Not afraid to give 'em Curry

Forget the Australian Open, the hottest event held at Vodafone Arena in the past 12 months was November's Coles Myer annual meeting.

As a spectacle, it was somewhere between boxing and Shakespeare; the execution of a successful boardroom plot to oust Solomon Lew, the company's largest shareholder.

Middle Australia travelled far and wide to have its say in Lew's fate and the questions from the floor were pretty heated. There was pathos, passion, ratbaggery and parrying.

One questioner accused the board of treating shareholders with contempt, Sir Ron Brierley threw metaphorical lances at Coles chief John Fletcher, serial AGM-goer Jack Tilburn accused chairman Rick Allert of being cranky and worrying about his lunch, crikey.com.au renegade Stephen Mayne questioned Sol about leaking information, eliciting the retort: "I don't subscribe to your piece of rubbish, Mr Mayne."

Then, cool as a cucumber, John Curry, the shareholders' friend, was on his feet wondering who would take responsibility for a declining earnings rate at the retail giant.

Boardroom stoushes are nothing new to John Curry, Victorian chairman of the Australian Shareholders Association. He cut his teeth in the Adsteam empire of John Spalvins, successfully fighting to keep National Consolidated, of which he was finance director, independent and out of the Adsteam wash-up.

A few years on it was swallowed by Alan Jackson's Austrim Nylex and Curry joined the ASA to fight the good fight in the interests of shareholders. Austrim later listed the National Consolidated purchase as contributing to its fall from grace.

"I retired at 58 and thought it was a great pity to lose my skills and training. I was well versed in corporate governance procedures," he says.

Those procedures are something he has had plenty of opportunity to hone in the past four years and he claims to have a few scalps on his belt - of undesirable practices rather than people, because the ASA's badgering has helped clean up corporate behaviour.

This approach fits with his personal style; measured, precise, uncompromising and playing the ball, not the man. "We're not in there to ambush chairman at AGMs or rant and rave. We think there's a lot more to be gained by putting up rational arguments and sticking to them over a period of years and it's surprising what results you can get."

In the vexed areas of executive options and the performance hurdles that regulate their granting, he claims to have helped change the landscape. "I know we were instrumental in raising the bar at two or three companies."

That is a euphemism for a genteel style of activism that has Curry and his associates sitting down for quiet chats with company management, putting out measured press releases and agitating among their 7300 greying members through the organisation's magazine Equity.

Curry and his grey army took on the National Bank over a scheme that granted options to management if the bank achieved results that were only 25 per cent of the average in the banking industry. "Our base theory is: why should anyone get anything below the average performance," Curry says. "That's ridiculous stuff. We talked to NAB management . . . they've since lifted the hurdle rate to 50 per cent." Even that is not an ideal situation but it can be built on, he says.

Curry says the ASA has been in the forefront, raising the options issue four years ago before the market had concerns. It also raised the audit independence issue (auditors earning non-audit fees from companies they audit) before the spectacular Enron crash put it in the headlines and caused the demise of Arthur Andersen.

"We opposed it for three years, well before the current fiasco in the US. Now everyone says that's a great idea - why should auditors get money for things that might conflict with the audit?"

Curry and his associates have given bouquets as well as brickbats for good corporate practice. He says BHP Billiton has a fair options scheme: the benefits might be a bit high but the trigger point is realistic.

Curry likes BHP's requirement that executives achieve earnings per share growth of 2 per cent above the Consumer Price Index. `We want to see people rewarded not just for the share price, which can be influenced by commodity prices, economic conditions and a whole lot of things. We need to see that companies perform better than others in their peer group.'

But it is not all elephant stamps for BHP once the question emerges of huge salaries for chief executives. Curry has the resources giant in his sights over the alleged $30 million retirement payment made to former CEO Brian Gilbertson when he resigned this month after only six months at the helm of the merged group he helped create.

"We are meeting (BHP chairman) Don Argus soon and we will say to him . . . you've let the shareholders down."

Curry believes that the Gilbertson affair, with the board deciding so soon that he was the wrong man for the job, did BHP no credit. "I blame the board. They knew the character of Gilbertson. He had been there for years (and had been) used to getting exactly what he wanted. So why did they persist? " They persisted because they didn't want to put another spanner in the merger process. They said "we'll stick with him and we'll live with him', because they wanted the merger to go through."

Curry says even if half of Gilbertson's alleged payout related to his 35 years of service at Billiton, $10-$15 million was a lot of money for a failed executive.

Overall Curry supports the BHP-Billiton merger, because it has widened BHP's range of products and markets and gives global scale. "I'm just as happy to see them progress slowly rather than take great leaps as perhaps Gilbertson would have wanted."

Argus is in the ASA's sights on another issue. Curry says directors should have no more than five public company directorships, and a chairman's position accounts for three. Argus as chairman of BHP Billiton and Brambles and director of Southcorp and Australian Foundation Investment Company, is overcommitted, Curry says. "How does the man cope rushing from one continent to another attending meetings. We'll say to him you are overstretched."

Argus is not alone in being over the ASA commitment threshold. Geoff Tomlinson (eight directorships including four chairmanships) is on the list, likewise Dick Warburton (chairman of David Jones, Caltex and the Board of Taxation, director of Southcorp, Tabcorp and Newfarm). The ASA opposed the re-election of Warburton as chairman of David Jones because the company had not delivered.

"Dick was supporting its strategy two or three years ago. It all changed and they had massive writeoffs but Dick's still there."

Taking issue with Curry's criticism, Tomlinson says he is young and energetic and eight directorships keep him commercially up to speed.

Managing directors with outside board positions draw Curry's ire also. He says Woolworths chief executive Roger Corbett should not be on the Fairfax board and Coles Myer CEO John Fletcher should not serve on Telstra board, as the companies they head should get 100 per cent attention.

The ASA ran a full-scale campaign over Coles Myer, with its membership delivering about 20 million proxies, or 1.5 per cent of capital, for Curry to vote with. He voted against Lew's re-election purely on the basis of poor company performance in recent years.

However, he says he had misgivings about Lew group related-party transactions and the fact that companies in which the Lew family has an interest are rivals of Coles.

He believes Lew will try to return if the retailer has had a poor summer and will try to roll the board, but shareholder support for Lew might be more difficult to muster next time.

Currently there seem to be more corporate sinners north of the Murray and Curry leaves campaigning there to his fellow ASA directors in Sydney. Nonetheless recent events there, such as HIH and OneTel, raise his ire. ``The Nick Whitlam thing (at NRMA) is a fiasco . . . and it can't be countenanced in corporate governance."

The ASA also looks askance at some public companies in which founding families have large stakes and benefit from management fees from related trusts. It has been critical of the Lowys at Westfield on this account. Frank Lowy, says Equity, was arrogant and rude to shareholders at the Westfield AGM as he dismissed their corporate governance concerns.

However the Lowy clan say their listed trust and the development arm, Westfield Holdings, have been strong performers for shareholders over a long period and the market has supported their performance.

The ASA can bark, but ultimately Curry believes that the institutions must commit themselves to shareholder activism to improve corporate governance further.

"If you ask the institutions they will say of course we vote our shares." But often they don't, he says, for fear of harming their own commercial interests.

Curry says they want to lend money to corporations and want to do deals, and as a result they don't exercise their roles as trustees. "They say it is time consuming and they don't have the resources to do it. But it's a lot of rubbish."

Copyright © 2024 The Mayne Report. All rights reserved

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