Tangling with Tabcorp in 2002
By Stephen Mayne
July 9, 2008
This was sent to Crikey subscriber on October 24, 2002, after the Tabcorp AGM in Melbourne.
Crikey has been one of the strongest critics of the voracious gambling machine. And none are greedier than Tabcorp:
The TABCORP AGM this morning was reasonably predictable, with the union hijacking proceedings with about eight different unionists, staff or former staff getting up to whinge about shift changes, low pay rises and automation of the call centres.
When Crikey took to the microphone the reaction was bigger than I've ever encountered - and that was before saying a word. All that News Corp exposure must have changed things.
Chairman Michael Robinson said he'd missed me at the last three AGMs (I've only missed two) and noted I was a keen shareholder from the early days.
Sadly, it was very early as I'm one of the few people to have lost money in Tabcorp having paid $2.25 in the 1994 float and then sold them for $2.23 on the second day.
Over seven years they have paid out an astonishing $3.23 in full franked dividends AND more than quadrupled the share price to $11.92 this afternoon after a healthy 31c gain this morning.
Former CEO Ross Wilson negotiated his contract with his very good friend Mike Tilley - who was supposed to be advising the government. This yielded Wilson a staggering $58 million over 8 years and then, amazingly, Tilley was mentioned as a potential successor.
Most of these profits came from battlers in Victoria's poorer areas but let's not worry about all the crime, family breakdown and bankruptcies that comes from Australians being the biggest per capita gamblers in the world.
Let's just try to get that share price higher.
Crikey asked four questions dealing with the following issues:
1. Plunging turnover from the new ban on smoking in gaming areas. 2. Improving relations with Labor governments. 3. The details of the contract for new CEO Matthew Slatter.
4. Abandoning the non-executive directors retirement scheme.
Gaming turnover is down more than 20 per cent since September 1 when smoking was banned. Slatter put up figures showing monthly gaming revenue changes.
The July figures were up 4.4 per cent, August was 17.1 per cent higher and then since then Tabcorp has been down on the previous year's reveneu by 6.6 per cent. If this continues gaming revenue will be down by 3.2 per cent for the year.
This is a pretty big turnaround but the board stressed how they were working so hard to get venues to provide smoking areas to stop people leaving altogether after a smoke.
My second question was an ironic criticism of the board for allowing the regulator to cruel the pokies business. Why didn't we follow Aristocrat's lead and get a Labor heavyweight such as John "Bruvva" Ducker on as chairman. At least the NSW TAB has former Labor Premier Barry Unsworth on its board. Chairman Robinson was told he is too closely associated with right wing think tanks such as the IPA and we clearly need to jump into bed more wholeheartedly with Labor. Robbo took this as a joke question but did point out that the former Labor member for Isaacs, David Charles, is head of government affairs. Clearly he's not doing a very good job for the shareholders at the moment.
Matthew Slatter stumbled more times than I've ever heard a CEO stumble during his address - but don't worry he's not getting nearly what Ross Wilson was on.
Chairman Robinson is to be commended for answering Crikey's call to reveal the details of his contract. It's 5 years from October 7 and has a base payment of $1.15 million which even includes things like the Superannuation Guarantee Charge payments.
There is provision for a bonus of up to 35 per cent of the base but this is based on a range of criteria which will definitely not be met in the first year.
On top of this is 500,000 shares funded by a company loan and an additional 1 million options with a range of hurdles which are currently out of the money.
The final question dealt with following the lead of WA News, Commonwealth Bank and BHP-Billiton in abolishing the retirement scheme for directors. This was put in by Kennett and Stockdale at the time of the float but they were advised by Robinson's law firm Arthur Robs.
I was working for Kennett at the time and later heard from another insider that Robinson was originally offered $50,000 for the gig but said he'd only do it for $100,000.
By the time he retires, the total payment will probably approach $2 million. Not bad given that Tabcorp would have to be the easiest top 100 company to run.
Michael rejected the argument that lump sum retirement schemes based on years of service prevent NEDs from retiring over matters of principle and pointed out that it hadn't stopped him from quitting boards previously. This was a reference to his departure from Seven when he fell out with the domineering Kerry Stokes.
Crikey tired of the ASU campaign and left when speaker eight was on her feet so I'm not sure what if anything happened later in the meeting.
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