Burrows quits, Rupert, donations, long-serving directors and much more
February 2, 2010
Dear Mayne Report subscribers and a few extras,
in one of our liveliest and most diverse editions yet, today we claim victory with the Mark Burrows resignation from Fairfax, preview the coming deluge of political donations figures, take an early look at a new book on Rupert Murdoch's governance challenges in China, lament the board record of the incoming Liberal Party president and also reveal the detail of our nomination for the Alumina board at the forthcoming AGM.
Enjoy and do ya best, Stephen Mayne
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.
in one of our liveliest and most diverse editions yet, today we claim victory with the Mark Burrows resignation from Fairfax, preview the coming deluge of political donations figures, take an early look at a new book on Rupert Murdoch's governance challenges in China, lament the board record of the incoming Liberal Party president and also reveal the detail of our nomination for the Alumina board at the forthcoming AGM.
Enjoy and do ya best, Stephen Mayne
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.
Burrows exits, mission accomplished
The Mayne Report's mission is to try and create a greater culture of shareholder pressure in Australia. This means creating as much noise as possible around issues of corporate governance, in the hope that things will change.
The big wins are few and far between but we've just had one with the resignation of Lachlan Murdoch's adviser Mark Burrows from the Fairfax board this afternoon, which rates right up there with the successful hounding of Steve Vizard off the Telstra board in 2000.
Apologies for the gloating, but when you've got as many adversarial media relationships as I do, no-one else will do it.
It was very disappointing that no media or business commentators called for Burrows to quit, but at least it still happened.
The timeline is instructive:
January 21: CMH privatisation deal announced with Burrows advising Lachlan Murdoch.
January 22: Only cursory mentions in the press of Mark Burrows advisory role, although I gave it a rev on 702 ABC Sydney and gave Burrows this spray in Crikey.
January 24: The AFR's Chanticleer columnist Alan Jury talks about "plenty of raised eye-brows".
January 30: Mayne Report board tilt announced to subscribers at 12.06am, then mass-distributed on the bottom of Crikey story as follows: "Today's Mayne Report reveals a coming Fairfax board tilt to drive Murdoch adviser Mark Burrows off the board."
January 31: stories quoting board concerns appear in The Age and The SMH.
January 31: Burrows quits.
Who knows how all the machinations worked but the threatened board tilt might have helped bring the process to a head. The internal Burrows critics could have said: "We don't want that nutter running for our board again, Mark. Let's shut this issue down and make a clean break."
Well done to the Fairfax directors who took a stand but Burrows never should have been on the board in the first place. What odds he'll now take all the inside Fairfax knowledge to the board of the privatised CMH.
Burrows is a well-credentialled media adviser, he just forgot that the system of advisers sitting on boards has had its day. His firm even picked up an advisory gig for Fairfax on last year's Southern Cross Broadcasting takeover, which was another bad move.
The conflict of interest campaign around this particular deal now moves onto the question of Lachlan Murdoch staying on the News Corp board whilst competing with the company in Australia with his James Packer joint venture.
This competition has got even greater with Lachlan's $76 million purchase last week of the Jaipur franchise in the Indian Twenty20 Premier League. Given that News Corp's STAR TV dominates the Indian market, this investment will no doubt bump up against News Corp's interests in the world's second most populous nation.
If Burrows and the Fairfax board can recognise the damaging "perception" of such a conflict, surely the Murdochs and the News Corp board can do likewise.
Sir Rod Eddington, lead News Corp independent director, it's time to step up to the plate.
The big wins are few and far between but we've just had one with the resignation of Lachlan Murdoch's adviser Mark Burrows from the Fairfax board this afternoon, which rates right up there with the successful hounding of Steve Vizard off the Telstra board in 2000.
Apologies for the gloating, but when you've got as many adversarial media relationships as I do, no-one else will do it.
It was very disappointing that no media or business commentators called for Burrows to quit, but at least it still happened.
The timeline is instructive:
January 21: CMH privatisation deal announced with Burrows advising Lachlan Murdoch.
January 22: Only cursory mentions in the press of Mark Burrows advisory role, although I gave it a rev on 702 ABC Sydney and gave Burrows this spray in Crikey.
January 24: The AFR's Chanticleer columnist Alan Jury talks about "plenty of raised eye-brows".
January 30: Mayne Report board tilt announced to subscribers at 12.06am, then mass-distributed on the bottom of Crikey story as follows: "Today's Mayne Report reveals a coming Fairfax board tilt to drive Murdoch adviser Mark Burrows off the board."
January 31: stories quoting board concerns appear in The Age and The SMH.
January 31: Burrows quits.
Who knows how all the machinations worked but the threatened board tilt might have helped bring the process to a head. The internal Burrows critics could have said: "We don't want that nutter running for our board again, Mark. Let's shut this issue down and make a clean break."
Well done to the Fairfax directors who took a stand but Burrows never should have been on the board in the first place. What odds he'll now take all the inside Fairfax knowledge to the board of the privatised CMH.
Burrows is a well-credentialled media adviser, he just forgot that the system of advisers sitting on boards has had its day. His firm even picked up an advisory gig for Fairfax on last year's Southern Cross Broadcasting takeover, which was another bad move.
The conflict of interest campaign around this particular deal now moves onto the question of Lachlan Murdoch staying on the News Corp board whilst competing with the company in Australia with his James Packer joint venture.
This competition has got even greater with Lachlan's $76 million purchase last week of the Jaipur franchise in the Indian Twenty20 Premier League. Given that News Corp's STAR TV dominates the Indian market, this investment will no doubt bump up against News Corp's interests in the world's second most populous nation.
If Burrows and the Fairfax board can recognise the damaging "perception" of such a conflict, surely the Murdochs and the News Corp board can do likewise.
Sir Rod Eddington, lead News Corp independent director, it's time to step up to the plate.
Rupert's Chinese adventures and governance challenges
If you're interested in understanding how News Corporation treats corporate governance and politics, you absolutely must buy Bruce Dover's cracking new book, Rupert's adventures in China: how Murdoch lost a fortune and found a wife.
I picked up a copy from a local book store yesterday before it formally goes on sale tomorrow and have enjoyed the first 150 pages immensely.
It's not often that a genuine Murdoch insider tells tales outside the company, but Bruce Dover was News Corp's point man in Beijing during the second half of the 1990s and has loads of fascinating snippets to share.
The News Corp board should be quite embarrassed by many of the revelations because it shows some of the shambolic tactics that went on to suck up to the Chinese government, who wanted nothing to do with Rupert.
Rupert even did the 1993 deal with Richard Li to buy control of STAR TV without first running it past his board, demonstrating that he learnt nothing from the near collapse of News Corp in 1991 after he spent $3 billion on the disastrous Triangle Publications acquisition a couple of years earlier without any reference to the board.
The Dover book will provide great fodder for upcoming News Corp AGMs, although he's been out of the picture for a few years now and STAR TV does seem to have turned around, especially its booming Indian operations.
I picked up a copy from a local book store yesterday before it formally goes on sale tomorrow and have enjoyed the first 150 pages immensely.
It's not often that a genuine Murdoch insider tells tales outside the company, but Bruce Dover was News Corp's point man in Beijing during the second half of the 1990s and has loads of fascinating snippets to share.
The News Corp board should be quite embarrassed by many of the revelations because it shows some of the shambolic tactics that went on to suck up to the Chinese government, who wanted nothing to do with Rupert.
Rupert even did the 1993 deal with Richard Li to buy control of STAR TV without first running it past his board, demonstrating that he learnt nothing from the near collapse of News Corp in 1991 after he spent $3 billion on the disastrous Triangle Publications acquisition a couple of years earlier without any reference to the board.
The Dover book will provide great fodder for upcoming News Corp AGMs, although he's been out of the picture for a few years now and STAR TV does seem to have turned around, especially its booming Indian operations.
A deluge of political donations data
By the time you read this, the Australian Electoral Commission will have dumped a vast amount of information on this website about all the political donations made to all the registered political parties at state and Federal level in 2006-07.
From a corporate governance point of view, the system is a disgrace.
For starters, the figures are at least 8 months old. This compares dreadfully with public companies which are currently producing profit reports for the six months to December 31.
Then you don't get any aggregation of the figures across the various state and federal divisions - and any figure below $10,500 is not disclosed at all.
Whilst my old kindergarten has to disclose a balance sheet to the state government, our ruling political duopoly doesn't have to real their own consolidated balance sheets. I reckon the ALP and its affiliated unions have net assets approaching $500 million, but this is pure guesswork because of our lax disclosure laws.
Asking about political donations is increasingly going to figure in my questions at AGMs. For instance, Tabcorp answered one question at the 2006 AGM revealing that it had just given $40,000 to both sides for the Victorian election. Fifteen months later, that information will finally be publicly confirmed.
Unfortunately, the vast majority of companies don't disclose political donations in their annual reports, preferring this system where their patronage usually gets lost in the February 1 torrent of information each year.
I gave the media this spray on Crikey last year for lax coverage of the donations deluge, so let's hope they do a better job this year.
The NSW and Victorian figures will be the most interesting because both states had elections that fell in 2006-07. Check out this Crikey story to see how the NSW Bruvvas rorted the system last year to make the figures even more confusing.
There'll be plenty more on this in today's Crikey, so don't miss it.
From a corporate governance point of view, the system is a disgrace.
For starters, the figures are at least 8 months old. This compares dreadfully with public companies which are currently producing profit reports for the six months to December 31.
Then you don't get any aggregation of the figures across the various state and federal divisions - and any figure below $10,500 is not disclosed at all.
Whilst my old kindergarten has to disclose a balance sheet to the state government, our ruling political duopoly doesn't have to real their own consolidated balance sheets. I reckon the ALP and its affiliated unions have net assets approaching $500 million, but this is pure guesswork because of our lax disclosure laws.
Asking about political donations is increasingly going to figure in my questions at AGMs. For instance, Tabcorp answered one question at the 2006 AGM revealing that it had just given $40,000 to both sides for the Victorian election. Fifteen months later, that information will finally be publicly confirmed.
Unfortunately, the vast majority of companies don't disclose political donations in their annual reports, preferring this system where their patronage usually gets lost in the February 1 torrent of information each year.
I gave the media this spray on Crikey last year for lax coverage of the donations deluge, so let's hope they do a better job this year.
The NSW and Victorian figures will be the most interesting because both states had elections that fell in 2006-07. Check out this Crikey story to see how the NSW Bruvvas rorted the system last year to make the figures even more confusing.
There'll be plenty more on this in today's Crikey, so don't miss it.
Mooted new Liberal President has woeful board record
The Australian reported on its front page last Friday that former Victorian Treasurer Alan Stockdale is likely to become the next President of the Liberal Party.
Not since the Liberal Party turned to Ashley Goldsworthy - the man who sent Jennings Industries broke and then became Federal President - has the party of business turned to a leader whose corporate record is so underwhelming.
I was Alan Stockdale's press secretary during the early years of the Kennett Government and had enormous admiration for the job he did turning around the state's finances.
The shedding of 100,000 public sector jobs and the sale of about $35 billion in assets put Victoria's finances back into AAA-territory and explains why the state has performed so well for the past decade.
Despite being a somewhat dour character, I assumed Stockdale's experience fixing Victoria would lead to a glorious corporate career. He joined Macquarie Bank after leaving Parliament in 1999 but after some early involvement in big deals such as the $5.6 billion Sydney Airport purchase, he ended up handling government affairs for tollroad giant Macquarie Infrastructure Group.
As an old industrial relations barrister, Stockdale was clearly excited about John Howard's WorkChoices regime because he quit Macquarie in 2005 to run the IR practice for boutique Melbourne law firm Mills Oakley.
Alas, that gig seems to have disappeared along with the Howard Government, although his bio on the IPA website, where he is chairman, hasn't yet picked up this change.
We wrote this piece in December pointing out the chequered record of former Howard Government ministers on boards, but the Stockdale score card is even worse.
Stockdale was appointed to the Senetas board as deputy chairman in March 2006 when the stock was trading at 80c. He's now chairman as the ship goes down with the stock wallowing at just 7c.
In April 2007 he joined the board of Bill Ireland's Mariner Financial and since then it has plunged from 90c to last week's low of 22c.
The story doesn't get any better with the tallow products and soap group Symex Holdings, which Stockdale has chaired since the 2000 float. The stock peaked at more than $2 in 2001 but is now back below the 50c float price at just 48c. That's not called adding value over seven years in a booming market.
If anyone had the record to make a decent professional director of blue-chip companies, it should have been Alan Stockdale. The experience he gathered knocking Victoria into shape was unprecedented anywhere in a developed economy, yet his post-political career is dotted with poorly performing small boards.
It just doesn't make sense and this is not a good look for the Liberal Party, if he does indeed become Federal President.
Not since the Liberal Party turned to Ashley Goldsworthy - the man who sent Jennings Industries broke and then became Federal President - has the party of business turned to a leader whose corporate record is so underwhelming.
I was Alan Stockdale's press secretary during the early years of the Kennett Government and had enormous admiration for the job he did turning around the state's finances.
The shedding of 100,000 public sector jobs and the sale of about $35 billion in assets put Victoria's finances back into AAA-territory and explains why the state has performed so well for the past decade.
Despite being a somewhat dour character, I assumed Stockdale's experience fixing Victoria would lead to a glorious corporate career. He joined Macquarie Bank after leaving Parliament in 1999 but after some early involvement in big deals such as the $5.6 billion Sydney Airport purchase, he ended up handling government affairs for tollroad giant Macquarie Infrastructure Group.
As an old industrial relations barrister, Stockdale was clearly excited about John Howard's WorkChoices regime because he quit Macquarie in 2005 to run the IR practice for boutique Melbourne law firm Mills Oakley.
Alas, that gig seems to have disappeared along with the Howard Government, although his bio on the IPA website, where he is chairman, hasn't yet picked up this change.
We wrote this piece in December pointing out the chequered record of former Howard Government ministers on boards, but the Stockdale score card is even worse.
Stockdale was appointed to the Senetas board as deputy chairman in March 2006 when the stock was trading at 80c. He's now chairman as the ship goes down with the stock wallowing at just 7c.
In April 2007 he joined the board of Bill Ireland's Mariner Financial and since then it has plunged from 90c to last week's low of 22c.
The story doesn't get any better with the tallow products and soap group Symex Holdings, which Stockdale has chaired since the 2000 float. The stock peaked at more than $2 in 2001 but is now back below the 50c float price at just 48c. That's not called adding value over seven years in a booming market.
If anyone had the record to make a decent professional director of blue-chip companies, it should have been Alan Stockdale. The experience he gathered knocking Victoria into shape was unprecedented anywhere in a developed economy, yet his post-political career is dotted with poorly performing small boards.
It just doesn't make sense and this is not a good look for the Liberal Party, if he does indeed become Federal President.
Australia's longest serving executive directors
Continuing our flourishing lists section, here is one dealing with the 15 longest serving executives who still sit on major company boards to this day.
Rupert Murdoch: CEO of News Corp and its predecessor companies since 1953 and chairman since 1991
Frank Lowy: CEO of Westfield since it first floated in 1961 and also chairman
Robert Millner: managing director of WH Soul Pattinson from 1968-86 and still a director
Barry Thornton: Current GWA chairman who first joined board as finance director in 1974
Alan Wilson: executive chairman of Reece who joined the board in 1969 and become CEO in 1974
Frank O'Halloran: became finance director of QBE in 1978 and CEO since 1989
Ken Cowley: News Corp director since 1980, retired as News Ltd executive chairman in 1996 and still on board
John Cloney: CEO of QBE from 1981-89 and chairman since 1998
Rob Patterson: Current MD of Argo Investments and a director since 1983
Trevor Eastwood: Wesfarmers CEO from 1986-1992, two year break then re-joined as a director in 1994 and chairman since 2002
Wal King: CEO of Leighton Holdings since 1987
John Gay: CEO of Gunns since 1987 and also still chairman
Gerry Harvey: CEO of Harvey Norman since 1987 and also still chairman
Ian Norman: Co-founder of Harvey Norman since 1987 and still on the board today
Kerry Hoggard: CEO of Nufarm from 1987 until 1999 and non-executive chairman ever since
Frank Lowy: CEO of Westfield since it first floated in 1961 and also chairman
Robert Millner: managing director of WH Soul Pattinson from 1968-86 and still a director
Barry Thornton: Current GWA chairman who first joined board as finance director in 1974
Alan Wilson: executive chairman of Reece who joined the board in 1969 and become CEO in 1974
Frank O'Halloran: became finance director of QBE in 1978 and CEO since 1989
Ken Cowley: News Corp director since 1980, retired as News Ltd executive chairman in 1996 and still on board
John Cloney: CEO of QBE from 1981-89 and chairman since 1998
Rob Patterson: Current MD of Argo Investments and a director since 1983
Trevor Eastwood: Wesfarmers CEO from 1986-1992, two year break then re-joined as a director in 1994 and chairman since 2002
Wal King: CEO of Leighton Holdings since 1987
John Gay: CEO of Gunns since 1987 and also still chairman
Gerry Harvey: CEO of Harvey Norman since 1987 and also still chairman
Ian Norman: Co-founder of Harvey Norman since 1987 and still on the board today
Kerry Hoggard: CEO of Nufarm from 1987 until 1999 and non-executive chairman ever since
Formalising the Alumina board tilt
Public company board tilt number 30 is underway after the following letter was faxed and snail mailed to Alumina Ltd, Australia's biggest power user, on January 30. This is the first time I've really put a stong position on the "no vacancy rort" so we'll see how it goes.
Mr Stephen Foster
Company Secretary
Alumina Ltd
Level 12
IBM Building
60 City Rd
Southbank 3006
By fax: (03) 8699 2699
Wednesday, January 30, 2008
Dear Mr Foster,
Please accept this letter as my formal consent to nominate for the board of Alumina Ltd at the 2008 annual general meeting. My wife and Alumina Ltd shareholder, Paula Piccinini, is formally supporting the nomination and has written to you separately.
I am the registered owner of 30 Alumina shares at the address: PO Box 925, Templestowe, 3106. Please include the following CV and platform to be printed in the notice of meeting and distributed to Alumina shareholders:
Stephen Mayne, age 38. Bcom (Melb). Stephen Mayne is a Walkley Award winning business journalist and Australia's leading shareholder activist. He founded Australia's best known ezine www.crikey.com.au and now publishes the corporate governance ezine www.maynereport.com. For four years he has been arguing that the six-man Alumina board is too big and paid too much for a post box company with just a handful of employees. He also believes Alumina needs to take global warming and sustainability issues more seriously, especially with wall-to-wall Labor governments in Australia.
In the interests of running a fair election, I strongly urge Alumina Ltd to follow the lead of Telstra and declare there is a vacancy for an additional director if 50% of the shares voted support such a move. The practice of declaring there is no vacancy normally makes it statistically impossible for an outsider to get elected, even with 100% of the directed proxies in favour. I will protest loudly and publicly if Alumina goes down this course.
I trust that the position on the notice paper will be determined by ballot and would also request that you consult with me before editing the proposed platform. I would also request that all of the directors up for re-election speak to the motion and that I be given up to five minutes to address the meeting. A photograph can be supplied on request.
I also look forward to receiving timely and free access to a list of Alumina's top 200 beneficial shareholders for the purposes of proxy solicitation.
Could you please confirm your receipt and acceptance of this nomination by email to smayne@crikey.com.au or by phone to (0412) 106 241 or fax to (03) 9846 7887. If there are any outstanding qualification issues pursuant to your constitution could you please inform me of those before the deadline for nominations close.
Yours Sincerely
Stephen Mayne
Alumina shareholder
Company Secretary
Alumina Ltd
Level 12
IBM Building
60 City Rd
Southbank 3006
By fax: (03) 8699 2699
Wednesday, January 30, 2008
Dear Mr Foster,
Please accept this letter as my formal consent to nominate for the board of Alumina Ltd at the 2008 annual general meeting. My wife and Alumina Ltd shareholder, Paula Piccinini, is formally supporting the nomination and has written to you separately.
I am the registered owner of 30 Alumina shares at the address: PO Box 925, Templestowe, 3106. Please include the following CV and platform to be printed in the notice of meeting and distributed to Alumina shareholders:
Stephen Mayne, age 38. Bcom (Melb). Stephen Mayne is a Walkley Award winning business journalist and Australia's leading shareholder activist. He founded Australia's best known ezine www.crikey.com.au and now publishes the corporate governance ezine www.maynereport.com. For four years he has been arguing that the six-man Alumina board is too big and paid too much for a post box company with just a handful of employees. He also believes Alumina needs to take global warming and sustainability issues more seriously, especially with wall-to-wall Labor governments in Australia.
In the interests of running a fair election, I strongly urge Alumina Ltd to follow the lead of Telstra and declare there is a vacancy for an additional director if 50% of the shares voted support such a move. The practice of declaring there is no vacancy normally makes it statistically impossible for an outsider to get elected, even with 100% of the directed proxies in favour. I will protest loudly and publicly if Alumina goes down this course.
I trust that the position on the notice paper will be determined by ballot and would also request that you consult with me before editing the proposed platform. I would also request that all of the directors up for re-election speak to the motion and that I be given up to five minutes to address the meeting. A photograph can be supplied on request.
I also look forward to receiving timely and free access to a list of Alumina's top 200 beneficial shareholders for the purposes of proxy solicitation.
Could you please confirm your receipt and acceptance of this nomination by email to smayne@crikey.com.au or by phone to (0412) 106 241 or fax to (03) 9846 7887. If there are any outstanding qualification issues pursuant to your constitution could you please inform me of those before the deadline for nominations close.
Yours Sincerely
Stephen Mayne
Alumina shareholder
From the AGM archive - AWB and Macquarie
We're busily building up our AGM archive for the purposes of writing this book looking back at the past 10 years of adventures and are pulling together some interesting transcripts and audio files from companies that either keep decent records on their web sites or are prepared to send through the information.
For instance, check out this transcript of the fairly tense exchanges at last year's AWB AGM. We'll be revisiting some of this territory at next Tuesday's AGM when the company is finally embracing a new constitution that will reduce farmer control.
Similarly, the Macquarie Bank boys always provide some good fodder, so we edited down the audio of some key exchanges from the 2007 AGM which were also quite interesting.
If you are, or know of, a company secretary or spindoctor at a company who would have an audio file or transcript of one of the 250-plus AGMs we've attended over the past decade, why not try to arrange to have it sent through.
That's all for now.
Do ya best, Stephen Mayne
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.
For instance, check out this transcript of the fairly tense exchanges at last year's AWB AGM. We'll be revisiting some of this territory at next Tuesday's AGM when the company is finally embracing a new constitution that will reduce farmer control.
Similarly, the Macquarie Bank boys always provide some good fodder, so we edited down the audio of some key exchanges from the 2007 AGM which were also quite interesting.
If you are, or know of, a company secretary or spindoctor at a company who would have an audio file or transcript of one of the 250-plus AGMs we've attended over the past decade, why not try to arrange to have it sent through.
That's all for now.
Do ya best, Stephen Mayne
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.