CEO payouts, Nufarm AGM, Manningham mayoral process and Gunns campaign
February 2, 2010
Dear Mayne Reporters,
It was always a bold move by proxy adviser RiskMetrics to launch a jihad against CEO golden parachutes and then actually redraft the relevent sections of the Corporations Act to give shareholders greater power over termination payouts.
The blitz was unveiled in late November with this press release and you can see Risk Metrics boss Dean Paatsch explain the proposal to Neal Woolrich on Lateline Business.
It is truly staggering when you read through the full list of termination payouts over the past couple of years but still our political duopoly has done precisely nothing about it.
Greens leader Bob Brown was big enough to specifically run with the Risk Metrics proposal and he added the proposed Corps Act redraft as an amendment to the short selling bill last week.
Alas, Liberal and Labor teamed up to vote it down, but observers are yet to hear either major party explain why shareholders shouldn't be given a vote over any payout exceeding $1 million, when the current threshhold is ridiculously high at seven times final salary.
With more and more CEOs getting the punt during the global financial crisis, we should also be getting more timely information on executive payouts.
Kerry Stokes sacked WA News CEO Ken Steinke last week but shareholders probably won't be told the size of his golden goodbye until the 2008-09 annual report is released in September next year.
Similarly, how much will David Kirk carry out the door at Fairfax? The Risk Metrics list of termination payouts shows Kirk's predecessor Fred Hilmer collected $4.5 million after five years of ordinary performance.
Manningham Council update
The scope and scale of the local government sector is starting to sink in as we get ready to decide who will be Manningham's next mayor at a meeting of councillors tomorrow night.
We had a four hour-plus session with a facilitator last Thursday night and the general consensus is that we've got a promising group. Selecting a leader isn't the easiest decision when there is more than one candidate, but it's presumably far easier than being one of those mayoral candidates, which I'm not.
The first sealed red bag of council information arrived on Friday afternoon with letters from various groups and a wide range of information on council matters.
The diary is already pretty full for the rest of the month with conferences, briefings, formal council meetings and various get togethers with stake holders.
Tomorrow morning sees a meeting with the traders from Templestowe Village, plus the big Australian Local Government Association conference in town.
I took our four year old boy Philip down to watch the Bulleen Boomers female basketball team play Adelaide at the Veneto Club this afternoon and ended up meeting the President Grant Waldron, plus club patron, former Olympic captain and all round basketball legend Michele Timms for a quick discussion about their aspirations for improved facilities.
Welcome to the next four years.
Teaching Donald McGauchie a lesson about AGM procedure
After the debacle that was the Telstra AGM two weeks ago, it was good to see chairman Donald McGauchie witness a well run meeting as a director of crop protection giant Nufarm, which fronted its shareholders last Thursday morning.
Nufarm held its AGM in the Telstra auditorium at the company's Melbourne headquarters in Exhibition Street. And sitting right next to Donald on stage was one Dr John Stocker, the Telstra director who dreadfully shut down the director election debate two weeks ago. Here's the video of that shemozzle if you need a reminder.
With Donald and Dr John looking on, the dynamic duo that have run Nufarm for more than 20 years, chairman and former CEO Kerry Hoggard and current CEO Doug Rathbone, executed a perfect AGM.
We had a crisp 7 minutes from the chairman with no slides, followed by a 23 minute presentation from the CEO with a few slides.
Both the Telstra and Nufarm AGMs started at 10am. By 10.30am Nufarm was into the debate and by 11.05am - after an informative 35 minute debate - the meeting was closed.
When it came to the final resolution I pointed out to McGauchie that if this was Telstra, we'd still have an hour of formal presentations to go. Have a listen here.
Whilst chairman Kerrry Hoggard revealed that he had no margin loans over his 2.4 million Nufarm shares, Doug Rathbone was a bit more coy, at first saying he'd had no "margin calls" and then simply saying he was comfortable.
The stock has plunged from the $17.50 a share that a Chinese-led consortium proposed paying late last year to the recent low of $7.55 as shareholders met at the AGM. However, a new debt rollover agreement and confirmation of the 2008-09 profit forecast has seen the stock roar back to $8.95 giving it a market capitalisation of $1.7 billion and valuing Rathbone's stake at more than $200 million.
Rathbone was in a fun mood at the beginning of proceedings when he suggested that I buy some of his four wine labels after inquiring about his personal financial situation. So when the Australian Shareholders' Association took issue with his guaranteed two year termination payout, albeit in the context of modest overall pay practices, I offered to spend $1000 buying his wine if he instantly agreed to wind back that guaranteed payout to a more acceptable 12 months.
Alas, the frivolity ended and Rathbone simply said "I'll take that as a comment" without responding to the substance, although his chairman made mention of 35 years of service in justifying the contract.
For a bloke that BRW reckons is worth $615 million, surely an extra $2 million guaranteed termination payout is nothing more than a round of drinks that could be happily surrendered. After all, Rathbone has done a great job over a long period, so he's hardly about to get the sack.
Hoggard signals his time is coming
One of the most fruitful lines of questioning this AGM season was to ask various long-serving chairmen about their retirement plans. Boral's Ken Moss and Fairfax Media's Ron Walker both confirmed they'll be seeking another 3 year term at their respective 2009 AGMs, even though the arguments for retirement appear strong.
BHP-Billiton's Don Argus was more non-commital and Nufarm's Kerry Hoggard, 67, gave the first retirement answer of the season when he said the three year term shareholders granted him last Thursday would definitely be his last.
Despite having a couple of shots at Donald McGauchie during the Nufarm meeting, I told Hoggard afterwards that he would make an excellent successor, provided he is prepared to give up the Telstra chairmanship after serving as a director for more than 10 years.
Getting these long-serving directors out after 10 years is proving very difficult across a range of companies, but there's no reason why someone can't then go on and do a productive 10 years at another major company.
Given that McGauchie is a former President of the National Farmers Federation, he's exactly the sort of person who should chair Nufarm. The top job at Telstra arguably promoted McGauchie beyond his capacity, especially now that he's dealing with a Labor Government and can't just call up the political contacts like in the old days.
Audio highlights from Nufarm AGM
The audio quality isn't the greatest, but this is how the Nufarm debate broke down last Thursday:
1. Does the chairman or CEO have any debt on their major shareholdings?
2. We've rolled over the debt but who are our bankers and what covenants have we given them?
3. How big is the AIG exposure and have we heard from the Chinese bidders again?
4. Offering to buy some wine from Doug if he cuts the termination payout clause
5. Legendary chairman reveals this will be his last term
6. Placements are not the fairest way to raise capital
7. Telstra should learn how to run an AGM from Nufarm
Wilderness Society cranks up the Gunns campaign
We received this email from The Wilderness Society urging people to become more involved with their superannuation funds from an ethical investment perspective. Given that Perpetual are the largest Gunns shareholder, they really should be the primary targets:
Subject: Super Activists!
Dear All,
Wth the pulp mill teetering we are calling out for the support of the majority of Australians who are opposed to Gunns' pulp mill to log onto www.wilderness.org.au/superactivist and follow the process to become a Super Activist - to pressure Australia's super funds to stop supporting Gunns forest destruction and the pulp mill.
Every year a minimum 9% of your income is contributed to your superannuation. Today, around $1 trillion is invested by Australians in superannuation funds. Many of these investments may directly contradict your personal values. For instance, approximately 40% of Tasmanian logging giant Gunns Ltd's shareholders are superannuation funds.
You may not realise, but it is through superannuation and other forms of investment that major companies' activities, including socially and environmentally destructive activities, are underwritten.
Fortunately, you don't have to settle for this. In 2005 the Federal Government introduced Super Choice legislation. This means you now have the right to decide how to invest your retirement money.
By becoming a Super Activist, you can hold your superfund accountable for the investments they make on your behalf. The best thing about this is that research has shown long-term returns have been consistently higher for investors who have chosen funds that explicitly take environmental, social and governance factors into account when choosing investments.
Recently, The Wilderness Society - along with 40,000 other Australians - helped the ANZ bank to decide not to fund Gunns' proposed pulp mill. This shows that the genuine actions of a committed group of people really can make a difference.
Take control of your super investment. If you're not satisfied with the way your superannuation contribution is being invested, tell your superfund you want better environmental and social investment. If you're not satisfied with the response - use your Super Activist powers and go elsewhere!
If you believe in improving your long-term super returns and protecting Australia's native forests, become a Super Activist - and contact your superfund today, visit www.wilderness.org.au/superactivist to find out how.
Cheers
Paul IJ Oosting
Pulp Mill Campaigner
The Wilderness Society (Tasmania) Inc.
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.
It was always a bold move by proxy adviser RiskMetrics to launch a jihad against CEO golden parachutes and then actually redraft the relevent sections of the Corporations Act to give shareholders greater power over termination payouts.
The blitz was unveiled in late November with this press release and you can see Risk Metrics boss Dean Paatsch explain the proposal to Neal Woolrich on Lateline Business.
It is truly staggering when you read through the full list of termination payouts over the past couple of years but still our political duopoly has done precisely nothing about it.
Greens leader Bob Brown was big enough to specifically run with the Risk Metrics proposal and he added the proposed Corps Act redraft as an amendment to the short selling bill last week.
Alas, Liberal and Labor teamed up to vote it down, but observers are yet to hear either major party explain why shareholders shouldn't be given a vote over any payout exceeding $1 million, when the current threshhold is ridiculously high at seven times final salary.
With more and more CEOs getting the punt during the global financial crisis, we should also be getting more timely information on executive payouts.
Kerry Stokes sacked WA News CEO Ken Steinke last week but shareholders probably won't be told the size of his golden goodbye until the 2008-09 annual report is released in September next year.
Similarly, how much will David Kirk carry out the door at Fairfax? The Risk Metrics list of termination payouts shows Kirk's predecessor Fred Hilmer collected $4.5 million after five years of ordinary performance.
Manningham Council update
The scope and scale of the local government sector is starting to sink in as we get ready to decide who will be Manningham's next mayor at a meeting of councillors tomorrow night.
We had a four hour-plus session with a facilitator last Thursday night and the general consensus is that we've got a promising group. Selecting a leader isn't the easiest decision when there is more than one candidate, but it's presumably far easier than being one of those mayoral candidates, which I'm not.
The first sealed red bag of council information arrived on Friday afternoon with letters from various groups and a wide range of information on council matters.
The diary is already pretty full for the rest of the month with conferences, briefings, formal council meetings and various get togethers with stake holders.
Tomorrow morning sees a meeting with the traders from Templestowe Village, plus the big Australian Local Government Association conference in town.
I took our four year old boy Philip down to watch the Bulleen Boomers female basketball team play Adelaide at the Veneto Club this afternoon and ended up meeting the President Grant Waldron, plus club patron, former Olympic captain and all round basketball legend Michele Timms for a quick discussion about their aspirations for improved facilities.
Welcome to the next four years.
Teaching Donald McGauchie a lesson about AGM procedure
After the debacle that was the Telstra AGM two weeks ago, it was good to see chairman Donald McGauchie witness a well run meeting as a director of crop protection giant Nufarm, which fronted its shareholders last Thursday morning.
Nufarm held its AGM in the Telstra auditorium at the company's Melbourne headquarters in Exhibition Street. And sitting right next to Donald on stage was one Dr John Stocker, the Telstra director who dreadfully shut down the director election debate two weeks ago. Here's the video of that shemozzle if you need a reminder.
With Donald and Dr John looking on, the dynamic duo that have run Nufarm for more than 20 years, chairman and former CEO Kerry Hoggard and current CEO Doug Rathbone, executed a perfect AGM.
We had a crisp 7 minutes from the chairman with no slides, followed by a 23 minute presentation from the CEO with a few slides.
Both the Telstra and Nufarm AGMs started at 10am. By 10.30am Nufarm was into the debate and by 11.05am - after an informative 35 minute debate - the meeting was closed.
When it came to the final resolution I pointed out to McGauchie that if this was Telstra, we'd still have an hour of formal presentations to go. Have a listen here.
Whilst chairman Kerrry Hoggard revealed that he had no margin loans over his 2.4 million Nufarm shares, Doug Rathbone was a bit more coy, at first saying he'd had no "margin calls" and then simply saying he was comfortable.
The stock has plunged from the $17.50 a share that a Chinese-led consortium proposed paying late last year to the recent low of $7.55 as shareholders met at the AGM. However, a new debt rollover agreement and confirmation of the 2008-09 profit forecast has seen the stock roar back to $8.95 giving it a market capitalisation of $1.7 billion and valuing Rathbone's stake at more than $200 million.
Rathbone was in a fun mood at the beginning of proceedings when he suggested that I buy some of his four wine labels after inquiring about his personal financial situation. So when the Australian Shareholders' Association took issue with his guaranteed two year termination payout, albeit in the context of modest overall pay practices, I offered to spend $1000 buying his wine if he instantly agreed to wind back that guaranteed payout to a more acceptable 12 months.
Alas, the frivolity ended and Rathbone simply said "I'll take that as a comment" without responding to the substance, although his chairman made mention of 35 years of service in justifying the contract.
For a bloke that BRW reckons is worth $615 million, surely an extra $2 million guaranteed termination payout is nothing more than a round of drinks that could be happily surrendered. After all, Rathbone has done a great job over a long period, so he's hardly about to get the sack.
Hoggard signals his time is coming
One of the most fruitful lines of questioning this AGM season was to ask various long-serving chairmen about their retirement plans. Boral's Ken Moss and Fairfax Media's Ron Walker both confirmed they'll be seeking another 3 year term at their respective 2009 AGMs, even though the arguments for retirement appear strong.
BHP-Billiton's Don Argus was more non-commital and Nufarm's Kerry Hoggard, 67, gave the first retirement answer of the season when he said the three year term shareholders granted him last Thursday would definitely be his last.
Despite having a couple of shots at Donald McGauchie during the Nufarm meeting, I told Hoggard afterwards that he would make an excellent successor, provided he is prepared to give up the Telstra chairmanship after serving as a director for more than 10 years.
Getting these long-serving directors out after 10 years is proving very difficult across a range of companies, but there's no reason why someone can't then go on and do a productive 10 years at another major company.
Given that McGauchie is a former President of the National Farmers Federation, he's exactly the sort of person who should chair Nufarm. The top job at Telstra arguably promoted McGauchie beyond his capacity, especially now that he's dealing with a Labor Government and can't just call up the political contacts like in the old days.
Audio highlights from Nufarm AGM
The audio quality isn't the greatest, but this is how the Nufarm debate broke down last Thursday:
1. Does the chairman or CEO have any debt on their major shareholdings?
2. We've rolled over the debt but who are our bankers and what covenants have we given them?
3. How big is the AIG exposure and have we heard from the Chinese bidders again?
4. Offering to buy some wine from Doug if he cuts the termination payout clause
5. Legendary chairman reveals this will be his last term
6. Placements are not the fairest way to raise capital
7. Telstra should learn how to run an AGM from Nufarm
Wilderness Society cranks up the Gunns campaign
We received this email from The Wilderness Society urging people to become more involved with their superannuation funds from an ethical investment perspective. Given that Perpetual are the largest Gunns shareholder, they really should be the primary targets:
Subject: Super Activists!
Dear All,
Wth the pulp mill teetering we are calling out for the support of the majority of Australians who are opposed to Gunns' pulp mill to log onto www.wilderness.org.au/superactivist and follow the process to become a Super Activist - to pressure Australia's super funds to stop supporting Gunns forest destruction and the pulp mill.
Every year a minimum 9% of your income is contributed to your superannuation. Today, around $1 trillion is invested by Australians in superannuation funds. Many of these investments may directly contradict your personal values. For instance, approximately 40% of Tasmanian logging giant Gunns Ltd's shareholders are superannuation funds.
You may not realise, but it is through superannuation and other forms of investment that major companies' activities, including socially and environmentally destructive activities, are underwritten.
Fortunately, you don't have to settle for this. In 2005 the Federal Government introduced Super Choice legislation. This means you now have the right to decide how to invest your retirement money.
By becoming a Super Activist, you can hold your superfund accountable for the investments they make on your behalf. The best thing about this is that research has shown long-term returns have been consistently higher for investors who have chosen funds that explicitly take environmental, social and governance factors into account when choosing investments.
Recently, The Wilderness Society - along with 40,000 other Australians - helped the ANZ bank to decide not to fund Gunns' proposed pulp mill. This shows that the genuine actions of a committed group of people really can make a difference.
Take control of your super investment. If you're not satisfied with the way your superannuation contribution is being invested, tell your superfund you want better environmental and social investment. If you're not satisfied with the response - use your Super Activist powers and go elsewhere!
If you believe in improving your long-term super returns and protecting Australia's native forests, become a Super Activist - and contact your superfund today, visit www.wilderness.org.au/superactivist to find out how.
Cheers
Paul IJ Oosting
Pulp Mill Campaigner
The Wilderness Society (Tasmania) Inc.
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.