Senate majority leader Mitch McConnell. Rupert said: “I hope she's having a break after three months of intense campaigning.”
Sounds like Elaine is on the board for her political connections more than her contributions around the board table.
Sadly, for the second straight day, there was no female among the eight suits sitting on the stage. Opera singer and Bancroft family board representative Natalie Bancroft sat silently in the front row.
After five minutes from Rupert and five minutes from CEO Robert Thomson (neither bothered with any slides), Rupert threw to former Spanish President Jose Maria Aznar, to give the board's defence of his gerrymander.
It was tosh, including that denying the owners of 70% of the shares on issue a vote at the AGM somehow helps News Corp attract and retain top talent.
After that, Bill Dempsey delivered an excellent two minute critique (listen here
) on why gerrymanders are a bad idea. He invoked Cuba and North Korea, talked about insiders using them to extract private benefits ($600 million in Murdoch salaries since 1998
) and said dual class voting structures delivered lower returns while insulating boards and management from facing shareholder concerns.
Rupert was hoping this issue would be book-ended and we'd then move onto general questions, but I got straight up and spoke strongly against the “abominable gerrymander” for being “fundamentally undemocratic”, allowing things like the $64 million in Murdoch salaries to be expropriated in 2013-14.
I directly asked Rupert to respond on the issue of why he felt the need to hide behind these undemocratic structures rather than standing on his record in a one vote one value system as his media outlets demand from politicians all over the world.
Incredibly, after Rupert briefly interjected to contest the salary figure, blustering lawyer Gerson stepped in again, providing a detailed response protecting the man who pays him millions but won't let him serve as an executive director.
Unfortunately, Gerson obviously misheard the $64 million figure and instead referenced the $600 million figure mentioned in the Crikey
story, which he had obviously read.
After that, two other shareholders got up on different issues related to dividends, synergies and Amazon legal settlements with book sellers.
Rupert took the opportunity to pump up son Lachlan's tyres for the original REA purchase for $2 million in 2000. Lachlan was also praised in Rupert's opening remarks, but once again, for the second day running, the co-chairman was seen but not heard.
I then got up for my two designated questions, which really morphed into half a dozen, based around the general themes of “Australian operations” and “UK operations”.
Goon Gerson continued to run interference but ultimately Rupert played ball, coughing up quite a few gems.
Firstly, when shown a copy of Kim Williams' book, Rules of Engagement,
Rupert said it was “nonsense” that he was fired for launching Chris Bowen's book last year.
“I don't want to be unfair to Mr Williams, but if you see those figures which he or someone else leaked to you [he meant Crikey
] on the performance of the company in the previous financial year, that tells you everything.”
In other words, Kim Williams was fired because his major restructuring hadn't worked.
News Corp CEO Robert Thomson dealt with the question on the heavy-handed legal response
by News after the Crikey
leak, saying it was merely “legal bluster”.
Then came the main news story of the day, which was Foxtel's bid for Ten. The independent directors through the News Corp audit committee have retained legal and financial advisers because of Lachlan's 9% stake in Ten, which made it a related party transaction the company.
Peter Barnes gave the main answer confirming a bid was on foot, but Rupert piped up with the important caveat that Lachlan was not planning to sell. Presumably Lachlan will do the same as largest shareholder Bruce Gordon and roll his Ten stake into the Foxtel bid vehicle.
All this will be highly controversial in Australia requiring government, Australian Competition and Consumer Commission, Foreign Investment Review Board, Telstra and Ten shareholder approval. It's also illegal under the current cross media laws because the Murdochs would be controlling a majority of the newspaper market, the monopoly pay TV provider, a free-to-air network and Lachlan's Nova radio network.
Why would favourite Murdoch target Clive Palmer vote for that when no other family has such media market dominance in any other country on earth?
If it happens, Lachlan will no doubt be relieved when dad helps take him off the hook to the Commonwealth Bank on that $200 million loan facility that the imploding Ten Network has negotiated and is guaranteed jointly by Lachlan, James Packer and Bruce Gordon.
The final question of the AGM was on the United Kingdom. Rupert proudly declared The Times
would make a profit this year, goon Gerson battered away the question about a settlement with the US Department of Justice over phone hacking, and Rupert wisely declined to explain his falling out with Tony Blair, simply declaring that he had never been on the News Corp payroll.
—————————————————————-Victorian election: way back in September 1999...
Today's email edition was sent at 10.28am (okay, we were running late so that was Queensland time) on the second last Sunday before a Coalition Government in Victoria seeks re-election. We did this for a reason of history.
This is because at 10.28am on Sunday, September 5, 1999, we went public with this treatise
It was 13 days out from Jeff Kennett's shock defeat and 15 years later, none of the material in this 18,766 word analysis
of the Kennett Government has been challenged.
The Kennett Government was defeated in what remains one of the greatest election shocks in Australia. And history also shows that www.jeffed.com overtook the ALP website for popularity as it attracted 115,000 page views in the 13 days before Victorians went to the polls. We tried the same with Bracksed.com during the 2006 election, but it badly flopped. There just wasn't the same governance issues surrounding Steve Bracks, who proved to be an excellent and popular Victorian Premier.
Candidate assessing for November 29
But that's all old news now. After toying with an independent tilt on November 29, the role this time will instead be one of independent commentator, policy analyst and candidate assessor.
I'll be making some voting recommendations across various seats based on the quality of the candidates and the policies being advanced.
For instance, if Labor can't see the merit of retaining Melbourne's competitiveness with Sydney in terms of attracting international conventions, it will be hard to support them. See this resolution
passed unanimously by City of Melbourne councillors last Tuesday calling on Daniel Andrews to match Denis Napthine's promise to deliver a $350 million expansion of the Melbourne Convention and Exhibition Centre as Sydney rolls-out a $2.5 billion overhaul of Darling Harbour.
And if Labor's candidate in Melbourne, Jennifer Kanis ,doesn't even respond to this City of Melbourne survey
, she has no chance of endorsement. The Greens are the only party to respond so far.
All councils should get into the business of unanimously supporting the publication of a range of issues and questions that their local candidates should deal with.
In terms of candidate appraisal, the Liberal in Albert Park, Shannon Eeles, would make a better contribution to the Liberal Party room than incumbent Martin Foley has done for Labor over the years. And the Liberal in Frankston, Sean Armistead
, would also make an excellent MP if he can take the seat off Geoff Shaw.
As the Port Phillip Leader reports
, I'm backing rocker Tex Perkins in Albert Park, but he is obviously unlikely to win. The Green candidate David Collis would also lift the quality in the Greens party room. If he gets preferences from Tex Perkins, he is a serious prospect. It was very disappointing that Martin Foley is Labor's Arts spokesman and he released an arts policy with nothing for The Palais, which is a much-loved venue in his Albert Park electorate. With Tex in the field, this may prove to be his undoing.
To demonstrate how these candidate recommendations can go both ways, it would be great if Labor's number 3 in the upper house Northern Metropolitan region
, Burhan Yigit, made his way into Parliament. He spent many years as a diligent and effective councillor at the City of Hume and would make an excellent MP.
There can be disendorsements too. For instance, the Liberals would be better off if Andrew Elsbury did not get returned as the number two behind Bernie Finn
in Western Metro. He's far too Tea Party for Victorian politics.
Smaller parties and independents will also be supported. Independent Suzanna Sheed should be watched in Shepparton
. She's good and the Liberals are not being offered someone to vote for in what is a Nationals seat being passed to a new Member.
Sam Dunn was a strong president of the VLGA and would serve the Greens well if elected in Eastern Metropolitan
And if the Sex Party prevails anywhere, we'd like it to be Fiona Patten in Northern Metro
as she would definitely add to the diversity and quality of the Parliamentary diaspora in Victoria.
More media AGMs and engagements this week
Many thanks for all those donations to fund the Los Angeles trip to catch up with paranoid anti-free speech dictator, Rupert Murdoch. Shareholder activism is not cheap and we'll be spending another $1500 before Christmas on three more trips to Sydney for important AGMs. Any further contributions to support these endeavours would be greatly appreciated. (see below)
On Wednesday this week, Peter Costello will be seeking re-election to the board of Nine Entertainment Company. (Here's the notice of meeting
.) We will be in Sydney asking a few questions, including whether he should be appearing on Ten's The Bolt Report
and getting paid to write tabloid columns for News Corp when he's a Channel Nine director and chairman of the $100 billion Future Fund, a position which should be above cheap politicking. Later that day, I've got a meeting in Sydney with Ten's executive chairman Hamish McLennan and independent deputy chairman Brian Long ahead of the Ten board tilt at the December 17 AGM in Sydney.
Ten's notice of meeting is out tomorrow. Check it out here
and you'll notice a reference to The Bolt Report
in the published platform.
And on November 26, there's another trip to Sydney for the Cabcharge AGM. Check out this Crikey story
below from last week on all the governance issues surrounding that company:
Governance issues aplenty at Cabcharge
By Stephen Mayne
Cabcharge board candidate
John Durie has been the nation's best commentator on corporate governance issues over the past decade. So it was a little surprising to read his column on Saturday
declaring the current AGM season to be benign, with corporate Australia “emerging virtually unscathed”.
The worst-governed companies tend to leave their AGMs towards the back end of the season, and the most dramatic repudiation of a board this season will probably occur at the Cabcharge AGM in Sydney.
For starters, you have to go all the way back to 2006 to find a Cabcharge AGM where all resolutions were supported by the typical 95%+ of voted shares. Institutional investors have long been revolting against the company, as follows:
- 2013 AGM results: 45% against remuneration report and 26% against director Donn McMichael;
- 2012 AGM results: 12% against Reg Kermode, 22% against Neill Ford and 39.8% against remuneration report;
- 2011 AGM results: 18% against Philip Franet and 40% against remuneration report;
- 2010 AGM results: 38% against Peter Hyer, 37.5% against Donn McMichael and 37.5% against Kua Hong Pak. Remuneration report protest peaked at 48.5%;
- 2009 AGM results: 9% against Neill Ford and 45% against remuneration report;
- 2008 AGM results: 9% against Philip Franet and remuneration report opposed by 39.5%; and
- 2007 AGM results: 10% protest votes against Peter Hyer, Neill Ford and the remuneration report.
The media keeps talking about Cabcharge being on a fourth strike above 25% on the remuneration report, but this has actually happened at the last six AGMs, when the smallest protest was 39.5% in 2008. No other ASX 300 company gets anywhere near this record.
However, when investors gather at the InterContinental on November 26, Cabcharge will join the trend outlined in this recent Crikey story
of lower remuneration protests but higher protests against non-independent directors.
The death earlier this year of 87-year-old Cabcharge founder and executive chairman Reg Kermode has largely taken the heat out of the remuneration debate because he was on an excessive fixed salary of $2 million a year right until the end, with no at-risk component at all.
His internal successor as CEO, former company secretary Andrew Skelton, has a more conventional contract, although for some reason he hasn't been appointed to the board.
Former ABC and Sydney Airport CEO Russell Balding has stepped up as the new non-executive independent chairman of Cabcharge, but he is coming under intense pressure from shareholders to deliver credible new independent directors with deep expertise in governance, technology and the payments system.
Balding made a dreadful mistake in June when he appointed a close friend
, Rodney Gilmour, to the board. Investors have been crying out for genuinely independent directors, but Gilmour has been consulting to Cabcharge on PR issues over the previous three years. Even worse, the Cabcharge notice of meeting
fails to disclose how much the Gilmour consultancy was worth.
Gilmour is facing the prospect of being unceremoniously voted off the board at the AGM. If so, he could potentially return to being the Cabcharge PR consultant.
Related-party transactions have long been a feature inside the Cabcharge board room. Taxi industry veteran Neill Ford, 69, has been on the board since 1996 and was promoted to deputy chairman in June this year, a move that ran counter to the impression that things would change after Kermode's death.
Indeed, Ford now chairs the powerful corporate governance committee, which also looks after board renewal and remuneration. The other member of that committee is another taxi industry veteran, Donn McMichael, who has also been on the Cabcharge board since the 1990s.
Ford and McMichael have ongoing positions and investments in the taxi industry. Ford is CEO of Yellow Cabs, which had $1.86 million worth of business with Cabcharge in 2013-14 (see p51
of annual report).
A similar figure was disclosed in 2012-13, but that year also featured a $4.8 million payment to Ford when he sold his interest in a business called Maxi Taxi Australia to Cabcharge.
Another veteran director, Ian Armstrong, suddenly resigned
in late October with no explanation given. He was chair of the audit committee, but the uncommunicative board hasn't announced who'll be replacing him in that important role.
As a candidate for the Commonwealth Bank board, I'm meeting chairman David Turner in Melbourne tomorrow ahead of Wednesday's AGM.
There has been no such luck with Balding, who has been unavailable as the pressure mounts over the ongoing failure to turn Cabcharge into a conventionally governed company with a majority of independent directors.
*Stephen Mayne has nominated for the Cabcharge board as an independent director on a platform of governance reform.
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Do ya best, Stephen Mayne
* The Mayne Report is an email newsletter and website 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 councillor. To unsubscribe from this email list, click here.