An evening with Sir Rod Eddington
February 2, 2010
Dear Mayne Reporters,
in tonight's edition we've tallied up all the losses I've suffered investing in 9 different Allco group vehicles in preparation for fronting prominent Allco Finance Group director Sir Rod Eddington at a seminar in Melbourne. Alas, rather than ripping into the lad we ended up having a 20 minute conversation about all sorts of things. Click through for more.
There's also an update on the great battle for WA News with Kerry Stokes tonight launching his how-to-vote card.
We also examine why more Australian divisional CEOs of multi-nationals aren't accepted into the directors' club. And speaking of multi-nationals, the Rio Tinto tilt hasn't eventuated. Click through to discover what happened.
The market has bounced strongly today, so I dumped 6 of my 7 Coal & Allied shares at $91.51 a pop. However, the buying continues with $500 invested in the following four companies since Monday's update: Warnambool Cheese & Butter, Noni B, Aurox Resources and Amadeus Energy
Check out the full list of all our share dealings and don't forget the Mayne Report Rich List which we're still updating on a daily basis in the quest to name the 1000 Australians who are worth more than $20 million.
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 tonight's edition we've tallied up all the losses I've suffered investing in 9 different Allco group vehicles in preparation for fronting prominent Allco Finance Group director Sir Rod Eddington at a seminar in Melbourne. Alas, rather than ripping into the lad we ended up having a 20 minute conversation about all sorts of things. Click through for more.
There's also an update on the great battle for WA News with Kerry Stokes tonight launching his how-to-vote card.
We also examine why more Australian divisional CEOs of multi-nationals aren't accepted into the directors' club. And speaking of multi-nationals, the Rio Tinto tilt hasn't eventuated. Click through to discover what happened.
The market has bounced strongly today, so I dumped 6 of my 7 Coal & Allied shares at $91.51 a pop. However, the buying continues with $500 invested in the following four companies since Monday's update: Warnambool Cheese & Butter, Noni B, Aurox Resources and Amadeus Energy
Check out the full list of all our share dealings and don't forget the Mayne Report Rich List which we're still updating on a daily basis in the quest to name the 1000 Australians who are worth more than $20 million.
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.
Stokes launches WAN how to vote card
The battle for WA News is a fast moving beast. Chairman Peter Mansell unveiled his campaign pitch in Sydney on Monday and then spent Tuesday in Melbourne personally meeting with individual journalists such as News Ltd's Terry McCrann, The Australian's John Durie and The Age's Jessie Hogan.
Tonight, Seven has emailed subscribers to its campaign website alerting them to its how-to-vote card, which is being mailed, along with a flyer, to all WA News shareholders.
Despite meeting with all these journalists, the board seems to be losing the public relations battle against Kerry Stokes, with the likes of The Australian's John Durie and Bryan Frith both criticising the tactics employed by chairman Peter Mansell and his fellow directors.
The AFR has been a little more circumspect, which perhaps reflect the difficult position of having Ingrid Mansell, Peter's daughter, working on the paper as a senior companies reporter.
Given that 50% of the WAN register is controlled by small investors, the role of business commentators and media coverage will be very important in this most colourful proxy battle since Solly Lew was booted off the Coles Myer board in 2002.
News Ltd's Terry McCrann produced the most insightful commentary on Wednesday, when he highlighted the outrageous point that the resolutions proposing Stokes and his lieutenant Peter Gammell won't even be valid if the four incumbents get returned. This is because WAN is deploying the notorious “no vacancy rort”, something which is explained in full here.
There is also a touch of the Nick Whitlams about the way WAN has structured the proxy form to maximise the number of undirected proxies, another rort which is explained here. Interestingly, Stokes is asking shareholders to appoint him as their proxy, which really will make him the kingmaker on the last two spots if the incumbents are indeed punted.
I spoke to one respected media analyst today who firmly predicted that Stokes would be rolled by the institutions. However, I think this underestimates the sort of response he will get from retail investors and the efforts he's making to win them over.
The WAN incumbents are right to press Seven into advising who they will be voting for at the AGM. However, because the voting system is so complex and inter-related and there are so many candidates, Seven should properly listen to the debate at the AGM before making a final decision in the poll. How do you lodge proxies when you only know that there will be somewhere between 0 and 4 vacancies?
I booked my flights to Perth for April 23 a while back before knowing the precise timing of the meeting, but the WAN board have helpfully scheduled a 2.30pm start which will play havoc with east coast media deadlines if the debate drags on. The 6pm flight home was also looking dicey so we've changed them now to instead catch the 11pm red-eye direct to Brisbane for the Rio Tinto AGM the next day.
Unfortunately, all the earlier bluster about running for the Rio Tinto board didn't come to pass in the end, so we'll be taking this video down. It would have been too much to run seriously for WAN and then back up with a nationalistic Rio tilt the following day. That said, the Rio AGM will still be a cracker and I'm still running for the Alumina board.
Tonight, Seven has emailed subscribers to its campaign website alerting them to its how-to-vote card, which is being mailed, along with a flyer, to all WA News shareholders.
Despite meeting with all these journalists, the board seems to be losing the public relations battle against Kerry Stokes, with the likes of The Australian's John Durie and Bryan Frith both criticising the tactics employed by chairman Peter Mansell and his fellow directors.
The AFR has been a little more circumspect, which perhaps reflect the difficult position of having Ingrid Mansell, Peter's daughter, working on the paper as a senior companies reporter.
Given that 50% of the WAN register is controlled by small investors, the role of business commentators and media coverage will be very important in this most colourful proxy battle since Solly Lew was booted off the Coles Myer board in 2002.
News Ltd's Terry McCrann produced the most insightful commentary on Wednesday, when he highlighted the outrageous point that the resolutions proposing Stokes and his lieutenant Peter Gammell won't even be valid if the four incumbents get returned. This is because WAN is deploying the notorious “no vacancy rort”, something which is explained in full here.
There is also a touch of the Nick Whitlams about the way WAN has structured the proxy form to maximise the number of undirected proxies, another rort which is explained here. Interestingly, Stokes is asking shareholders to appoint him as their proxy, which really will make him the kingmaker on the last two spots if the incumbents are indeed punted.
I spoke to one respected media analyst today who firmly predicted that Stokes would be rolled by the institutions. However, I think this underestimates the sort of response he will get from retail investors and the efforts he's making to win them over.
The WAN incumbents are right to press Seven into advising who they will be voting for at the AGM. However, because the voting system is so complex and inter-related and there are so many candidates, Seven should properly listen to the debate at the AGM before making a final decision in the poll. How do you lodge proxies when you only know that there will be somewhere between 0 and 4 vacancies?
I booked my flights to Perth for April 23 a while back before knowing the precise timing of the meeting, but the WAN board have helpfully scheduled a 2.30pm start which will play havoc with east coast media deadlines if the debate drags on. The 6pm flight home was also looking dicey so we've changed them now to instead catch the 11pm red-eye direct to Brisbane for the Rio Tinto AGM the next day.
Unfortunately, all the earlier bluster about running for the Rio Tinto board didn't come to pass in the end, so we'll be taking this video down. It would have been too much to run seriously for WAN and then back up with a nationalistic Rio tilt the following day. That said, the Rio AGM will still be a cracker and I'm still running for the Alumina board.
Sledges aplenty for Sir Rod, then a 20 minute chat
Sir Rod Eddington didn't quite make this video detailing the most Sackable Seven directors of Australian public companies, but he's getting close given his tolerance of shoddy governance at News Corp and the continuing disaster of Allco Finance Group.
The Centre for Corporate Law and Securities Regulation held a seminar in Melbourne tonight on the topic: Director's duties: navigating the storm on board. Sir Rod was listed as one of the speakers, along with former Trade Practices Commission chairman Bob Baxt and a couple of lawyers.
I paid my $99 fully expecting Sir Rod wouldn't show up because of the Allco Finance Group explosion where he is reportedly leading negotiations with the banks who want $10 billion back. Alas, there he was, listening closely to Bob Baxt talk about legal defences when directors get sued and then holding forth on what makes a good board.
Personally, I'll be amazed if the Allco Finance Group board doesn't finish up in storm of civil and regulatory litigation. As a senior independent director and a member of the related party transactions committee, Sir Rod presumably signed off on all those Allco associates drawing loans from the parent company over the past few months that now might never be recovered.
Sir Rod made some interesting points during his 15 minute spot, including the following:
* he believes in a majority of non-execs and an independent chairman;
* The Qantas constitution shouldn't specifically have banned former CEOs like James Strong from returning as chairman after a break;
* Sarbanes-Oxley was too onerous and led to London becoming more important than New York as a business centre;
* CEOs should take on one outside non-exec role to better understand their own boards;
* a good board should have 2 or 3 executive directors;
* the non-execs need to keep a close eye on the relationship between the chairman and CEO;
* Noah's Ark's board (two women, two blacks, two lawyers, two accountants etc) are no good;
* increased regulation is discouraging some business leaders from joining the NEDs club but the pool of talent remains strong; and
* experienced NEDs are more likely to back risky propositions whilst newcomers are too cautious.
Given that Sir Rod backed non-exec chairs I got up and asked the obvious question about his experiences as the senior independent director under News Corp executive chairman Rupert Murdoch and Allco Finance Group executive chairman David Coe. He didn't answer the Allco bit, but described Rupert as the driving entrepreneurial force behind News Corp who had the capacity to pull off both positions.
I've been giving Sir Rod plenty of stick lately. Check out this Mayne Report update after the Rubicon takeover EGM, along with the following Crikey stories:
Allco delays half year result
Where is ASIC on Allco?
Why didn't Sir Rod quit Allco?
Rudd's Murdoch embrace through Sir Rod
Editorial after Infrastructure Australia appointment
Given all this, it was amazing that he came up for a 20 minute chat after tonight's seminar. Unfortunately, it was off the record, but he was quite willing to talk, without breaking any confidences, about Allco, Rupert, Sir Peter Abeles, directorial workloads and a few other things.
I'm still steaming about all those Allco losses (see next story) but was amazed how cool he was (cheery chats over two glasses of champers) during what is surely the greatest crisis of his professional career. The former British Airways CEO, current Rio Tinto director and Kevin Rudd's new chairman of Infrastructure Australia eventually headed off to collect his son who was returning from boarding school, but he was one of the last to leave.
Oh, and the chairman of Melbourne Major Events was also wearing a daggy Melbourne badge, too. It would be interesting to know what this Perth-born lad thinks of those rumours that a combined BHP-Rio would be run out of the WA capital. Unfortunately, I forgot to ask him.
The Centre for Corporate Law and Securities Regulation held a seminar in Melbourne tonight on the topic: Director's duties: navigating the storm on board. Sir Rod was listed as one of the speakers, along with former Trade Practices Commission chairman Bob Baxt and a couple of lawyers.
I paid my $99 fully expecting Sir Rod wouldn't show up because of the Allco Finance Group explosion where he is reportedly leading negotiations with the banks who want $10 billion back. Alas, there he was, listening closely to Bob Baxt talk about legal defences when directors get sued and then holding forth on what makes a good board.
Personally, I'll be amazed if the Allco Finance Group board doesn't finish up in storm of civil and regulatory litigation. As a senior independent director and a member of the related party transactions committee, Sir Rod presumably signed off on all those Allco associates drawing loans from the parent company over the past few months that now might never be recovered.
Sir Rod made some interesting points during his 15 minute spot, including the following:
* he believes in a majority of non-execs and an independent chairman;
* The Qantas constitution shouldn't specifically have banned former CEOs like James Strong from returning as chairman after a break;
* Sarbanes-Oxley was too onerous and led to London becoming more important than New York as a business centre;
* CEOs should take on one outside non-exec role to better understand their own boards;
* a good board should have 2 or 3 executive directors;
* the non-execs need to keep a close eye on the relationship between the chairman and CEO;
* Noah's Ark's board (two women, two blacks, two lawyers, two accountants etc) are no good;
* increased regulation is discouraging some business leaders from joining the NEDs club but the pool of talent remains strong; and
* experienced NEDs are more likely to back risky propositions whilst newcomers are too cautious.
Given that Sir Rod backed non-exec chairs I got up and asked the obvious question about his experiences as the senior independent director under News Corp executive chairman Rupert Murdoch and Allco Finance Group executive chairman David Coe. He didn't answer the Allco bit, but described Rupert as the driving entrepreneurial force behind News Corp who had the capacity to pull off both positions.
I've been giving Sir Rod plenty of stick lately. Check out this Mayne Report update after the Rubicon takeover EGM, along with the following Crikey stories:
Allco delays half year result
Where is ASIC on Allco?
Why didn't Sir Rod quit Allco?
Rudd's Murdoch embrace through Sir Rod
Editorial after Infrastructure Australia appointment
Given all this, it was amazing that he came up for a 20 minute chat after tonight's seminar. Unfortunately, it was off the record, but he was quite willing to talk, without breaking any confidences, about Allco, Rupert, Sir Peter Abeles, directorial workloads and a few other things.
I'm still steaming about all those Allco losses (see next story) but was amazed how cool he was (cheery chats over two glasses of champers) during what is surely the greatest crisis of his professional career. The former British Airways CEO, current Rio Tinto director and Kevin Rudd's new chairman of Infrastructure Australia eventually headed off to collect his son who was returning from boarding school, but he was one of the last to leave.
Oh, and the chairman of Melbourne Major Events was also wearing a daggy Melbourne badge, too. It would be interesting to know what this Perth-born lad thinks of those rumours that a combined BHP-Rio would be run out of the WA capital. Unfortunately, I forgot to ask him.
The Allco experience - nine punts for a loss of $3561
As a shareholder in Allco Finance Group, I'm still yet to receive any communication explaining the chaos that has been unfolding. In fact, this is the status of all my Allco plays as at the close of trading today.
Allco Finance Group: bought 100 Record Investments shares at $5.38 on April 20, 2005. Sold 50 at $10.65 a pop on April 26, 2006. Retain 50 worth $11.50 at the closing price of 22c. Broken even.
Allco Hit: bought 227 at $2.21 on Sept 18, 2007. Now 7.9c so losing $483.
Allco Hybrid Investment Trust: bought 9 at $60 on Jan 21, 2008. Now $5.10 so losing $494.
Allco Max Securities and Mortgage Fund: bought 800 at 62c on Nov 20, 2007. Now 14c so losing $384.
Allco Equity Partners: bought 130 at $3.85 and 2500 at $2. Now $1.90 so losing $503.
Record Reality: bought 590 at 85c on Aug 15, 2007. Now 14.5c so losing $416.
Rubicon America Trust: bought 500 at $1 on Aug 15, 2007. Now 11.5c so losing $442.
Rubicon Europe Trust Group: bought 645 at 78c on Nov 5, 2007. Now 12c so losing $425.
Rubicon Japan Trust: bought 575 at 87c on Nov 5, 2007. Now 15c so losing $414.
As you can see, I'm down $3,561 on these 9 investments and the broader Allco stable has clearly destroyed many billions of other people's money. And tonight Sir Rod managed not to mention Allco once during his sermon on how directors should navigate the storms.
Allco Hit: bought 227 at $2.21 on Sept 18, 2007. Now 7.9c so losing $483.
Allco Hybrid Investment Trust: bought 9 at $60 on Jan 21, 2008. Now $5.10 so losing $494.
Allco Max Securities and Mortgage Fund: bought 800 at 62c on Nov 20, 2007. Now 14c so losing $384.
Allco Equity Partners: bought 130 at $3.85 and 2500 at $2. Now $1.90 so losing $503.
Record Reality: bought 590 at 85c on Aug 15, 2007. Now 14.5c so losing $416.
Rubicon America Trust: bought 500 at $1 on Aug 15, 2007. Now 11.5c so losing $442.
Rubicon Europe Trust Group: bought 645 at 78c on Nov 5, 2007. Now 12c so losing $425.
Rubicon Japan Trust: bought 575 at 87c on Nov 5, 2007. Now 15c so losing $414.
As you can see, I'm down $3,561 on these 9 investments and the broader Allco stable has clearly destroyed many billions of other people's money. And tonight Sir Rod managed not to mention Allco once during his sermon on how directors should navigate the storms.
Why regional multinational CEO should join our boards
Peter Coates was the spectacularly successful CEO of Xstrata Coal, so it is good to see he is joining Australia's directors' club, starting off with a spot on the Santos board as its ridiculous 15% shareholder cap expires.
As a nation, we don't tap into enough regional CEOs of multi-nationals for our boards. The most prominent examples over the years have included the following:
Dick Warburton: spent his executive career at Du Pont, rising to run Australia and then became one of the most prolific non-executive directors we've ever seen, competing for the "most gigs" title with Nick Greiner.
Bob Savage: the Perpetual and David Jones chairman made his name running IBM Australia.
Brian Healey: the Englishman ran Nicholas Kiwi in Australia and then joined the director's club before blowing his reputation at 72 by staying around far too long as chairman of Centro.
Frank Swan: rose to be managing director of Cadbury Schweppes in Australia and then ended up as chairman of Foster's for a few years.
It is far more common for the CEOs of prominent Australian listed companies to emerge at the top of the director's club. This would be a long list, but includes people like Don Argus, Stan Wallis, Leon Davis, Leigh Clifford, Dean Wills, James Strong, Mark Rayner, John Ralph and John Schubert.
Given that Australia has such a huge number of foreign companies turning over more than $200 million a year in Australia (we've just added struggling US bond insurer PMI to our list after its $US80 million profit Down Under last year), it would make sense to scoop up more of them for a final few years on boards after they retire as regional CEOs.
This is especially so in a market like Perth, which is now the home of more public companies than Sydney or Melbourne after a spate of mining-related floats over the past two years.
It is interesting that two candidates with strong multi-national CVs have nominated for the board of WA News. Peter Abery has worked in Australia, South Africa and the UK for the likes of Vodafone and Crown Castle, including CEO and chairman positions. Similarly, Aidan Montague spent much of his career in senior roles with Cisco and would do well on the WA News board.
As a nation, we don't tap into enough regional CEOs of multi-nationals for our boards. The most prominent examples over the years have included the following:
Dick Warburton: spent his executive career at Du Pont, rising to run Australia and then became one of the most prolific non-executive directors we've ever seen, competing for the "most gigs" title with Nick Greiner.
Bob Savage: the Perpetual and David Jones chairman made his name running IBM Australia.
Brian Healey: the Englishman ran Nicholas Kiwi in Australia and then joined the director's club before blowing his reputation at 72 by staying around far too long as chairman of Centro.
Frank Swan: rose to be managing director of Cadbury Schweppes in Australia and then ended up as chairman of Foster's for a few years.
It is far more common for the CEOs of prominent Australian listed companies to emerge at the top of the director's club. This would be a long list, but includes people like Don Argus, Stan Wallis, Leon Davis, Leigh Clifford, Dean Wills, James Strong, Mark Rayner, John Ralph and John Schubert.
Given that Australia has such a huge number of foreign companies turning over more than $200 million a year in Australia (we've just added struggling US bond insurer PMI to our list after its $US80 million profit Down Under last year), it would make sense to scoop up more of them for a final few years on boards after they retire as regional CEOs.
This is especially so in a market like Perth, which is now the home of more public companies than Sydney or Melbourne after a spate of mining-related floats over the past two years.
It is interesting that two candidates with strong multi-national CVs have nominated for the board of WA News. Peter Abery has worked in Australia, South Africa and the UK for the likes of Vodafone and Crown Castle, including CEO and chairman positions. Similarly, Aidan Montague spent much of his career in senior roles with Cisco and would do well on the WA News board.