AWB AGM, Rio takeover and three updated lists
February 2, 2010
Dear Mayne Report subscribers,
today's edition sets the scene for this morning's finely poised AWB AGM and also fleshes out our foreign ownership, over-committed directors and Rich Lists, plus warns of ego getting in the way of common sense as the battle for Rio Tinto unfolds.
It's not online, but The Sunday Age and the Sydney Sun-Herald both gave this opinion piece about Labor's wealth and investments in banking stocks a big run on Sunday. Hopefully it will trigger a broader debate about political disclosure which can be used to argue for greater corporate disclosure.
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.
today's edition sets the scene for this morning's finely poised AWB AGM and also fleshes out our foreign ownership, over-committed directors and Rich Lists, plus warns of ego getting in the way of common sense as the battle for Rio Tinto unfolds.
It's not online, but The Sunday Age and the Sydney Sun-Herald both gave this opinion piece about Labor's wealth and investments in banking stocks a big run on Sunday. Hopefully it will trigger a broader debate about political disclosure which can be used to argue for greater corporate disclosure.
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.
AWB to fall short with board control in the balance
Today's AWB AGM in Melbourne will go down to the wire with constitutional reform likely to fail and some new anti-reform directors likely to get elected.
Adele Ferguson had a good steer on the proxies in The Australian yesterday and 66% of the A class shares is a strong mandate, but still shy of the 75% needed to kick all seven farmers off the board. CEO Gordon Davis will clearly have a mandate to come back for a second crack later in the year, but that will depend on the fragile pro-reform majority of director maintaining the numbers.
At one level it is good that three of the grower directors - John Simpson from NSW, Warwick McClelland from Victoria and Chris Moffet from WA - will retire today. After all, they were on the board as all those bribes were paid to Saddam Hussein and should have gone two years ago.
However, if the new constitution doesn't get up, we'll then proceed to new contested farmer board elections in a later resolution which will almost certainly see Russell McKenzie from Victoria and Colin Nicholl from WA join the board. These two are single desk cold war warriors who are interested in rolling chairman Brendan Stewart and pulling out all stops to save the single desk, which Labor is determined to bury once and for all.
However, there is a chance that a more progressive grower from NSW may get up, which would leave the reformers with a bare majority.
The regular B class shareholders are not batting with a full line-up because only three of their four spots on the board are filled. However, no self-respecting corporate type would jump into the hot seat in the current environment and the farmers have a right of veto over all directors anyway.
It should be an emotionally charged day at Melbourne Park and we'll give you a full update shortly after it finishes. Also, check out our package of AWB video, audio and transcripts on the site here.
Adele Ferguson had a good steer on the proxies in The Australian yesterday and 66% of the A class shares is a strong mandate, but still shy of the 75% needed to kick all seven farmers off the board. CEO Gordon Davis will clearly have a mandate to come back for a second crack later in the year, but that will depend on the fragile pro-reform majority of director maintaining the numbers.
At one level it is good that three of the grower directors - John Simpson from NSW, Warwick McClelland from Victoria and Chris Moffet from WA - will retire today. After all, they were on the board as all those bribes were paid to Saddam Hussein and should have gone two years ago.
However, if the new constitution doesn't get up, we'll then proceed to new contested farmer board elections in a later resolution which will almost certainly see Russell McKenzie from Victoria and Colin Nicholl from WA join the board. These two are single desk cold war warriors who are interested in rolling chairman Brendan Stewart and pulling out all stops to save the single desk, which Labor is determined to bury once and for all.
However, there is a chance that a more progressive grower from NSW may get up, which would leave the reformers with a bare majority.
The regular B class shareholders are not batting with a full line-up because only three of their four spots on the board are filled. However, no self-respecting corporate type would jump into the hot seat in the current environment and the farmers have a right of veto over all directors anyway.
It should be an emotionally charged day at Melbourne Park and we'll give you a full update shortly after it finishes. Also, check out our package of AWB video, audio and transcripts on the site here.
When ego destroys value in takeover battles
Alan Kohler has this interesting column in The Eureka Report yesterday where he laid out the worst performing ASX300 stocks over the past three years and concluded that expensive acquisitions, often driven by ego, was the common thread. Naturally, I'm a shareholder in all of the following companies, as the portfolio is now about 630 stocks:
You can see his interesting comments during this chat with Helen Dalley on Saturday morning's Business View program on Sky when I raised the ego question in suggesting BHP was going over the top.
Michael Pascoe interviewed Bruce Teele in The Eureka Report last Friday and the stockbroking doyen pointed out that the $5 billion AFIC listed investment fund that he chairs is unlikely to back anything other than an agreed deal that will deliver capital gains tax rollover relief.
With $570 million invested in BHP-Billiton and $337 million in Rio Tinto shares, the Teele-chaired AFIC is an important player in the debate. And guess who sits alongside Teele on the AFIC board? None other than BHP chairman Don Argus.
We saw a similar situation when the BHP board surrendered $5 billion in value with the overly generous Billiton merger back in 2001. Then BHP director John Ralph was party to those full page ads urging shareholders to back the deal. The largest Australian shareholder was Colonial First State which made noises about voting against the deal but ultimately came on side. The fact that Ralph was chairman of Colonial's then new master, the Commonwealth Bank, wasn't a good look and demonstrated the excessive connectedness of Australia's director's club.
Argus will have a very tough time lobbying Australian institutions to sign up for a scrip deal that triggers a cash tax bill. Yet the only way to avoid that is compulsory acquisition with more than 90% and that will only arrive with an agreed merger. If Rio won't talk then it is hard to see how this deal can work.
- Macquarie Infrastructure (–0.4%)
- Tabcorp (–1.8%)
- IAG (–12.2%)
- Soul Pattinson (–4.2%)
- Allco Finance Group (–16.4%)
- Centennial Coal (–2.5%)
- Iluka Resources (–4.7%)
- PaperlinX (–18.4%)
- Spotless –3.3%)
- Graincorp (–1.9%)
- Macquarie DDR (–8.0%)
- Great Southern (–22.4)
You can see his interesting comments during this chat with Helen Dalley on Saturday morning's Business View program on Sky when I raised the ego question in suggesting BHP was going over the top.
Michael Pascoe interviewed Bruce Teele in The Eureka Report last Friday and the stockbroking doyen pointed out that the $5 billion AFIC listed investment fund that he chairs is unlikely to back anything other than an agreed deal that will deliver capital gains tax rollover relief.
With $570 million invested in BHP-Billiton and $337 million in Rio Tinto shares, the Teele-chaired AFIC is an important player in the debate. And guess who sits alongside Teele on the AFIC board? None other than BHP chairman Don Argus.
We saw a similar situation when the BHP board surrendered $5 billion in value with the overly generous Billiton merger back in 2001. Then BHP director John Ralph was party to those full page ads urging shareholders to back the deal. The largest Australian shareholder was Colonial First State which made noises about voting against the deal but ultimately came on side. The fact that Ralph was chairman of Colonial's then new master, the Commonwealth Bank, wasn't a good look and demonstrated the excessive connectedness of Australia's director's club.
Argus will have a very tough time lobbying Australian institutions to sign up for a scrip deal that triggers a cash tax bill. Yet the only way to avoid that is compulsory acquisition with more than 90% and that will only arrive with an agreed merger. If Rio won't talk then it is hard to see how this deal can work.
Argus does the right thing at Brambles
Whilst Don Argus is to be commended for surrendering the Brambles chair so he can focus on his leadership of BHP-Billiton through the Rio Tinto takeover battle, his replacement Graham Kraehe is equally over-committed.
Not since John Gough sponsored Margaret Jackson onto the Pacific Dunlop, ANZ and BHP boards in the early 1990s have we seen one individual so depend on the support of another for board advancement as has occurred with Don Argus and Graham Kraehe.
However, the ASX Corporate Governance guidelines recommend against the one person chairing two ASX100 companies, but after the Brambles handover we've still got 13 of them as follows, although a couple have slipped outside the top 100:
Graham Bradley: chairman of Boart Longyear since 2007 float and Stockland since 2005
Michael Chaney: chairman of National Australia Bank and Woodside Petroleum
David Clarke: non-executive chairman of Macquarie Bank since April 2007 and Goodman Group
David Crawford: replaced Frank Swan at Foster's in 2007 and still chairs Lend Lease
David Gonski: has chaired Coca-Cola Amatil since 2001 and will take over from Maurice Newman at ASX this year
Graham Kraehe: Brambles and Bluescope Steel
Peter Mansell: chairman of Zinifex and WA News
Kevin McCann: chairman of Healthscope and Origin Energy
Don Mercer: has chaired Orica since 2001 but also took over as Newcrest chair in 2006
Bob Savage: chairman of Perpetual and David Jones
Peter Smedley: chairman of Onesteel and Spotless
John Storey: took over as Tabcorp chairman in 2007 and still chairing Suncorp
James Strong: long-term chairman of Woolworths and Insurance Australia Group
Harvard academic Stephen Davis puts out the best-regarded international governance newsletter, Global Proxy Watch, and his latest edition features an item on our list tracking the over-committed directors. You should also check out his take on the upcoming UBS recapitalisation vote, which is running into plenty of opposition.
Not since John Gough sponsored Margaret Jackson onto the Pacific Dunlop, ANZ and BHP boards in the early 1990s have we seen one individual so depend on the support of another for board advancement as has occurred with Don Argus and Graham Kraehe.
However, the ASX Corporate Governance guidelines recommend against the one person chairing two ASX100 companies, but after the Brambles handover we've still got 13 of them as follows, although a couple have slipped outside the top 100:
Graham Bradley: chairman of Boart Longyear since 2007 float and Stockland since 2005
Michael Chaney: chairman of National Australia Bank and Woodside Petroleum
David Clarke: non-executive chairman of Macquarie Bank since April 2007 and Goodman Group
David Crawford: replaced Frank Swan at Foster's in 2007 and still chairs Lend Lease
David Gonski: has chaired Coca-Cola Amatil since 2001 and will take over from Maurice Newman at ASX this year
Graham Kraehe: Brambles and Bluescope Steel
Peter Mansell: chairman of Zinifex and WA News
Kevin McCann: chairman of Healthscope and Origin Energy
Don Mercer: has chaired Orica since 2001 but also took over as Newcrest chair in 2006
Bob Savage: chairman of Perpetual and David Jones
Peter Smedley: chairman of Onesteel and Spotless
John Storey: took over as Tabcorp chairman in 2007 and still chairing Suncorp
James Strong: long-term chairman of Woolworths and Insurance Australia Group
Harvard academic Stephen Davis puts out the best-regarded international governance newsletter, Global Proxy Watch, and his latest edition features an item on our list tracking the over-committed directors. You should also check out his take on the upcoming UBS recapitalisation vote, which is running into plenty of opposition.
Another 10 Rich Listers
Here are ten new names for the Mayne Report Rich List including seven from emerging African coal play Riversdale Mining which has rocketed from $2 to more than $9 in less than a year.
William O'Keeffe: chairman of African coal miner Riversdale Mining which rocketed through $10 in 2007. The former MIM executive and Glencore Australia managing director owns 3.85 million shares which are worth almost more than $30 million.
Niall Lenehan: the former finance director of Kingsgate Consolidated, Goldfields and AurionGold has hit real pay dirt since joining African coal miner Riversdale Mining as his 3 million shares are now worth almost $30 million.
Andrew Love: has been making plenty for years as a partner at insolvency firm Ferrier Hodgson but also owns 345,000 shares in booming African coal miner Riversdale Mining and has in-the-money options over a further 550,000 shares which together have delivered him about $8 million on paper. Quite a lucrative non-executive board seat all up.
Dr Salim Cassim: pops up on a range of WA mining company top 20 shareholder lists such as Grange Resources and Riversdale Mining, where his 1.3 million shares are worth more than $10 million.
Peter Anderton: executive chairman of the struggling Australian Ethanol but has done far better from his 2.25 million shares in African coal play Riversdale Mining where his 2.25 million shares are worth more than $20 million.
Hugh Callaghan: the former Rio Tinto and Xstrata executive is best known as the founder of Riversdale Mining who quit to pursue other interests before the African coal miner really took off but still pocketed almost $10 million from the sale of his 4.5 million shares.
Barry Fitzpatrick: served as CEO of Adelaide Bank for 21 years and received an $8.3 million retirement payout on top of his salary and share profits when he finally bailed in 2006.
Robert Biddle: has popped up on the Skilled Group share registry with 5% or 5 million shares worth $25 million.
Bruce McWilliam: the lawyer and Seven Network Ltd executive director owns 2.14 million shares worth more than $20 million and has options over another 1 million, which his package was valued at $2.3 million in 2006-07.
Ted Kunkel: the former Foster's CEO retired in 2005 with a $3.4 million termination benefit and super, holiday pay and long service totalling more than $12 million after spending his career with the company.
William O'Keeffe: chairman of African coal miner Riversdale Mining which rocketed through $10 in 2007. The former MIM executive and Glencore Australia managing director owns 3.85 million shares which are worth almost more than $30 million.
Niall Lenehan: the former finance director of Kingsgate Consolidated, Goldfields and AurionGold has hit real pay dirt since joining African coal miner Riversdale Mining as his 3 million shares are now worth almost $30 million.
Andrew Love: has been making plenty for years as a partner at insolvency firm Ferrier Hodgson but also owns 345,000 shares in booming African coal miner Riversdale Mining and has in-the-money options over a further 550,000 shares which together have delivered him about $8 million on paper. Quite a lucrative non-executive board seat all up.
Dr Salim Cassim: pops up on a range of WA mining company top 20 shareholder lists such as Grange Resources and Riversdale Mining, where his 1.3 million shares are worth more than $10 million.
Peter Anderton: executive chairman of the struggling Australian Ethanol but has done far better from his 2.25 million shares in African coal play Riversdale Mining where his 2.25 million shares are worth more than $20 million.
Hugh Callaghan: the former Rio Tinto and Xstrata executive is best known as the founder of Riversdale Mining who quit to pursue other interests before the African coal miner really took off but still pocketed almost $10 million from the sale of his 4.5 million shares.
Barry Fitzpatrick: served as CEO of Adelaide Bank for 21 years and received an $8.3 million retirement payout on top of his salary and share profits when he finally bailed in 2006.
Robert Biddle: has popped up on the Skilled Group share registry with 5% or 5 million shares worth $25 million.
Bruce McWilliam: the lawyer and Seven Network Ltd executive director owns 2.14 million shares worth more than $20 million and has options over another 1 million, which his package was valued at $2.3 million in 2006-07.
Ted Kunkel: the former Foster's CEO retired in 2005 with a $3.4 million termination benefit and super, holiday pay and long service totalling more than $12 million after spending his career with the company.
More foreign companies doing $200m Down Under
With the coming foreign ownership debate given the Chinese interest in Rio Tinto, we've decided to give some of our business lists a real push. We've now got more than 220 names on our list of foreign companies doing more than $200 million a year in revenue out of Australia versus just 75 Australian companies doing the same offshore. Below are the latest additions to the foreign investment list:
Abbott Australasia: US, pharmaceutical and toiletry wholesaleing
Accenture: US, global management consulting, technology services and outsourcing company
Apache Energy: US, the oil and gas industry
Aon: US, reinsurance and risk management
Baosteel Group Corporation: China, iron ore and steel
Baxter Healthcare: US, is a global healthcare company applying its expertise in medical devices, pharmaceuticals and biotechhnology
BUPA: UK, health insurer that purchased, with Macquarie Bank, the old National Mutual health insurance division
Compass group: US, catering giant employing 10,000 Australians
Chevron: US, oil and gas
Exxon-Mobil: US, oil and gas
Hitachi: Japan, train systems, power tools and mining equipment are some activiteis undertaken by this huge conglomerate
Infosys: India, designs and delivers technology-enabled business solutions
Kyocera Mita: Japan, printers, photocopiers and digital cameras
LogicaCMG: UK, business consulting, systems integration and IT
Maxxium: Dutch, Maxxium Worldwide is responsible for the sales, local marketing and distribution of ABSOLUT Vodka, The Famous Grouse Scotch Whisky, Jim Beam Bourbon and Rémy Martin Cognac
Nippon Steel: Japanese, iron ore through Robe River
Sanofi-Aventis: France, one of the world's largest pharmaceutical companies focussing on cardiovascular, thrombosis, metabolic disorders, oncology, central nervous system, internal medicine and vaccines
Schenker Logistics: German, is one of the leading international providers of integrated logistics services
Serco: UK, management of facilities, projects and IT systems, through to the creation of entirely new businesses
Sumisho Coal: Japan, Investment in Northparkes copper mine
Yara International: Norway, fertilisers and chemicals
Abbott Australasia: US, pharmaceutical and toiletry wholesaleing
Accenture: US, global management consulting, technology services and outsourcing company
Apache Energy: US, the oil and gas industry
Aon: US, reinsurance and risk management
Baosteel Group Corporation: China, iron ore and steel
Baxter Healthcare: US, is a global healthcare company applying its expertise in medical devices, pharmaceuticals and biotechhnology
BUPA: UK, health insurer that purchased, with Macquarie Bank, the old National Mutual health insurance division
Compass group: US, catering giant employing 10,000 Australians
Chevron: US, oil and gas
Exxon-Mobil: US, oil and gas
Hitachi: Japan, train systems, power tools and mining equipment are some activiteis undertaken by this huge conglomerate
Infosys: India, designs and delivers technology-enabled business solutions
Kyocera Mita: Japan, printers, photocopiers and digital cameras
LogicaCMG: UK, business consulting, systems integration and IT
Maxxium: Dutch, Maxxium Worldwide is responsible for the sales, local marketing and distribution of ABSOLUT Vodka, The Famous Grouse Scotch Whisky, Jim Beam Bourbon and Rémy Martin Cognac
Nippon Steel: Japanese, iron ore through Robe River
Sanofi-Aventis: France, one of the world's largest pharmaceutical companies focussing on cardiovascular, thrombosis, metabolic disorders, oncology, central nervous system, internal medicine and vaccines
Schenker Logistics: German, is one of the leading international providers of integrated logistics services
Serco: UK, management of facilities, projects and IT systems, through to the creation of entirely new businesses
Sumisho Coal: Japan, Investment in Northparkes copper mine
Yara International: Norway, fertilisers and chemicals