Murdoch video, PacBrands, NAB, Xenophon
February 2, 2010
Dear Mayne Reporters,
First up, check out this blockbuster video on the News Corp AGM which nails Rupert's complete lack of accountability and invokes the Wicked Witch of the West to visualise the performance put on by nutty former sex worker Evelyn Davis.
Great exchanges with PacBrands chairman Pat Handley
In other AGM action we had a terrific back and forth exchange today with former Westpac finance director Pat Handley in his role as chairman of Pacific Brands, the largest importer of Chinese goods to Australia through its iconic brands such as Bonds, Holeproof, Rio, Volleys, Berlei, Slazenger, Crosby, Clarkes and Sheridan.
Have a listen to this series of questions which cuts to the chase on sales post-Lehman, China, bank guarantees for shipments, supplier terms, banking covenants, the retail oligopoly in Australia and even Pat's masochistic tendencies after agreeing to join the teetering Babcock & Brown board.
Handley put in a terrific performance today. When the finance director was asked to explain all the currency hedging, Pat took the question and gave a very detailed explained.
However, we're yet to see whether he is amenable to taking advice from the floor. PacBrands is one of Australia's biggest advertisers and former Channel Seven CEO Maureen Plasvic is on the board. Given that Maureen also sits on the board of Macquarie Radio, I asked why it wasn't disclosed how much we were spending on The Parrot's radio station, 2GB.
The same went for director Andrew Cummins who chairs the advisory board for CVC Asia Pacific which controls PBL Media and must be collecting tens of millions in revenue from Pacific Brands through its Channel Nine and ACP divisions.
Hopefully we'll get these figures next year, along with a chance to elect new CEO Sue Morphett to the board. PacBrands used the increasingly popular CEO exemption clause to avoid such an election, but Pat's been asked to change that for next year and we'll see what happens.
Xenophon nails it on executive pay rorts
It's good to see Independent Senator Nick Xenophon has entered the fray on executive pay, putting out this press release today focusing on the outrageous tax concessions available to executives who get paid in shares rather than cash and also calling for shareholders to be given the right to approve any termination payments exceeding $1 million. If that gets up, it should be called the Owen Hegarty amendment given the way Oz Minerals paid him $8.4 million even though shareholders voted down an earlier proposal to dish out $10.7 million in termination benefits.
It is interesting that both Xenophon and Dean Paatsch from proxy adviser Risk Metrics have latched onto the same issue. Paatsch explained the position in The Age last week as follows:
The taxpayer subsidy of the share component of CEO pay should be removed. Executives can now choose to make a one-off prepayment of income tax on a maximum of 18.4% of the accounting value of the shares or options they receive as part of their job. It's absurd that our captains of industry are paying high single-digit rates of tax on about one-third of their income while pensioners struggle to get a $10 a week raise. Eliminating this silvertail welfare scheme would also remove a growing distortion in an already dysfunctional market for executive remuneration. In 2006, executives in our top 300 companies were granted $116 million in share payments. The 2007 figures revealed that 826 high-flyers in the same 300 companies had more than doubled their take to $253 million. Clearly tax minimisation is a factor in the design of pay schemes.
There is a lot of talk that the government will move very quickly on this front to close a loophole that was first introduced by Paul Keating's Treasurer Ralph Willis to encourage employee ownership schemes. How ironic that it is CEOs who have ended up helping themselves to literally hundreds of millions dollars worth of tax concesions instead.
The super profits of Australian banks
At one point in the Pacific Brands meeting today, Pat Handley said "ask Gail Kelly" in response to a query about whether the company's bankers were passing on the cuts in official interest rates in full to its corporate customers.
This was an unusual thing for the former finance director of Westpac to say about the current CEO of Westpac.
Whilst banks all over the world fall over, the Australian banking cartel is powering ahead.
NAB's gross interest margin actually increased 214 basis points to 225 basis points over the past six months and today's net cash profit of $3.9 billion was a belter.
If you crunch the numbers, NAB's revenue rose 4.5% to $16 billion and its underlying profit soared 14% to $8.1 billion. Those 50% gross margins are very cartel-like, even after you take out the burgeoning bad debt charge, tax and few other things to reach the net figure.
Tune in to 774 ABC Melbourne at 5.20pm
The Australians have collapsed to defeat in the cricket so the regular 774 ABC Melbourne slot with Lindy Burns is back on from 5.20pm this afternoon. If you get a chance to listen, there's an awful lot of territory to cover.
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.
First up, check out this blockbuster video on the News Corp AGM which nails Rupert's complete lack of accountability and invokes the Wicked Witch of the West to visualise the performance put on by nutty former sex worker Evelyn Davis.
Great exchanges with PacBrands chairman Pat Handley
In other AGM action we had a terrific back and forth exchange today with former Westpac finance director Pat Handley in his role as chairman of Pacific Brands, the largest importer of Chinese goods to Australia through its iconic brands such as Bonds, Holeproof, Rio, Volleys, Berlei, Slazenger, Crosby, Clarkes and Sheridan.
Have a listen to this series of questions which cuts to the chase on sales post-Lehman, China, bank guarantees for shipments, supplier terms, banking covenants, the retail oligopoly in Australia and even Pat's masochistic tendencies after agreeing to join the teetering Babcock & Brown board.
Handley put in a terrific performance today. When the finance director was asked to explain all the currency hedging, Pat took the question and gave a very detailed explained.
However, we're yet to see whether he is amenable to taking advice from the floor. PacBrands is one of Australia's biggest advertisers and former Channel Seven CEO Maureen Plasvic is on the board. Given that Maureen also sits on the board of Macquarie Radio, I asked why it wasn't disclosed how much we were spending on The Parrot's radio station, 2GB.
The same went for director Andrew Cummins who chairs the advisory board for CVC Asia Pacific which controls PBL Media and must be collecting tens of millions in revenue from Pacific Brands through its Channel Nine and ACP divisions.
Hopefully we'll get these figures next year, along with a chance to elect new CEO Sue Morphett to the board. PacBrands used the increasingly popular CEO exemption clause to avoid such an election, but Pat's been asked to change that for next year and we'll see what happens.
Xenophon nails it on executive pay rorts
It's good to see Independent Senator Nick Xenophon has entered the fray on executive pay, putting out this press release today focusing on the outrageous tax concessions available to executives who get paid in shares rather than cash and also calling for shareholders to be given the right to approve any termination payments exceeding $1 million. If that gets up, it should be called the Owen Hegarty amendment given the way Oz Minerals paid him $8.4 million even though shareholders voted down an earlier proposal to dish out $10.7 million in termination benefits.
It is interesting that both Xenophon and Dean Paatsch from proxy adviser Risk Metrics have latched onto the same issue. Paatsch explained the position in The Age last week as follows:
The taxpayer subsidy of the share component of CEO pay should be removed. Executives can now choose to make a one-off prepayment of income tax on a maximum of 18.4% of the accounting value of the shares or options they receive as part of their job. It's absurd that our captains of industry are paying high single-digit rates of tax on about one-third of their income while pensioners struggle to get a $10 a week raise. Eliminating this silvertail welfare scheme would also remove a growing distortion in an already dysfunctional market for executive remuneration. In 2006, executives in our top 300 companies were granted $116 million in share payments. The 2007 figures revealed that 826 high-flyers in the same 300 companies had more than doubled their take to $253 million. Clearly tax minimisation is a factor in the design of pay schemes.
There is a lot of talk that the government will move very quickly on this front to close a loophole that was first introduced by Paul Keating's Treasurer Ralph Willis to encourage employee ownership schemes. How ironic that it is CEOs who have ended up helping themselves to literally hundreds of millions dollars worth of tax concesions instead.
The super profits of Australian banks
At one point in the Pacific Brands meeting today, Pat Handley said "ask Gail Kelly" in response to a query about whether the company's bankers were passing on the cuts in official interest rates in full to its corporate customers.
This was an unusual thing for the former finance director of Westpac to say about the current CEO of Westpac.
Whilst banks all over the world fall over, the Australian banking cartel is powering ahead.
NAB's gross interest margin actually increased 214 basis points to 225 basis points over the past six months and today's net cash profit of $3.9 billion was a belter.
If you crunch the numbers, NAB's revenue rose 4.5% to $16 billion and its underlying profit soared 14% to $8.1 billion. Those 50% gross margins are very cartel-like, even after you take out the burgeoning bad debt charge, tax and few other things to reach the net figure.
Tune in to 774 ABC Melbourne at 5.20pm
The Australians have collapsed to defeat in the cricket so the regular 774 ABC Melbourne slot with Lindy Burns is back on from 5.20pm this afternoon. If you get a chance to listen, there's an awful lot of territory to cover.
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.