WA board coup, Rupert's whinge and Healey's next outing
February 2, 2010
Dear Mayne Reporters,
Cripes, this is three editions in three days, but there's just so much going on.
Shares in West Australian Newspapers plunged 8% in a surging market today after another disappointing profit result, but the most interesting development was the appointment of former Murdoch loyalist Doug Flynn to the board. Flynn is returning to Australia after a controversial three year stretch as CEO of industrial services company Renotokil in London.
At one level Flynn is a great appointment because he has loads of media experience, including a period running News Ltd's Australian suburban newspapers and a stretch as CEO of News International, where he was in charge of The Sun, The Times and the like.
However, there is no way an ambitious and abrasive executive like Flynn will be happy to sit back as a humble non-executive director of Perth's monopoly newspaper. Don't be at all surprised if he emerges to replace besieged WAN chairman Peter Mansell or even CEO Ken Steinke.
The four WAN non-executive incumbent directors are living on borrowed time but they have neatly snookered local billionaire Kerry Stokes today because Flynn will replace former Wesfarmers finance director Erich Fraunschiel, who was going to be the only incumbent up for re-election at the upcoming AGM.
This means that Stokes's Seven Network will have no one to vote its 22.4% stake against on November 5, unless he wants to churlishly oppose newcomer Doug Flynn who on paper is a stand-out candidate and exactly the sort of person WAN needs.
Given that Kerry Stokes and Rupert Murdoch are bitter enemies after the C7 case, the Stokes camp will no doubt believe Flynn, who was on Rupert's payroll from 1987 until 1999, is a News Ltd stooge, although that is a bit rough given he's been out for almost a decade.
Even the Fairfax board offered Flynn its top job in 2005, but negotiations collapsed into an ugly public slanging match in a dispute over money.
A grumpy Kerry Stokes refused to comment about the WAN board at yesterday's Seven profit briefing, other than to say he still wants two board seats out of seven. His mood will be even darker today with the loss on Seven's WAN stake blowing out to almost $200 million. Having paid $540 million for the 42.3 million shares, today they are only worth $350 million and this weakness has also driven Seven shares down 4% for the day.
Stokes can't even take advantage of the depressed share price because Australian law only allows creeping purchases of 3% every six months, once you move past 20%. Having only recently crept from 19.4% to 22.4%, Seven can't start buying again until next January, unless it wants to launch a low-ball takeover bid for the whole company.
Perhaps Stokes should launch a cash bid at $9 and then secure enough shares to sweep away the the board at the AGM.
Incumbent chairman Peter Mansell is clearly resisting Stokes' push to become a director, yet Stokes wants to be chairman and become the undisputed king of Western Australian. This Mexican stand-off will only be resolved when Stokes secures total control of WAN and for that he really should launch a full bid, rather than messing around with these silly creeping tactics like he continues to do at Seven.
Failing that, the only thing he should do at the AGM is put up a proposed constitutional change which removes the board's ability to control the number of directors by using the "no vacancy" rort. That way he could propose a slate of new directors at an EGM after his next 3% creep in early 2009 and not have this silly issue of there being no spots for them.
Rupert's whingeing about the share price
Rupert Murdoch was clearly in a cranky mood on today's earnings conference call when it came to the News Corp share. Twice he snapped at analysts telling them to recommend clients buy the depressed stock.
As we pointed out in last year's Murdoch campaign to end News Corp's undemocratic gerrymander, Rupert could easily send News Corp shares soaring if he moved to one vote one value and started paying out $US1 a year in dividends.
By denying more than 60% of the shares a vote, Rupert simply depresses the share price because there is no takeover premium in the stock as the Murdoch family controls almost 40% of the votes.
Sadly, Rupert won't embrace corporate democracy because he's obsessed with control and handing over to his children, which means News Corp will continue to underperform despite the seemingly wonderful operating performance that was announced today.
In this dangerous world of the credit crisis, trust and good governance is more valuable than ever, yet Rupert insists on taking the governance low road and then takes out his frustructions on hapless analysts.
Another chance to pressure Brian Healey into retirement
Former long-serving Centro Properties chairman Brian Healey finally did the decent thing and resigned a few weeks ago, but after smoking more than $5 billion in that particular implosion he hasn't yet deigned to resign his other boards.
The most notable is chemical and fertiliser giant Incitec-Pivot, which has called an EGM for September 5 to approve a 20-for-1 share split. Healey didn't show up at last year's Incitec-Pivot AGM when I counselled the board to give him the flick as you can see in this package.
Eight months later and the 73-year-old is still hanging around like a bad smell as deputy chairman, so we'll be giving him both barrels at the EGM on September 5.
Incitec-Pivot's recent takeover of Dyno-Nobel should have presaged a board restructure, but farmer chairman Alan Watson doesn't seem too cluey when it comes to shareholder accountability.
Sure, Healey hasn't done anything wrong at Incitec-Pivot, but the destruction of $5 billion at Centro is enough to trigger his retirement from all boards, not just the one where he was totally inadequate.
That's all for now.
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.
Cripes, this is three editions in three days, but there's just so much going on.
Shares in West Australian Newspapers plunged 8% in a surging market today after another disappointing profit result, but the most interesting development was the appointment of former Murdoch loyalist Doug Flynn to the board. Flynn is returning to Australia after a controversial three year stretch as CEO of industrial services company Renotokil in London.
At one level Flynn is a great appointment because he has loads of media experience, including a period running News Ltd's Australian suburban newspapers and a stretch as CEO of News International, where he was in charge of The Sun, The Times and the like.
However, there is no way an ambitious and abrasive executive like Flynn will be happy to sit back as a humble non-executive director of Perth's monopoly newspaper. Don't be at all surprised if he emerges to replace besieged WAN chairman Peter Mansell or even CEO Ken Steinke.
The four WAN non-executive incumbent directors are living on borrowed time but they have neatly snookered local billionaire Kerry Stokes today because Flynn will replace former Wesfarmers finance director Erich Fraunschiel, who was going to be the only incumbent up for re-election at the upcoming AGM.
This means that Stokes's Seven Network will have no one to vote its 22.4% stake against on November 5, unless he wants to churlishly oppose newcomer Doug Flynn who on paper is a stand-out candidate and exactly the sort of person WAN needs.
Given that Kerry Stokes and Rupert Murdoch are bitter enemies after the C7 case, the Stokes camp will no doubt believe Flynn, who was on Rupert's payroll from 1987 until 1999, is a News Ltd stooge, although that is a bit rough given he's been out for almost a decade.
Even the Fairfax board offered Flynn its top job in 2005, but negotiations collapsed into an ugly public slanging match in a dispute over money.
A grumpy Kerry Stokes refused to comment about the WAN board at yesterday's Seven profit briefing, other than to say he still wants two board seats out of seven. His mood will be even darker today with the loss on Seven's WAN stake blowing out to almost $200 million. Having paid $540 million for the 42.3 million shares, today they are only worth $350 million and this weakness has also driven Seven shares down 4% for the day.
Stokes can't even take advantage of the depressed share price because Australian law only allows creeping purchases of 3% every six months, once you move past 20%. Having only recently crept from 19.4% to 22.4%, Seven can't start buying again until next January, unless it wants to launch a low-ball takeover bid for the whole company.
Perhaps Stokes should launch a cash bid at $9 and then secure enough shares to sweep away the the board at the AGM.
Incumbent chairman Peter Mansell is clearly resisting Stokes' push to become a director, yet Stokes wants to be chairman and become the undisputed king of Western Australian. This Mexican stand-off will only be resolved when Stokes secures total control of WAN and for that he really should launch a full bid, rather than messing around with these silly creeping tactics like he continues to do at Seven.
Failing that, the only thing he should do at the AGM is put up a proposed constitutional change which removes the board's ability to control the number of directors by using the "no vacancy" rort. That way he could propose a slate of new directors at an EGM after his next 3% creep in early 2009 and not have this silly issue of there being no spots for them.
Rupert's whingeing about the share price
Rupert Murdoch was clearly in a cranky mood on today's earnings conference call when it came to the News Corp share. Twice he snapped at analysts telling them to recommend clients buy the depressed stock.
As we pointed out in last year's Murdoch campaign to end News Corp's undemocratic gerrymander, Rupert could easily send News Corp shares soaring if he moved to one vote one value and started paying out $US1 a year in dividends.
By denying more than 60% of the shares a vote, Rupert simply depresses the share price because there is no takeover premium in the stock as the Murdoch family controls almost 40% of the votes.
Sadly, Rupert won't embrace corporate democracy because he's obsessed with control and handing over to his children, which means News Corp will continue to underperform despite the seemingly wonderful operating performance that was announced today.
In this dangerous world of the credit crisis, trust and good governance is more valuable than ever, yet Rupert insists on taking the governance low road and then takes out his frustructions on hapless analysts.
Another chance to pressure Brian Healey into retirement
Former long-serving Centro Properties chairman Brian Healey finally did the decent thing and resigned a few weeks ago, but after smoking more than $5 billion in that particular implosion he hasn't yet deigned to resign his other boards.
The most notable is chemical and fertiliser giant Incitec-Pivot, which has called an EGM for September 5 to approve a 20-for-1 share split. Healey didn't show up at last year's Incitec-Pivot AGM when I counselled the board to give him the flick as you can see in this package.
Eight months later and the 73-year-old is still hanging around like a bad smell as deputy chairman, so we'll be giving him both barrels at the EGM on September 5.
Incitec-Pivot's recent takeover of Dyno-Nobel should have presaged a board restructure, but farmer chairman Alan Watson doesn't seem too cluey when it comes to shareholder accountability.
Sure, Healey hasn't done anything wrong at Incitec-Pivot, but the destruction of $5 billion at Centro is enough to trigger his retirement from all boards, not just the one where he was totally inadequate.
That's all for now.
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.