Time to buy, Akerman lets fly, RACV directors tenure, any older board than Gunns?
July 28, 2008
Here are Stephen Mayne's four stories from the Crikey edition on Thursday, 6 October, 2005.
1. Minor correction, time to buy?
By Stephen Mayne, who invested $2100 in four stocks this morning
It's always amusing to see how headline writers beat-up a small fall on the sharemarket into something that it isn't. Today we got "Rout blows froth from bourse" as the lead in The Australian's business section. Sure, the market fell 2.15% yesterday but in the context of this year's 30% rise, it is nothing.
The All Ords is off another 66 points to 4,431 today after further interest rate jitters sent the Dow Jones falling another 123.75 points to 10,317.36 overnight. Even if the All Ords fell another 300 points, it would still be in well up for the calendar year and only then would we have an official correction – that being a 10% drop.
A 3.5% drop in two days can be ignored because there has been quite a bubble in the market of late and you can see it in the share prices of infrastructure players such as Macquarie Bank and Babcock & Brown.
BNB is off another 84c to $16.72 today, meaning it has now lost 21.32% from its record high of $21.25 on Monday. Macquarie Bank may have just got the timing of its media float wrong, because its share price has lost another $2.19 to $70 today, bringing the total drop from the peak of $78.28 on Monday to 10.57%. Hopes of locking in the maximum $170 million profit on the sale of its regional radio assets into the media fund are quickly receding.
I still reckon the market could get back to 4000, but with AGMs to attend, you have to take your buying opportunities so orders have been placed this morning for 32 PBL shares, 40 Billabong shares, 95 IAG shares and 165 Multiplex shares, a total spend of about $2100. We remain heavily underweight on equities and are looking forward to a real "rout" to create some genuine buying opportunities.
With property turnover also slowing, it just might be that we've seen the peak of the economic cycle, but as long as China continues to boom, the Australian economy has no serious concerns on the horizon, especially given the sheer weight of capital looking for a home from compulsory superannuation savings.
11. Akerman lets fly at Alan Oakley
By Stephen Mayne
As someone who appears almost genetically predisposed towards ripping into those in senior positions at John Fairfax, Piers Akerman was at his pugnacious best today as he fired off a letter to The Australian's Media section. It is not online but read as follows:
Your coverage (Mark Day and Errol Simper) of the appointment of The Sydney Morning Herald's new editor, Alan Oakley, was generous in the extreme and ignored some stark realities.
Notably that he, like other unsuccessful Sunday Age editors Steve Harris, Bruce Guthrie, Michael Gordon, Jill Baker, Steve Foley, Michael Gawenda and Malcolm Schmidtke, failed to make any significant dent in the circulation of the opposition Sunday Herald Sun, edited for the past 13 years by Alan Howe, the most successful editor in Australia by any measure.
The present margin between the two newspapers – 420,000 – is not only the largest between competing newspapers in Australian publishing history, it is also double the circulation of The SMH. Howe has increased sales by 30%; the next most successful editor can boast a mere 6% increase and this as newspaper sales suffer internationally.
Despite the revolving door at the Spencer Street Soviet, no Fairfax editor has managed to challenge this circulation supremacy or come within cooee of The Sunday Herald Sun's success. Surely such a feat is worthy of mention in the context of the circulation-challenged SMH's new editor's Sydney prospects.
Did Howe write that himself? The story was actually about Alan Oakley, Piers! What Akerman fails to mention is that he was the worst editor-in-chief in the history of the HWT. Sunday Age sales were closest to The Sunday Herald Sun when Akerman ran the show and Howe was part of the team that fixed up his mess when he left in 1992.
Besides, the Sunday newspaper market in Melbourne was only tackled properly in 1989 when the Fairfax-News Ltd joint venture Sunday Press closed and three new papers were launched. The market is still relatively immature, so of course the Sunday tabloid would grow steadily over the years. Howe still has a long way to go before he'll get a free Porsche because the daily Herald Sun outsells The Daily Telegraph by almost 150,000 copies a day, yet The Sunday Herald Sun is still more than 100,000 behind The Sunday Telegraph. Lift your game, Alan!
It is also amusing that Akerman has chosen to gratuitously insult two current News Ltd colleagues, The Australian Magazine editor Bruce Guthrie and Herald Sun business editor Malcolm Schmidtke. If they were so bad, why did News Ltd rehire them?
Perhaps he is still carrying a grudge for the front page demolition job he copped by then Sunday Age feature writer Caroline Wilson in 1991. It must be galling that Steve Harris, the Sunday Age editor who commissioned the piece, was installed to replace Akerman as HWT editor-in-chief in 1992. Harris managed to reverse the plunging Herald Sun circulation which afflicted the paper during Akerman's rein of terror.
Akerman should also have disclosed that Oakley was sent down from Sydney as editor of the Herald Sun in 1991 to try to fix up the mess created by Akerman after he fell out with the paper's founding editor, Bruce Baskett. Akerman famously declared that "Sydney said they were sending an editor, but instead they've given me a layout sub."
The record shows that Oakley did a good job rebuilding the Herald Sun and it is telling that Akerman has rarely visited the paper's office since leaving 13 years ago, such is the disdain with which he is still regarded by those who worked under him.
* Stephen Mayne worked under Piers Akerman and Alan Oakley at the Herald Sun
19. The incredible tenure of RACV directors
By Paula Piccinini and Stephen Mayne, candidates for the RACV board
The more we study the RACV, Australia's biggest and richest remaining mutual, the more astonishing the two-tiered board gerrymander and tenure of directors looks.
The best way to demonstrate the point is to line up the tenure of the seven RACV directors who have served for 19 years or more with the longest serving non-executive directors we can find in Australia's top 50 companies. We've left out founders such as Rupert Murdoch and former executives, as this list only deals with independent non-executive directors. But who would have thought the RACV would have five of the ten longest serving directors:
Australia's 22 longest serving non-executive directors in the ASX top 50 (plus the RACV)
1. David Mattei: RACV Service, 1979
2. Allan McDonald: Brambles, 1981
3. John Marcard: RACV Club, 1982
4. William Shelton: RACV Club, 1984
5. Lou Giglia: Wesfarmers, 1984
6. John Isaac: RACV Club, 1985
7. David Gonski: Westfield, 1985
8. Brian Baquie: RACV Club, 1986
9. Dr Max Lay: RACV Club, 1986
10. Dr Michael Heffernan: RACV Service, 1986
11. Richard Longes: Lend Lease, 1986
12. Mark Burrows: Brambles, 1987
13. Sir Ron Brierley: AGL, 1987
14. Charles Goode: Woodside Petroleum chairman, director since 1988
15. Graham Reaney: AGL, 1988
16. Mark Johnson: AGL chairman, director since 1988
17. Stephen Gerlach: Santos chairman, director since September 1989
18. David White: Wesfarmers, 1990
19. Burns Philp: Mark Burrows, 1991
20. John Schubert: CBA chairman, director since 1991
21. Charles Goode: ANZ chairman, director since July 1991
22. Fred Hilmer: Westfield deputy chairman, director since 1991
We've identified RACV directors from the pool of nine representing the RACV Club, which has only conducted three contested elections in 32 years, and those who are from the minority pool of six directors, representing the 1.3 million ordinary roadside service members, who face an election most years and have created virtually all the value.
It truly is extraordinary that the Club's gerrymander and board control, despite delivering revenues of just $17.4 million in 2004-05, has seen it splash almost $200 million on a new headquarters which appears to have already been written down by more than $100 million before even opening on July 4 this year.
Australia's big companies have been cleaning out their longest serving directors in recent years. For instance, ANZ recently announced the retirement of John Dahlsen and Brian Scott after both notched up 20 years of service.
The RACV board is clearly unable to renew itself so the best thing members can do is inject some new blood in the current elections and vote for us. If you need a ballot paper, just ring 1300 365 699 or email us and we'll send one to you but be quick as the polls close at 5pm next Thursday.
Don't forget to urge your friends to get behind us because there's a real sense that one of us, Paula is the more likely, can knock off the former Tricontinental director John Rawlins and begin the long overdue RACV board renewal process.
If we've missed anyone from that long service list, please drop us a line to smayne@crikey.com.au and send through other names because we'll expand this to a master list of the 50 longest serving "independent" directors in the top 200.
20. Is there an older, longer serving board than Gunns?
By Stephen Mayne, wannabe corporate club buster
With an hour to kill in Prahran yesterday afternoon before picking up the kids, Crikey stumbled into what turned out to be a gay bar/cafe called Ice and spent most of the time engrossed in the Gunns Ltd annual report to avoid getting chatted up.
Whilst the RACV board is undoubtedly the clubbiest outfit going around with 7 directors who have served for 19 years or more, the Gunns board looks like it might go close to being the oldest and longest serving boys club in the ASX top 100.
There are actually six blokes on the board, not five as I reported earlier this week, and all of them are in their 60s. Consider this for a line-up:
John Gay, 62, executive chairman since 2002 and CEO since 1986 float
Robin Gray, 65, director since 1996
David McQuestin, 62, director since 1988
Christopher Newman, 61, director since 2001
Cornelius Van der key, 66, director since 1996 when he retired as CFO
Robin Holyman, 67, director since 1983
So there you have it. The average age is 64 and the collective length of service of these blokes is 80 years, an astonishing average of 13.33 years each.
There is no older or more entrenched listed company board that we've found, so the institutions who control the stock, such as Perpetual Trustees and Deutsche Bank, surely have a duty to shake things up a bit, especially after the collapse in the share price over the past year.
The Gunns board have also thumbed their nose at best practice corporate governance. Having an executive chairman is bad enough, but no other executive chairman in Australia dodges the three year electoral cycle like John Gay.
Similarly, the board committee structure outlined in the annual report is a joke. All five non-executive directors sit on every committee and even John Gay attended the one meeting of the remuneration committee last year.
These are not actually board committees at all, it's just the whole board and this is what can happen when you only have five non-executive directors. It is curious that the nomination committee even bothered to meet once in 2004-05 given that only one new director has been appointed in the last nine years.
Contrast that with the best practice adopted by Mayne Group in 2003 when it introduced a nine year maximum tenure for non-executive directors as you can see from this release. If only the RACV and Gunns boards would adopt something similar.
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