Mayne Report year ender: Abbott reshuffle, tilts wrap, hiring CEOs, council, ASA, Harvey Norman, pokies, Crikey burst and then some

December 22, 2014

Dear Mayne Report readers,

Greetings for the first time since our last email edition on November 30. If you'd rather not receive these occasional email newsletters, click here to unsubscribe. If you'd like to share it, the web version of the URL is here.

Assessing the Abbott Cabinet reshuffle

Tony Abbott's new ministerial line-up is an improvement on what went before. David Johnston had to go from Defence and Sussan Ley is an excellent choice for the Health portfolio.

Peter Dutton failed miserably when it came to selling the price signal reforms to Medicare and deserved a demotion into Border Protection and Immigration.

The Kevin Andrews promotion into Defence is curious but once again confirms the old adage that loyalty to the leader will often be rewarded.

Whilst Scott Morrison has been successful, his barely disguised ambition has neither been loyal to his leader or Cabinet colleagues such as Julie Bishop. You don't reward bad behaviour by giving him an expanded Defence portfolio, as requested. Instead Morrison gets the old Kevin Andrews portfolio, with some expanded elements, which may assist with broadening his public profile for future leadership ambitions. The early media spin is all about unleashing tough guy Morrison on pensioners and welfare recipients, which is probably a tad unfair. Here's hoping Morrison stops the George Pell-inspired Kevin Andrews attacks on the ACNC, which is an excellent driver of better governance in the not-for-profit sector.

Josh Frydenberg will be a good replacement for "Arfa" Sinodinos as Assistant Treasurer and I'll certainly be hitting him up with a range of necessary reforms to improve public company transparency, respect shareholder property rights and stop the rip-offs of small shareholders in capital raisings.

Billionaire Gerry Harvey's capital raising rip-off of his small supporters

Billionaire Gerry Harvey was on the phone last week, declaring himself to be a "mean" in the way he negotiates deals in the commercial world.

He certainly wasn't generous with the $55,000 under-writing fee that he agreed to pay Perth-based stockbroker Paterson Securities to underwrite a $120.7 million Harvey Norman capital raising

However, Gerry's determination to save money has also contributed to him pocketing an outrageous $1.3 million windfall from his own small shareholders. The detail was all explained in this subscriber-only Crikey story last week.

However, the size of the rip-off was confirmed in this ASX announcement by Harvey Norman on Thursday. Thousands of the company's 12,000 small shareholders did not act rationally and failed to take up the offer of new shares at the heavily discounted price of $2.50.

Despite Gerry's ill-founded predictions of a 100% take-up, thousands of small holders collectively surrendered 1.463 million shares, so executive chairman Gerry Harvey kindly wrote out a cheque for $4.7 million last Friday and scooped up the lot. Having paid $2.50 a share and with the stock closing on Friday at $3.40, Gerry could sell these ill-gotten shares when the new stock commences trading tomorrow. His paper profit would be $1.31 million - all of which has come directly from his vulnerable non-participating small shareholders.

The problem is that Gerry was the only Harvey Norman shareholder given a chance to buy the stock when this privilege is normally offered to all small shareholders when a pro-rata capital raising is not fully renounceable. The cleaner solution is to make the offer completely renounceable whereby the shortfall after it closes is sold off in a competitive auction to the highest bidder, with the "premium" returned to those non-participating shareholders who declined the offer.

With such a brazen example of wealth being transferred from punters to a greedy and mean billionaire, Josh Frydenberg should immediately get to work and amend the Corporations Law so an inside job like this can never be perpetrated again.

If Gerry Harvey was half sensible, he would voluntarily compensate his non-participating shareholders rather than cop an ongoing campaign, including a board tilt at next year's Harvey Norman AGM. However, he's probably too mean to do that. As for his so-called "independent directors" looking after the interests of minority shareholders, they should be ashamed of themselves.

City of Melbourne update, appointment of new CEO

After an intensive 6 consecutive public council or committee meetings in a row between Tuesday, November 11 and Tuesday, December 16, it will be quite a strange experience to have a rare Tuesday off tomorrow.

We finished the year strongly, announcing quite a coup with the appointment of 42-year-old young gun Ben Rimmer as Melbourne's new CEO.

Ben has spent the past three years as "Associate Secretary, Service Delivery Transformation, Department of Human Services". This has involved some major digital reforms across the Centrelink network.

He's also a Rhode Scholar and has an MBA from Oxford, not to mention his past experience in both Premiers and PMC. All very exciting for the City of Melbourne, as was the overall quality of the field.

There were more significant changes pursuing the transparency agenda at Melbourne as was explained in this November edition. And another highlight was the ground-breaking People's Panel which advised council on our first ever 10 year financial plan.

ASA appoints a new CEO

Also on the CEO recruitment front, the Australian Shareholders' Association has appointed Joanne Parker as its new CEO.

The press release identifies a strong background, including her current role as GM for NSW/ACT of the Institute of Public Accountants.

I had no involvement in the process and don't know Joanne, but accountancy is the profession which has the most in common with ASA's goals to drive good financial performance and strong corporate governance at Australian listed companies, so it looks like a good fit. Best of luck to Joanne.

Picture of the year - the 6 shareholders who fronted Rupert

Perhaps the biggest corporate governance farce of 2014 was Rupert Murdoch's attempt to shut down debate at the News Corp AGM in LA in November. Radio Adelaide's fabulous program, The Scrutineers, had the best coverage of the shemozzle. Here is a picture of the 6 shareholders who actually attended, after we were dropped off by the company shuttle bus at a parking lot near Fox Studios. So much for Rupert's 2 question limit based on the huge numbers of people who wanted to ask questions:

Meanwhile, check out this excellent Bruce Guthrie piece in The New Daily about Rupert's strange tweeting ways.

Final scorecard after a flurry of 5 board tilts

For all the noise made about the attempted coup at Karoon Gas, the challenging slate of directors were comfortably rejected with a peak vote of 24.2%. Proxy advisers and institutions are now well-drilled at rejecting virtually all outside challengers who emerge. Former Australian Institute of Company Directors CEO, Ian Dunlop, saw his BHP Billiton vote drop from 108 million shares or 3.74% last year to 65 million shares or 2.26% this year.

As for my tilts, the long-term batting average has certainly declined after the latest burst of board contests. And who else can gloat that more than $400 billion worth of stock has been voted against them? Anyway, here are the results but do remember the aim of the exercise was to change behaviour/culture and put pressure on for reforms, not get elected:

Fairfax Media:
0.92% in favour despite majority of retail voters supporting the tilt, as was explained here.

Commonwealth Bank: 3.15% support but they refused to reveal retail sentiment, which presumably means there was majority support like at Fairfax.

Woolworths: 4.05% support as some retail shareholders clearly share the concern about its position as Australia's biggest pokies operator.

Cabcharge: an excellent AGM for governance debate but only 2.25% support in the poll.

Ten Network Holdings: 0.61% on the proxies but rose to 1.48% in the poll after stronger than usual support from the floor.

After 45 board tilts in 15 years, we're not yet sure about any future runs, save for the likelihood of a nomination at Harvey Norman next year given the shocking capital raising rip-off explained above.

Tap into ASA's excellent research lists

Any retail investor worth their salt should be a member of the Australian Shareholders' Association and the value proposition has never been better.

The ASA website has a growing list of interesting research lists, some of which are member-only behind the paywall. Here are a few favourites:

Longest serving ASX 200 directors

New CEOs who embrace write-offs

Biggest protest votes against directors in 2013

Measuring independent chairs for "skin in the game"

Capped SPPs which were then expanded

How retail investors do worse with separate bookbuilds

The 100 most important remuneration protest votes

31 examples of where retail investors gathered 100 signatures

ASA does not publish voting intentions reports free on its website any more. However, "subscribers" who merely give their details will get plenty of access so that's definitely worth doing.

And if you want to see all the research plus the full archive of AGM reports and voting recommendations since 2009, you really should become a member. Click here.

Pokies campaign contributed to Green win in Prahran

Anti-pokies campaigner Paul Bendat spent up big in the marginal seat of Prahran, which ended up delivering a shock Green victory over Liberal Clem Newton-Brown. Maybe just maybe the tens of thousands of dollars he put into Prahran might have influenced a few voters to reject the major parties with their limp policies on curbing poker machine addition. Paul had billboards, street crews, coffee cups and sent flyers to every home twice.

He saw Clem Newton-Brown (Lib) and Neil Pharaoh (ALP) before the election to try to convince them to push for the $1 bet limit so that gamblers won't lose more than $120 per hour. Too bad party structures would not let them speak on the issue, particularly Neil who seemed sympathetic.

Here's an example of one of the big billboards Paul secured under the Network Ten logo in Chapel Street South Yarra. And look where the tram is headed?

It's a message which other politicians should take note of, including new Victorian Gaming Minister Jane Garrett who is facing a growing challenge from the Greens in her seat of Brunswick.

Also, 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 ago featuring our daughter Alice, who was 6 at the time:

A trip down memory lane on our Youtube channel

When The Mayne Report first launched in 2007 we were posting daily videos on our Youtube channel. Alas, the cost and time of in-house video production, plus the lack of any revenue, made this model unviable. Besides, daily videos weren't necessarily the best way to campaign for better corporate governance through shareholder activism. And words, not pictures, was our traditional strength.

In the end, it made more sense to channel our efforts into appearing on mainstream media video platforms. People watch Q&A, Inside Business and The Project.

However, when you look back at all the video we've got spanning our own productions, one-off interviews, profiles or lengthy interviews such as Nine's Sunday program or ABC TV's Talking Heads, the regular spot on Sky's Business View and webcasts of AGMs, it turns out we've got a rather large library of material, some of which is now available on our Youtube channel.

Some of the favourite videos on our playlist include the following:

Macquarie Model a dead parrot

Challenging Mark Scott at the Press Club on falling media wages

Debating Mark Scott and John Fairfax on media trustworthiness

Donate to help keep us going

The Mayne Report has accumulated net losses of almost $300,000 since we launched in October 2007. 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 $30,000 worth of donations over the past five years and if you fancy giving us a hand to help fund our activism and keep us going on the political and AGM circuit, just click on the image below:

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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 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.

A busy year for Crikey, spilling into January

We ended up writing these 51 stories for Crikey in 2014, the majority occurring after the ASA gig wrapped up in September. This will continue into January with another 12 stories promised and then the arrangement will be reviewed as we work out what the "second gig" after City of Melbourne should be in 2015.

Below are links to some of the Crikey favourites from 2014 which are now out from the behind the paywall:

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

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

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

Eddie Obeid, Wesfarmers, dilutionary capital raisings and an Arrium debacle
Crikey, Thursday, September 18, 2014

Transurban out-plays Labor and Liberal in Victoria
Crikey, Friday, October 10, 2014

Companies for old men: the codgers who won't let of their board seats
Crikey, Tuesday, October 14, 2014

Why is The OZ spinning for overpaid and underworked Gina Rinehart?
Crikey, Tuesday, October 21, 2014

Director protests overtaking remuneration reports
Crikey, Wednesday, October 29, 2014

How Sydney and Melbourne do central city planning so differently
Crikey, Thursday, October 30, 2014

Revealed: Murdoch salaries top $600m from News Corp
Crikey, Monday, November 3, 2014

A full history lesson on Packer, Crown and Victorian Labor
Crikey, Tuesday, November 4, 2014

Wrap of the 2014 Fairfax Media AGM
Crikey, Friday, November 7

Murdoch vs Mayne in fiery Fox AGM in LA
Crikey, Thursday, November 13, 2014

Round two with Rupert at News Corp AGM
Crikey, Friday, November 14, 2014

Murdoch and the Saudi prince: scenario analysis
Crikey, Thursday, November 20, 2014

Governance issues aplenty at Nine for Costello to sort out
Crikey, Friday, November 21, 2014

How Ten's chairman avoided election
Crikey, Monday, November 24, 2014

Murdoch rent-seeking reaches new high in Victorian election
Crikey, Tuesday, November 25, 2014

Dreadful Cabcharge governance on full display at AGM
Crikey, Thursday, November 27, 2014

Last day of AGM season and a review of key highlights
Crikey, Friday, November 28, 2014

Revealed: 233 last day AGM laggards
Crikey, Wednesday, December 3, 2014

CBA declines to reveal retail voter sentiment at AGM
Crikey, Thursday, December 4

Sign up for campaign and governance Tweets

Click on the image above to join 23,000 followers on Twitter. We are regularly dropping out observations about journalism, politics, breaking stories, local government and shareholder activism.

From the member edition archive

If you're a relatively new Mayne Report reader, here are links to some of the more interesting email editions sent out over the past seven years.


Special edition on the Victorian election result
Sunday, November 30, 2014

Vic election, Herald Sun, Rupert votes, Tex, Xenophon and much morey
Sunday, November 23, 2014

Rupert AGMs, Cabcharge, Costello, Bolt, Ten and Victorian election
Sunday, November 16, 2014

CBA tilt, LA visit, Rupert AGMs, Cabcharge and state election
Wednesday, November 12, 2014

Cabcharge, donations for Rupert visit and governance reforms at City of Melbourne
Wednesday, November 5, 2014

Tilts, Fairfax, CBA, Brickworks, Albert Park, ASX, Woolies, pokies and Crown
Friday, September 20, 2014

We're back: inside a post-ASA election season blitz
Monday, September 15, 2014


Capital raisings, Ansell, IAG, Packer, pokies, Rich List, City of Melbourne and ASA update
Monday, December 23, 2013

Franking robbery, East West trust breach, BHP bonuses, John Gay and plenty more
Sunday, August 25, 2013

ASA policy paper, Kevin Andrews on the pokies, Senate preferences and much more
August 19, 2013

ASA, Billabong, Westfield, Newcrest, Shorten, Turnbull, pokies and then some
Monday, July 22, 2013

Rudd v Gillard, referendum, Labor sleaze, Clive Palmer, ASA, City of Melbourne and plenty more
Monday, June 24, 2013


Backing Rudd, Lachlan, Bob Brown media debate, Manningham governance, Gunns and St Kilda AGM
Monday, February 20, 2012

The OZ goes mad, Murdoch piracy, AFR, pokies double rate, Gina, council super, BoQ rip-off and power speech
Wednesday, April 4, 2012


Murdoch special, media inquiry, pokies, Manningham, Zara, secretive Shortenite crs and 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


Paperlinx, Packer, Murdoch, Manningham, pokies, Rich ex wives, foreign takeovers and much more
Saturday, October 23, 2010

DJs, women on boards, ex Lib goes no pokies, preferences, Pratt-Shorten, Labor's debt and Manningham council audio
August 3, 2010

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

Political donations, Stokes, Westfield tower, Richard Colless, Manningham nursing home, state debt, Rich List and Grand Prix
February 23, 2010


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 and hostile EGMs
September 15, 2009

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

2008 as the GFC hit and before we got overloaded at Manningham

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

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

Computershare AGM, Seven wash-up, audio highlights and ABC Learning chair under pump at Lend Lease
November 11, 2008

Toll board skewered over $55m executive rort
October 30, 2008

Transurban shareholder revolution - chairman almost defeated
October 28, 2008

A huuuuge day for Australian corporate governance
October 22, 2008

Rupert's accountability dodge, Macquarie's Italian hit, Babcock funds revamp, and rich lists.
October 20, 2008

BHP and Woolies tilts, AFIC push on Stan Wallis, ASX-Kohler yarn and new Rich Listers
September 26, 2008

Risk Metrics nails Macquarie and Babcock
September 18, 2008

Macquarie videos, Stokes raid, new board tilt, Oz Minerals, share trading and much more
July 25, 2008

Hegarty Payout rolled, history is made
July 18, 2008

Great debate at the Babcock AGM
May 30, 2008

Our liveliest edition yet
Thursday, May 8, 2008

Burrows quits, Rupert, donations, long-serving directors and much more
January 31, 2008

Markets tumble, Rupert book deal, Centro, Rich List, Xenophon, AFR tips and our buying spree
January 17, 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. Merry Christmas to everyone and we'll be back with more in the new year.

Do ya best, Stephen Mayne

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