Catching up with Jeff Kennett at Sofcom

Let's start with the banter after the meeting.

Jeff: Thanks Stephen, are you playing any tennis?

Crikey: Just finished a pennant season actually?

Jeff: And how are the lungs?

Crikey: They've been working well for eight years now Jeff ever since I was with you in 93. That was a good meeting, see you at the AGM.

Jeff: Yes, I'm looking forward to it.

Ends

Jeff appears to have learnt nothing from his days as Premier because he joined a small but illustrious group of company chairman that ban the media from attending a public company AGM. The last one of these that I can recall was Surfboard Securities in Perth earlier this year. Is anyone aware of any companies that have tried this dodgy tactic. Many companies ban photographers but kicking out the journalists as well was pretty unfair. Jeff simply told The Age's Eli Greenblat to get out because "this is not a public meeting".

As a direct result of this, the following item appeared in Christopher Webb's Strictly Private column in The Age following day:

Kennett pulls blind down

By Christopher Webb of The Age

Jeffrey Gibb Kennett yesterday returned to the dark old days of barring everyone but shareholders from a public company meeting.

In his role as chairman of the $11 million loss incurrer Software Communications Group, Kennett ordered the sole reporter who turned up to leave the meeting.

Kennett was fully within his rights, but someone should tell him that accepted practice these days is to let visitors in, including the dreaded press.

One person not counting on an open-door policy was former Kennett staffer, one Stephen Mayne, proprietor of the Crikey.com.au website.

Mayne was at the meeting - called to approve a $300,000 termination payment to managing director Cary Stynes - as a joint proxy holder with Charles Richardson, the former Kennett staffer who penned the chapter in the recently published 'Liberalism and the Australian Federation'. His words caused John Malcolm Fraser to throw a tantrum.

Mayne and Richardson were representing a Sofcom shareholders who is down 10 grand on his investments.

Mayne apparently questioned Kennett on Cary Stynes's departure, proxies held, and the wisdom of future acquisitions.

Proxy votes in favour were 49 million shares, with 694,578 against.

ends

During the meeting Jeff took exception to my use of the word 'we', pointing out that I was a mere proxy and he would prefer me to say 'the person I represent'. This person is a Liberal Party member in Melbourne and he appointed two proxies, Fraser critic Dr Charles Richardson and Kennett critic Crikey.

When Dr Richardson, a former staffer for Kennett finance minister Ian Smith, started asking questions Jeff said: 'Now you're the other half of this person aren't you?'

Charles was the Smith adviser back in 1993 who pushed through the first ever cut in Parliamentary superannuation entitlements as best I can remember anywhere. The early days of the Kennett government were certainly the best with such selfless moves occurring whilst they inflicted a lot of pain on the community at the same time.

(By the way, I've just the Fraser chapter and a couple of others and can recommend anyone interested in political history pick up a copy from any good book store.)

Back to Sofcom, Jeff was pretty candid in saying that Ivanhoe Grammar old boy Cary Stynes had failed to meet the financial performance hurdles but they had to pay him $300,000 to avoid "an unseemly" legal fight that could bring discredit to the company.

When asked about the odds of Cary ever exercising his 10 million options at 17.5c when the current price is 7.5c, chairman Jeff said: "As you know Stephen, I have never been one to crystal ball gaze, I am about performance-based outcomes."

Hmmm, this stock was floated at 35c and now wallows at one-fifth of that. What do you do with a poorly performing chairman?

Jeff has always been a budget surplus man and he invoked some of the old government mantras saying Sofcom needed to earn more than it spent but was full of wonderfully talented and enthusiastic staff - presumably that doesn't include the 55 he sacked 6 weeks back along with Cary.

As the man who has sacked more people than anyone else in Australia, punting Cary Stynes was no problem for Jeff. Remember how he sacked 10 departments heads in his first two weeks in office. People forget that Jeff shrunk the size of the Victorian public sector workforce from about 260,000 to 160,000 - an unprecedented restructuring anywhere in the western world as far as I can tell.

One of the reasons he lost the election was that he built up huge surpluses and cash reserves but then refused to go out and spend them.

The Sofcom parallel is the $12 million of cash still sitting in the bank after the $11 million loss last year. The Stynes reign at Sofcom was characterised by a series of acquisitions of ill-fated rival dotcoms such as Doubleclick Australia, Liberty One's old web design business Zivo and Real Media but it seems the expansion plans remain undimmed.

Jeff revealed that they are assessing about two acquisition opportunities a week as they are one of the oldest dotcoms about and still have plenty of cash to burn through.

"We are going to make the right purchase at the right time," he reassured shareholders.

It did seem a little odd that Cary was back at the company's Como House office attending the meeting, but Jeff had an explanation for this too: 'He is here today because he is a shareholder and very involved in the wellbeing of the company. It is in his interest that we lift the share price. He has only been very supportive since the separation took place.'

There was no need to vote his shares because the two largest shareholders - company founder and Monash Uni academic Professor Les Goldschlager and Shell Australia - who together own more than 50 per cent of the stock, had pledged their support for the cash payout and option retention proposal.

It did seem a little odd that SofCom took on Cary given his acrimonious falling out with the Packers at Media Entertainment Group. Kennett's former communications director Peter Bennett appears to be a possible link to both jobs as he worked with Cary at advertising agency DDB Needham a few years back and is close to Kennett.

Cary's total take from his time at Sofcom will approach $1 million which isn't too bad for a couple of years work.

Then again, he did successfully get the float away at 35c but when the wheels started falling off, Jeff decided he needed a different skill set.

Crikey knows Cary's brother Kimble Stynes and can tell you these Stynes boys don't mind a bit of professional conflict. Kimble is a real bluff and bluster lawyer full of big talk. It comes as no surprise that Cary would have threatened Sofcom with legal action without the payout and this is why Jeff said they agreed to the payout and decided it was better to "avoid the potential risk of litigation and come to an amicable and fair separation."

For some reason, I've got a sneaking suspicion that Sofcom is a reasonable buy at 7.5c. If only we had some spare cash for a punt like that.

Copyright © 2024 The Mayne Report. All rights reserved

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