Crikey coverage of 2003 Brambles AGM

Don't Argue. Don't Answer. The king of CEO payouts with a $10 million gold pen

There are certainly many monikers for the chairman of BHP-Billiton and Brambles, Don Argus, but anyone who witnessed his belligerent, arrogant and dismissive handling of Brambles' AGM in Sydney yesterday, would probably agree that such crude labels still fall short of describing the man.

Although Argus has overseen yet another disastrous year at the outsourced business services company, he was not only devoid of empathy and openly contemptuous of genuinely held shareholder concerns, but downright rude to many of the 175 long-suffering attendees at the annual general meeting.

After Frank Lowy's mellow, corporate governance belly-tickling effort at Westfield's AGM last week, Argus has undoubtedly reclaimed the title of Australia's most combative chairman.

The Board presentations

Shareholders who had hoped for a mildly magnanimous mea culpa (a la Andrew Mohl at AMP) were soon disappointed, with Argus seeking to spin a positive story in his opening remarks. However the day's theme of hopelessly empty rhetoric was soon established when (in a regretful tone) he said the departure of former CEO Sir CK Chow was “in order for him to take up a new role”.

Right. And shareholder's collective fury, pent up frustration and devastatingly universal condemnation of Chow's failed reign had nothing to do with him scurrying back to Hong Kong with his tail tucked (perhaps permanently) between his legs.

Argus' next unintentionally comedic routine was to describe the fate of the infamous 15 million ‘lost' pallets from the ailing CHEP business in Europe. A million here, a million there and within a couple of minutes he had somehow accounted for them all, including the hilarious but quickly passing reference to some not being lost, just “incorrectly located”.

Questioned later about his seemingly loose pallet accounting, Argus became quite agitated and repeatedly declared, “there are no lost pallets”. After much questioning on the topic, Crikey thought it appropriate to come to Argus' defence and repeat (for the benefit of less keen-eared attendees), that shareholders should be absolutely confident that they are not lost, because according to Argus, they are merely “incorrectly located”. While this received plenty of laughs, the combative chairman was not amused as will be revealed later.

Argus also responded to criticism that Brambles' dual listed company structure erodes shareholder rights and is a significant obstacle to potential takeovers. Long on rhetoric and short on substance, Argus rambled slightly before grandly claiming that the structure actually enhanced, not compromised, shareholder interests. Huh? Few, if any, were convinced.

New CEO David Turner (previously the CFO working with Chow), who also presided over the 2001 GKN merger disaster, gave an enthusiastic speech, however his Tony Blair-esque habit of emphasising every second or third word, punctuated with many pauses, made close listening extremely difficult. Another moment of comedy arrived when, upon Turner's conclusion and to the sound of deafening silence, Argus darted back to the microphone clapping with rapture. Out of instinct, a few in the crowd followed his lead, but otherwise it was a highly amusing display of superficial stage management.

The questioners

Far and away the outstanding questioner was a Mr Paul Hickey, who bombarded Argus all afternoon with detailed, probing and incisive commentary and questioning. While a knockout blow is impossible with such a Teflon-coated and side-stepping chairman, Hickey undoubtedly scored a comprehensive points victory over Argus with his 20-odd efforts throughout the 4 hour marathon.

Unlike some individuals (we'll get to Jack Tilburn soon) and narrow interest groups, Hickey's strong business reckoning, reasoned articulation and pinpoint identification of concerning issues did a terrific service to the cause of legitimate shareholder activism in Australia.

Hickey nailed the board on everything from the financial statements, to corporate governance, business strategy, competition and the apparent incongruence between the company's statements and actions. Inevitably, Argus' immediate responses to excellent specific questions included the tired old “I refute that” and “those allegations are simply not true” lines.

The Australian Shareholder Association (ASA) team of Stephen Matthews and Giles Edwards also scored many direct hits, and well articulated the general dissatisfaction shareholders felt not only with the company's financial performance, but also with Argus' generally insufficient, aggressive and arrogant responses to questions. At one stage, Argus launched into Edwards well before he had even completed asking his question. The ASA gun pulled the chairman into line by asking how he could possibly answer a question he had not even heard yet?

Jack Tilburn was invariably on hand, and it was a clear measure of dissatisfaction with Argus' performance, that even Jack's typically semi-coherent ravings were better received by the crowd than the chairman's vacuous comments.

Crikey vs Don't Argue

There were plenty of newsworthy exchanges between Argus and shareholders, but with 24 pages of longhand notes, one would not want to overindulge an AGM review. However the exchange Crikey had with Argus sums up the day – and his performance - quite well.

Crikey let half a dozen questioners kick-start proceedings - it was typical of Argus' style that he continually interrupted every single one of them - before taking the microphone and opening up with the “incorrectly located” jibe. The following paraphrased exchange then ensued (after the laughter had died down):

Crikey: And another statement you made regarding stability . . .

Argus: [interrupting] Well I've already explained that.

Crikey: OK. The other statement you made about needing stability . . .

Argus: [interrupts again with something]

Crikey: What I want to say is that I was surprised to hear you say . . .

Argus: [interrupts again]

Crikey: Mr Argus. We listened to your 20-minute speech without interrupting you once. However you have interrupted every single questioner so far. Could you please afford us the same courtesy we afforded you?

Argus: [after strong applause] Yes. All right.

Crikey: In defending Mr Turner's appointment, you said the one thing you don't want is instability.

[To save repetition, Argus interrupted twice more to cries of “you're still interrupting” from the crowd.]

Crikey: However your track record Mr Chairman is one of having removed the most CEO's in the country, costing countless tens of millions of dollars in payouts.

Argus: Aah, Mr Mayne's offsider. . . [ahem, yes]

Crikey: So I do not understand this apparent double standard and am wondering when you will eventually take responsibility for such problems yourself, stop the expensive habit of punting CEO's and resign yourself?

Argus interrupted several more times than noted above, including the demand to ask the question, even though Crikey had taken up a fraction of the time of other speakers. When Crikey quietly reminded him that he had invited questions AND comments, and that we were trying to do so in spite of his interruptions, there was further vocal support from the floor.

Argus effectively dodged the question, saying he had answered it earlier (he wasn't going anywhere) and snapped for the next questioner.

There were many other questions raised by Crikey and others regarding Brambles' seemingly generous remuneration policies (even during such tough times), the gall of directors seeking re-election who had presided over the 50% plunge in the share price in the last two years, and reported problems of customer satisfaction in the US. And that's not even mentioning the significant shareholder incredulousness that the company still does not seem to understand, let alone run, their pallet business in Europe.

The bottom line

For all the shareholder anger on display, institutional investors again disgraced themselves with a pandering display of voting which saw all 19 resolutions get passed comfortably (including accepting the remuneration report and the re-election of dud directors Brown, Lees and Milne).

However it was mildly satisfying (and embarrassing for the board) to see many of the contentious resolutions get comprehensively voted down on the floor by the 40-odd remaining shareholders left at 6.45pm. As a footnote, even the fact that Argus decided to start the meeting at the cynical hour of 3.00pm was a sly move, roundly criticized by several shareholders.

Also greatly grating to present shareholders was Argus' constant defence that a majority of shareholders supported him and the management, as proved by the proxy voting. Now, c'mon Don. This is absolutely the last line of defence for embattled chairmen, and nothing could signal a chairman's greater desperation. Argus knows the 'great' tradition of cosy board/ institution relationships, and by hiding behind such a thin veil of superficial support, Argus only exposed the vulnerability of his own misplaced confidence.

Apart from Argus' arrogant and apathetic performance – though he conceded the board was not proud of the results, he stopped short of conceding mistakes were made (instead claiming they only arose after the merger, yeah right) – perhaps the most disturbing thing to come out of the meeting was one of the chairman's own comments. It was in response to a heartfelt shareholder plea of when all the problems of the last 3 years would finally be sorted out, to which Argus responded:

“I can't put my hand on my heart and say we've got to the bottom of it.”

Oh dear. It looks like another 12 months of platitudes, promises and pernicious propaganda ahead.

—————————————–

See the SMH's coverage here - 'Investors want Brambles board sacked' which even managed to report a part of Crikey's involvement with the following comment to Argus:

"No matter which way you look at it, there seems to be a big gap between your rhetoric and reality," Crikey.com's [sic] Justin McMurray said.

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