Grilling Westpac before final HIH AGM

Dear sole subscriber, greetings from a sweaty and packed net cafe in George St Surry Hills as we pause for breath after the Westpac AGM and get ready for the slugfest in Redfern from 4pm at the HIH Insurance AGM.

Westpac was fairly predictable. Outgoing chairman John "washing machine maker" Uhrig gave a boring speech about all that has been achieved since the board almost sent Westpac broke in 1992.

Then Dr David Morgan, the overpaid husband of Ros Kelly who took home $2.43 million last year, is $10 million in front on his existing options and his lining up for another whack, gave a rah rah speech with plenty of hand movement.

Westpac, being Australia's oldest company, just had to sponsor the Olympics and what a wonderful event it was etc etc.

Jack Tilburn got up first and rambled for about 10 minutes, managing to mention that he was 10 minutes late due to an interview with Channel 7.
Uhrig put him down nicely on his question about customer service when he said: "You would have known this if you had not been prancing about in front of the cameras."

I then got up and raised these points:

* Why is David Morgan the highest paid bank CEO when his bank is the third biggest and why does he need another big whack of options to further incentivate him.

Uhrig tried the usual lines about global markets and how you've got to pay well to keep the top talent. As if David Morgan is going to run off somewhere else after scaling the heights at Westpac. The latest issue of options is just pure greed and he deserves all the political strife that is coming his way during the five elections across the country next year. Uhrig is perhaps more responsible than anyone else in Australia for the CEO wages break out. He approved the package that delivered about $70 million to Bob Joss and Westpac was one of the first major Australian companies to look offshore for a CEO in the early 90s. Even yesterday Uhrig set a new record sign-on fee at Santos, where he is also chairman, when the gas giant recuited a bloke from the US with a $6 million golden-hello. Nice one John.

* Why is Westpac a passive fund manager and never gets up at AGMS or take a position on anything.

Morgan responded by saying there are other ways of being an active fund manager than getting up at AGMs, obviously forgetting that Westpac got up at their first ever AGM when they bagged Village Roadshow on the Gold Coast last month.

* What's with the Rio Tinto board faction. Uhrig backed Leon Davis into the top job at CRA and then Rio Tinto by overlooking NAB's current chairman Mark Rayner who was retrenched from CRA with $1.8 million in the back pocket in 1995. Davis has retired as the London-based CEO of Rio Tinto, joined the Westpac board last year and succeeded Uhrig as chairman today. John Morschel is the other member of the Rio Tinto faction.

Uhrig denied there is a Rio Tinto faction and said he played no part in the selection of Davis as chairman. He also refused to comment on the $500,000 a year he got as co-chairman of Rio Tinto after he sold out Australia's interests in 1996 to become the first non-exec Aussie chairman to crack half a mill.

* Uhrig promised to reduce the board so I suggested they get rid of Sir Llew Edwards, Ian Harper and Roger Hogan, all of whom date back to the 1980s and must be held partly responsible for the $1.6 billion lost in 1992 when the bank almost went broke. Besides their average age is 68 anyway so pack 'em off into the paddock.

Uhrig suggested these guys were geniuses because Westpac's market cap had surged from $5 billion to $23 billion since 1992. Yeah, but John, Westpac used to be number one and now it lags NAB by about $15 billion. The whole banking system has surged on the back of a strong economy and the cartel of fee gouging, but the blokes who almost sent Westpac broke should be the first to go, especially if you're promising to reduce the 13-person board and now have policy that no directors serve more than three 3-year terms.

* What's with this $300,000 in political donations - making Westpac a top 10 donor to both sides - and it didn't seem to help in recent negotiations with Costello to get the merger with Singaporean bank DBS over the line.

Uhrig claimed they donate to support democracy. It is ironic that Morgan is great mates with Keating and married to Ros Kelly, yet Labor only gets $120,000 compared with about $180,000 for the Coalition. Leon Davis is no friend of Labor from his union-busting days at CRA so it will be interesting to see if Labor keeps getting six-figure annual donations going forward.

* How can you claim in the annual report that Westpac is 97.15 per cent Australian-owned when your second largest shareholder, the LA-based Capital Group of Companies, has 9.27 per cent which is worth about $2.4 billion.

Uhrig somehow claimed foreign ownership was impossible to measure - "I would defy any company in Australia to answer Mr Mayne's question" - so why would you come up with such a precise figure which is patently wrong? The real figure is probably about 35 per cent foreign ownership. Westpac would know this and should stop hiding behind this "nominee companies blur the issue" rubbish.

That's all we've got time for. "TAXI...HIH AGM in Redfern please."

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