Murdoch's biggest challange, Brian Evans sticks it to Fairfax, RACV board coup
July 28, 2008
Here are Stephen Mayne's three stories from the Crikey edition on Monday, 10 October, 2005.
7. The biggest challenge to Rupert Murdoch in 52 years
By Stephen Mayne, small News Corp shareholder and rejected board candidate
Brian Toohey scored himself quite a coup in the Saturday AFR when he landed the story about a global coalition of super funds getting together to sue News Corp and its directors in the Delaware courts over the notorious "poison pill" arrangement. Check out this comprehensive story from The New York Times.
It was actually the international newsletter Global Proxy Watch which broke the story on Friday afternoon. You can tell the importance of the issue in global corporate governance terms by the treatment the Boston-based newsletter gives the story here.
Add to that the resignation of conflicted non-executive director and long-time News Corp adviser Stanley Shuman and a recommendation by the powerful global proxy adviser Institutional Shareholders Services to vote against a pay rise for directors and the re-election of four directors at the forthcoming AGM in New York and you have the biggest challenge to Rupert Murdoch's authority in the 52 year history of the company.
All four directors facing a vote on October 21 are conflicted. Two of them, Chase Carey and Peter Chernin, are current News Corp directors and the other two, Rod Eddington and Andrew Knight, are former executives who have been enriched by Rupert but now somehow claim they are independent. American AGMs don't get to vote "against" a director, you can only tick the "withheld" box to mount a protest and these four will face an unprecedented rejection from News Corp shareholders who have never before voted an incumbent director back in with less than 90% support.
However, the real pressure from the Delaware legal action here is on the so-called independents on the boards who are now getting personally sued, many of them for the first time in their careers as professional directors.
The resignation of Shuman probably reflects the fact that his company, Allen & Co, has been working on the peace deal with Malone that would earn it huge fees if successfully executed. However, some other patently affiliated or conflicted directors such as Ken Cowley, who ran News Ltd from 1980 until 1996, are still in there, approving everything Rupert wants. Cowley should resign too and increase to three the number of vacancies for genuine independents, which Rupert simply won't be able to find whilst his board is getting sued over the poison pill scandal.
While Rupert might very well be prepared to stare down the institutions and take them on in court, the rest of his board won't be so keen, particularly the four who face big protest votes. Would someone like new Ansell chairman and News Corp director Peter Barnes risk signing off on a sweetheart peace deal with Rupert's friend-turned-foe John Malone knowing that his personal assets could be on the line in a subsequent court action?
Meanwhile, it is most amusing to have Greg Baxter, the former James Hardie spinner who now handles PR for News Ltd, publicly blasting the very same funds that he was personally involved with, making the broken promises ahead of last year's vote on the move to America.
As usual, the News Corp papers were pathetic in their coverage of this issue and we can't wait to see what Terry McCrann and Bryan Frith will say. They could start by reading Alan Kohler's editorial on Inside Business yesterday.
Crikey is booked to fly to New York next week in what should be an unprecedented News Corp AGM with rockets going off all over the place. Whilst Rupert might be confident he can win the legal battle, what does he tell his own shareholders when some of his previous biggest backers, John Malone and this group of 15 institutions, have turned against him?
How can he possibly defend the poison pill when it has only served to deflate the share price. Rupert's annual report address opens with the claim that, "I am very pleased to report to you that fiscal 2005 was, by virtually any measure, the best year in News Corporation's 52-year history."
Er, not in shareholder returns Rupert.
10. Brian Evans sticks it up Fairfax in CEO swapfest
By Stephen Mayne, small PMP and Fairfax shareholder
Passed-over internal CEO candidates are well known for spitting the dummy and defecting to a competitor. But can anyone recall the unprecedented situation revealed this morning when Fairfax's chief operating officer, Brian Evans, was appointed CEO of PMP?
As we know, the Fairfax board decided Evans wasn't up to the top job and instead head hunted PMP CEO David Kirk, the former All Black captain with no newspaper experience, to run the company.
So we've now got the paper and print expert running Australia's most important journalism company and the newspaper veteran leaving behind a 30 year career to suddenly become the king of Australia's biggest printing company. Wouldn't it have been a lot easier if the Fairfax board had appointed Evans as CEO and left Kirk, whose recent record was decidedly mixed, at PMP?
And how amusing to have the Fairfax CEO who just won't go away, Fred Hilmer, telling the staff about the news with this announcement earlier today:
Dear Colleagues
This morning PMP Ltd will be announcing that Brian Evans has been appointed as its new CEO. We congratulate Brian. He has our thanks for his outstanding work with Fairfax for the past several years.
David Kirk, our incoming CEO, will accelerate his commencement date with Fairfax, and will formally start next Monday, 17 October. David will assume direct responsibility for the Australian operations that previously reported to Brian. David welcomes the opportunity to be involved so strongly from the outset, and is eager to begin.
The company's announcement to the ASX this morning follows below.
Sincerely
Fred Hilmer
Chief Executive Officer
Check out the PMP announcement here and the Fairfax announcement from controversial chairman Ron Walker here.
It is a chairman's role to manage succession and the Fairfax process has, frankly, been quite pathetic. Add to that the totally unnecessary $4.5 million retirement benefit promised to Fred Hilmer for six years of average performance and Ron Walker might find himself under a little bit of pressure when he puts himself up for re-election at the forthcoming AGM.
Fairfax shares fell 6c to $4.38 this morning, so the market regards Evans as an important loss, although PMP is only 0.5c higher at $1.455, so getting a non-printing bloke in as CEO hasn't fired up its share price.
Other prominent spurned wannabe CEOs who defected over the years include:
Keith Barton: Passed over at CSR so went to run James Hardie
John Mulcahy and Gail Kelly: left CBA to run Suncorp Metway and St George respectively after David Murray showed no sign of leaving
Paul Thompson: shafted as Austereo CEO after Village Roadshow bought the company, then later defected to establish DMG
Gary Toomey: The Qantas board opted for Geoff Dixon to replace James Strong so Toomey defected to Air New Zealand.
Send other examples to smayne@crikey.com.au.
27. Mrs Crikey firming for RACV board coup
By Stephen Mayne, frantic candidate for the RACV board
More than 50,000 votes for the RACV election have already been received but the inflow has slowed to less than 1,000 votes a day ahead of Thursday's 5pm close of polling. The biggest rush saw 11,000 ballots arrive on one day, but this was just after RoyalAuto arrived in more than one million letter boxes across Victoria four weeks ago.
However, it's fair to say that Victoria is not gripped by RACV election excitement. The voting hotline, 1300 365 699, has been averaging 3 calls a day but we did get it up to 10 on one day after urging the Crikey army to call through and ask for another ballot paper if the RoyalAuto had already been binned.
Believe it or not, but Mrs Crikey, back-at-work barrister Paula Piccinini, is firming as a good chance to win one of the two seats, along with incumbent and fellow lawyer Suzanna Sheed. The two blokes, incumbent John Rawlins and yours truly, will probably miss out – and I'm tipped to come last.
Such is the excitement in the Crikey household about Paula's prospects, we were busily letter dropping the local suburb this weekend and have ordered another four boxes of ballot papers for distribution today and tomorrow. An estimated 16,000-18,000 votes should carry the day but it will probably be very tight so every last vote will count.
Scrutineering begins at 10am on Friday morning and we're delighted to have secured the services of Crikey psephologist Charles Richardson who should be able to tell us in time for that day's edition whether Paula has pulled off an unlikely coup in her first contested election for anything. There will be about 25 people scanning the ballot papers for an estimated five hours and the RACV board will be informed of the outcome some time after 3pm.
I'll probably be adding the embarrassing "can't even beat my wife" claim to the "Australia's most unsuccessful candidate" title, with this likely to be failed tilt number 26 since it all begin with the Burwood by-election in December 1999.
However, engineering a tilt that saw Mrs Crikey knock off an incumbent director would be a huge coup, although we're now hearing that former Tricontinental director John Rawlins is actually one of the better directors who has been pushing for the RACV Club to surrender its ridiculous gerrymander over the 1.3 million service members who create far more value.
The 17,000-member Club has a vice-like grip over the entire RACV because surrendering its clear majority of nine out of 15 directors would require a constitutional change approved by 75% of those voting at the AGM and only Club members can vote. That's how disenfranchised service members really are.
If anyone fancies joining Charles and the Crikey family at Laverton North for some scrutineering on Friday, drop us a line. Similarly, if you need a ballot paper sent out please email smayne@crikey.com.au before last mail today at the absolute latest.
Despite plenty of false dawns over the years, I'm more confident about the prospect of success in this tilt than any other, so get your ballot in promptly and make your contribution to a possible palace coup.
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