Questions for Rupert, CNBC drops Sun King doco, outrageous payouts, ANZ non-tilt, welfare splurge and ComBank rip-offs
February 2, 2010
Dear Mayne Reporters and a few News Corp analysts,
Amid all the gloom of the Australian market actually falling 1% today after Wall Street's 4% bounce, let's start with the good news. We have a proxy lined up for tonight's News Corp AGM in New York which starts at 10am local time and 1am AEST. We'll be emailing some suggested questions through to this Australian in New York in about 3 hours time so tune in to the webcast to hear the result, or subscribers can wait for a full update in the morning.
If you've got any suggested questions, drop us a confidential line to stephen@maynereport.com.
The proxy fortuitously came through after the following appeared in Crikey yesterday:
When Rupert Murdoch fronts his shareholders on Friday morning in New York at the historic Hudson Theatre, he'll have a lot on his mind. Fellow ageing media mogul Sumner Redstone has just been embarrassingly margin called out of part of his Viacom stake and the family is publically brawling.
While I'll be missing only the second News Corp AGM since 1999, here's hoping someone asks the Sun King just how much debt the Murdoch family is carrying on its much-diminished $4.2 billion stake in the company. The ability to service this debt comes in part from the $50 million-plus a year in salary that News Corp is paying to Rupert and his youngest son, James, plus the pathetic US11c annual dividend.
Whilst it is all very well for The Australian to plaster pictures of overpaid bankers across the front page, News Corp shareholders should be demanding that their leaders take a huge salary cut in 2008-09. Why not a gesture similar to the practices of James Packer and his late father, who have always donated their services to various public companies for free?
In Australian dollar terms, News Corp shares have halved in a year to this morning's multi-year low of $13.42. In US dollar terms, the fall exceeds 70%. The company is now capitalised at $35 billion and is carrying $20 billion in debt. The audited accounts claim News Corp has total equity of $50 billion and you have to wonder about that $50 billion in goodwill on the balance sheet.
And check out all the coverage from last year's News Corp AGM when our shareholder resolution to unwind the dual class voting shares attracted 60% of the independent vote which was worth $5 billion at the time.
CNBC pulls the plug on Murdoch documentary
Meanwhile, the world's only global business channel CNBC has pulled the plug on a planned one hour documentary about Rupert Murdoch.
A crew was meant to be flying into Australia this week and we'd scheduled a two camera interview at our place for an hour next Tuesday morning. The reporter simply emailed last night to say the project had been cancelled for "a wide variety of reasons".
At a pinch, you'd have to say that spending tens of thousands putting together a profile of the bloke who has taken on CNBC with the launch of Fox Business Channel was always going to be a contentious affair. The leader in any category normally refuses to even mention an upstart challenger, so maybe it was just concluded that giving publicity to the bloke behind Fox Business Channel wasn't a good move, especially given that it has failed to make any serious ratings impression so far.
And with CNBC parent GE raising $US12 billion two weeks back in what looked like an emergency capital raising lead by Warren Buffett, you'd have to presume some belt tightening would be in order. Then again, CNBC reportedly makes about $US300 million a year and its rating have gone through the roof during the global financial crisis. I've been spending about 15 hours a week watching it for the past month. Compelling stuff.
The most egregious payouts in Australian history
Check out today's story in Crikey about Prime Minister Rudd's attack on executive greed, plus some suggested reforms. With pressure on to produce something concrete, not just PR words, I reckon the government will legislate to require shareholder approval for any payout above $1 million.
Similarly, they will also close the loophole which allows executives to only pay 18.4% tax upfront if they are paid in stock, which explains the huge explosion in equity incentive schemes over the past couple of years.
Rather than belly-aching about bank pay packets in general, let's cut to the chase and start naming some specific deals that were outrageous. This Today Tonight story from last week really hit the mark and here is a list of 15 excessive payouts by Australian companies to departing CEOs over the past decade:
George Trumbull, AMP: $7.5m
Andrew Scott, Centro: $3m
Keith Lambert, Southcorp: $4.4m
Sir CK Chow, Brambles: $7.7m
Paul Anthony, AGL: $17m for 17 months work
Owen Hegarty, Oxiana: $8m
Frank Cicutto, NAB: $6.5m
David Higgins, Lend Lease: $6.7m
Dennis Eck, Coles Myer: $4.7m
Duncan Fischer, Tattersall's: $4.4m
Brian Gilbertson, BHP-Billiton: $10m
Peter Macdonald, James Hardie: $8.2m
Tony D'Aloisio, ASX: $7.8m
Peter Yates, PBL, $6.5m
Chris Cuffe, Colonial First state: $32m
Too late for ANZ board tilt
The ANZ board tilt which was foreshadowed with much fanfare in Wednesday's edition (now including audio of the questions) after the Australian United Investment Company AGM, has stalled at the starters gates after this email came in from ANZ spin doctor Paul Edwards:
Stephen, I have checked with the Company Secretary's office and they have advised the following:
* Rule 3.4(c) of ANZ's constitution relevantly provides that the "Company in general meeting cannot validly appoint a person as a director unless at least 45 business days… before the date of the meeting at which the election is to occur, unless the Listing Rules otherwise require, the Company receives at its registered office both [a nomination by a member (who may be the person) and a consent to act]".
* The calculation is that 45 business days before the AGM date of Thursday, 18 December is Wednesday, 15 October. This reflects that Tuesday, 4 November is not a business day for the purpose of ANZ's constitution.
* Accordingly, any nominations for election as a director received after 15 October are out of time to be considered at the election of directors to be held at the 2008 AGM.
Regards, Paul
Darn it, this is the same situation as Woolworths. The vast majority of companies require notice of 35 business days, but ANZ and Woolies are both at 45 days. If only your shareholder activist correspondent was a little better organised.
ANZ chairman Charles Goode, if he does indeed push for another three year term after serving since 1991, will still attract quite a big protest vote.
Lashing Kevin Rudd's reckless welfare splurge
Finally, listen to this hard hitting editorial by 4BC drive presenter Mike Smith and subsequent discussion on Wednesday night. We both let fly at the Federal government for recklessly splashing $10 billion in additional welfare at a time when mid-sized sovereign nations around the world are running out of foreign reserves and calling for international bailouts.
It's time for some good old fashioned hard work and belt tightening, not a $10 billion welfare splurge in a country which only has $30 billion in foreign reserves and where 42% of all families still pay no net tax.
And as I argued on ABC TV's Midday News today, the next policy response to boost Australia's contracting economy should be another 100 basis point cut in official interest rates.
Comsec yet to pass on last rate cut
It would also make sense for the government to start heavying the banks to fully pass on the last cut. As one of Comsec's 87,000 margin loan customers across the country, I'm still paying 10.25% on the margin loan. Yep, that's right, the nation's biggest margin lender is yet to pass on any of the 100 basis point cut from two weeks ago.
As Australia's largest deposit taking institution, you can bet your life that no ComBank customer is being offered anything near 10.25%.
No wonder Charlie Aitken from Southern Cross Equities described CBA as "the strongest bank in the world". This will all make for good fodder at the ComBank AGM on November 13, although it clashes with Fairfax Media so we'll be juggling the schedule a little.
That's all until tomorrow's subscriber update.
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.
Amid all the gloom of the Australian market actually falling 1% today after Wall Street's 4% bounce, let's start with the good news. We have a proxy lined up for tonight's News Corp AGM in New York which starts at 10am local time and 1am AEST. We'll be emailing some suggested questions through to this Australian in New York in about 3 hours time so tune in to the webcast to hear the result, or subscribers can wait for a full update in the morning.
If you've got any suggested questions, drop us a confidential line to stephen@maynereport.com.
The proxy fortuitously came through after the following appeared in Crikey yesterday:
When Rupert Murdoch fronts his shareholders on Friday morning in New York at the historic Hudson Theatre, he'll have a lot on his mind. Fellow ageing media mogul Sumner Redstone has just been embarrassingly margin called out of part of his Viacom stake and the family is publically brawling.
While I'll be missing only the second News Corp AGM since 1999, here's hoping someone asks the Sun King just how much debt the Murdoch family is carrying on its much-diminished $4.2 billion stake in the company. The ability to service this debt comes in part from the $50 million-plus a year in salary that News Corp is paying to Rupert and his youngest son, James, plus the pathetic US11c annual dividend.
Whilst it is all very well for The Australian to plaster pictures of overpaid bankers across the front page, News Corp shareholders should be demanding that their leaders take a huge salary cut in 2008-09. Why not a gesture similar to the practices of James Packer and his late father, who have always donated their services to various public companies for free?
In Australian dollar terms, News Corp shares have halved in a year to this morning's multi-year low of $13.42. In US dollar terms, the fall exceeds 70%. The company is now capitalised at $35 billion and is carrying $20 billion in debt. The audited accounts claim News Corp has total equity of $50 billion and you have to wonder about that $50 billion in goodwill on the balance sheet.
And check out all the coverage from last year's News Corp AGM when our shareholder resolution to unwind the dual class voting shares attracted 60% of the independent vote which was worth $5 billion at the time.
CNBC pulls the plug on Murdoch documentary
Meanwhile, the world's only global business channel CNBC has pulled the plug on a planned one hour documentary about Rupert Murdoch.
A crew was meant to be flying into Australia this week and we'd scheduled a two camera interview at our place for an hour next Tuesday morning. The reporter simply emailed last night to say the project had been cancelled for "a wide variety of reasons".
At a pinch, you'd have to say that spending tens of thousands putting together a profile of the bloke who has taken on CNBC with the launch of Fox Business Channel was always going to be a contentious affair. The leader in any category normally refuses to even mention an upstart challenger, so maybe it was just concluded that giving publicity to the bloke behind Fox Business Channel wasn't a good move, especially given that it has failed to make any serious ratings impression so far.
And with CNBC parent GE raising $US12 billion two weeks back in what looked like an emergency capital raising lead by Warren Buffett, you'd have to presume some belt tightening would be in order. Then again, CNBC reportedly makes about $US300 million a year and its rating have gone through the roof during the global financial crisis. I've been spending about 15 hours a week watching it for the past month. Compelling stuff.
The most egregious payouts in Australian history
Check out today's story in Crikey about Prime Minister Rudd's attack on executive greed, plus some suggested reforms. With pressure on to produce something concrete, not just PR words, I reckon the government will legislate to require shareholder approval for any payout above $1 million.
Similarly, they will also close the loophole which allows executives to only pay 18.4% tax upfront if they are paid in stock, which explains the huge explosion in equity incentive schemes over the past couple of years.
Rather than belly-aching about bank pay packets in general, let's cut to the chase and start naming some specific deals that were outrageous. This Today Tonight story from last week really hit the mark and here is a list of 15 excessive payouts by Australian companies to departing CEOs over the past decade:
George Trumbull, AMP: $7.5m
Andrew Scott, Centro: $3m
Keith Lambert, Southcorp: $4.4m
Sir CK Chow, Brambles: $7.7m
Paul Anthony, AGL: $17m for 17 months work
Owen Hegarty, Oxiana: $8m
Frank Cicutto, NAB: $6.5m
David Higgins, Lend Lease: $6.7m
Dennis Eck, Coles Myer: $4.7m
Duncan Fischer, Tattersall's: $4.4m
Brian Gilbertson, BHP-Billiton: $10m
Peter Macdonald, James Hardie: $8.2m
Tony D'Aloisio, ASX: $7.8m
Peter Yates, PBL, $6.5m
Chris Cuffe, Colonial First state: $32m
Too late for ANZ board tilt
The ANZ board tilt which was foreshadowed with much fanfare in Wednesday's edition (now including audio of the questions) after the Australian United Investment Company AGM, has stalled at the starters gates after this email came in from ANZ spin doctor Paul Edwards:
Stephen, I have checked with the Company Secretary's office and they have advised the following:
* Rule 3.4(c) of ANZ's constitution relevantly provides that the "Company in general meeting cannot validly appoint a person as a director unless at least 45 business days… before the date of the meeting at which the election is to occur, unless the Listing Rules otherwise require, the Company receives at its registered office both [a nomination by a member (who may be the person) and a consent to act]".
* The calculation is that 45 business days before the AGM date of Thursday, 18 December is Wednesday, 15 October. This reflects that Tuesday, 4 November is not a business day for the purpose of ANZ's constitution.
* Accordingly, any nominations for election as a director received after 15 October are out of time to be considered at the election of directors to be held at the 2008 AGM.
Regards, Paul
Darn it, this is the same situation as Woolworths. The vast majority of companies require notice of 35 business days, but ANZ and Woolies are both at 45 days. If only your shareholder activist correspondent was a little better organised.
ANZ chairman Charles Goode, if he does indeed push for another three year term after serving since 1991, will still attract quite a big protest vote.
Lashing Kevin Rudd's reckless welfare splurge
Finally, listen to this hard hitting editorial by 4BC drive presenter Mike Smith and subsequent discussion on Wednesday night. We both let fly at the Federal government for recklessly splashing $10 billion in additional welfare at a time when mid-sized sovereign nations around the world are running out of foreign reserves and calling for international bailouts.
It's time for some good old fashioned hard work and belt tightening, not a $10 billion welfare splurge in a country which only has $30 billion in foreign reserves and where 42% of all families still pay no net tax.
And as I argued on ABC TV's Midday News today, the next policy response to boost Australia's contracting economy should be another 100 basis point cut in official interest rates.
Comsec yet to pass on last rate cut
It would also make sense for the government to start heavying the banks to fully pass on the last cut. As one of Comsec's 87,000 margin loan customers across the country, I'm still paying 10.25% on the margin loan. Yep, that's right, the nation's biggest margin lender is yet to pass on any of the 100 basis point cut from two weeks ago.
As Australia's largest deposit taking institution, you can bet your life that no ComBank customer is being offered anything near 10.25%.
No wonder Charlie Aitken from Southern Cross Equities described CBA as "the strongest bank in the world". This will all make for good fodder at the ComBank AGM on November 13, although it clashes with Fairfax Media so we'll be juggling the schedule a little.
That's all until tomorrow's subscriber update.
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.