Xenophon-backed pokies tilt, Ten, Leighton, Woolies censorshop, Tatts, Tabcorp, banks, Rich List and plenty more

Dear Mayne Report Readers,

Greetings after a big day yesterday in Sydney with the Prime Infrastructure scheme meeting, the Wal King farewell extravaganza at Leighton Holdings, a visit to the ASA, a visit to Sky News and various big news developments involving BHP, Ten, News Corp and Westfield.

But before getting to all that, Senator Nick Xenophon's office sent out the following media alert last night:

No pokies Senator backs No Pokies Victorian candidates

Independent Senator for South Australia, Nick Xenophon, will tomorrow throw his support behind two Independent candidates for the Victorian State election; Dr Lorraine Beyer for Macedon and Stephen Mayne who is running for the Northern Metropolitan Region in the Upper House.

"Independents in politics are crucial to ensuring that the Government and Opposition are truly held accountable," Nick said.

Senator Xenophon says Lorraine Beyer and Stephen Mayne share his stance against poker machines and their successful election will be positive for Victoria.

In particular, Lorraine Beyer and Stephen Mayne support full and uniform pre-commitment on poker machines, credit limits on phone betting for new users and a ban on sports-betting advertising at venues and on apparel, and during G-rated television programming.

"It is a real sign of the times to see more and more Independent candidates running for election at both a State and Federal level," Nick said. "Independents have a real ability to cut through on issues that matter to the community."

Lorraine Beyer was a key player in ensuring that no poker machines were allowed to be introduced into the Romsey Hotel.

Stephen Mayne is a journalist and Councillor for the City of Manningham. He has been an outspoken campaigner against poker machines.

"Lorraine and Stephen have my full support and I hope that Victorians will get behind them and vote for serious action on poker machines," Nick said.

Ends

* The event kicks off at 10.30am at Rupertwood Mansion at 3 Macedon St, Sunbury. We'll send around some vision in the next missive.

Farewell to Wal King at 49th Leighton Holdings AGM

With Jack Tilburn doing the formal presentation of a farewell cake to Wal King after a remarkable 23 years running Leighton, there weren't too many discordant voices to be heard at Darling Harbour yesterday morning.

I missed the first 80 minutes after instead attending the Prime Infrastructure scheme meeting just to make sure the old Babcock & Brown Infrastructure was indeed sold off to the New York listed Brookfield Infrastructure Partners. It was quite fun giving those directors, led by chairman and former Queensland Labor Treasurer David Hamill, one final kicking for blowing up more than $2 billion.

On arriving at Leighton, they'd just finished general business and were starting the remuneration debate.

Tilburn got up and said everything was absolutely fine even though Wal King collected $30 million in his last two years including a ridiculous $5 million bonus just for finding a successor. It all became clear later when Jack was wheeled out to formally hand over a giant cake to Wal which featured on Lateline Business last night.

Whilst it was appropriate to give Wal a positive send-off, the opportunity to raise a few issues could not be missed. Have a listen to the edited audio highlights because Wal cracks a gag about being "dopey" for not being paid more in stock, one of the German Hochtief directors engaged and chairman David Mortimer was surprisingly candid about deliberations inside what has reportedly been a highly factionalised board room.

Why did Wal take cash instead of stock? Are we going to see an end to the culture of greed?

Giving Stephen Johns a rocket after he last week shafted retail investors in a capital raising scale back at Spark Infrastructure

How has the board functioned with Hochtief as controlling shareholder?

Engaging with the German Dr Noe on board issues, takeovers, dividends and executive pay

Media late to the play on Falloon electoral dodge as he sort of offers to resign

The Ten story developed further with a curious announcement at 5pm last night that Nick Falloon has sort of offered to resign if it will help resolve issues with James Packer and Lachlan Murdoch. Fairfax's Liz Knight has also taken the story significantly forward with a big scoop today that James Packer only pounced to foil a Nick Falloon-driven plan to take Ten private in conjunction with former PBL executive chairman Brian Powers, who is back with his favourite Californian investment house Hellman & Friedman. Anyway, here is a slightly tweaked version of a story about Falloon's election dodging that Crikey declined to run a couple of days ago:

The media really does work in mysterious ways some times. Last Friday, Crikey first alerted everyone to the sneaky move that Ten's executive chairman Nick Falloon was planning when the following was published in the daily email edition:

The AFR's Neil Shoebridge reported today that five of the eight directors of Ten – Brian Long, David Gordon, Dean Hawkins, Paul Gleeson and Christine Holgate – were up for election at the AGM on December 9.

Curiously, he did not include executive chairman Nick Falloon, who was last elected in 2007 and therefore should be on the slate. However, the Ten board could actually pull a swifty and grant Falloon a board seat in perpetuity on the basis that he is the chief executive.

The majority of Australia CEOs use this exemption but the only two executive chairs who've done it over the years were Rupert Murdoch and John Gay at Gunns. Surely Shoebridge has just made a mistake and Nick Falloon is not going to hang onto his job in such a sneaky fashion.

No one followed up the story and then Ten's general counsel Stephen Partington confirmed the move in an email that arrived at 10.42am on Monday morning and included the following:

Stephen

In response to your query below, just to confirm that, following the exit of Canwest from the TEN register late last year, Nick Falloon was appointed to the role of managing director of TEN. Mr Falloon was originally appointed to TEN in the roles of Executive Chairman and Chief Executive and continues to hold these positions.

On this basis and in accordance with the Company's constitution and the ASX Listing Rules, Mr Falloon is now no longer required to retire by rotation.

Regards
Stephen Partington
Group General Counsel
Ten Network Holdings

The AFR, and especially its media writer Neil Shoebridge, appear to have a general ban on mentioning anyone involved in the Crikey stable of publications. Our letters are not often published but we sent through one on this issue and because it was a mini scoop of sorts it duly appeared on Melbourne Cup day in The AFR's letters page. Suddenly much of the media were onto the issue. The Australian ran this story headlined “Falloon can side-step Ten execution” and it even got a run in the News Ltd tabloids courtesy of reporter Nick Tabakoff.

Shoebridge was also onto the story on Wednesday, but there was no reference to the letter.

It's not too late for Ten to change its mind because the notice of meeting for the December 9 AGM must be sent out 28 days in advance.

If it has already been printed, so what. Pulp it and do another version with Falloon included on the ballot and then send it next Monday.

If Ten won't voluntarily come to this position, then ASIC and the ASX should step in. On Wednesday morning I sent the following email to the ASX's spin doctor Matthew Gibbs:

Matthew, I wish to lodge a formal complaint with ASX about Nick Falloon using the listing rules to avoid re-election as chairman of Ten despite having served a 3 year term.

Please advise who I should address this to.

It's not too late for ASX to counsel Ten to change its position before the December 9 AGM and that's what I'll be requesting.

Regards, Stephen Mayne
Ten shareholder

It would be interesting to know what Communications Minister and election tactics junkie Stephen Conroy thinks about the only public company chairman in the country who is trying to serve longer than the maximum three year term without an election.

Conroy recently told Barry Cassidy on Insiders that James Packer is “a very, very savvy businessman” and his move on Channel Ten was “a very clever move.''

Surely it's only a clever move by a clever businessman if the important regulatory decisions Stephen Conroy is due to make in the coming weeks over sports broadcasting and the 75 per cent reach limit go in favour of the free to air networks.

And given the Minister's penchant for commentary about the tactics of investments in regulated media assets, it would be good to hear whether he thinks the Falloon election dodge is “a very clever move” or an insult to corporate democracy.

Truth be known, it is both. The rules should require all directors to face election every three years and until this loophole is closed, vulnerable corporate bosses like Nick Falloon will use it to avoid marauding corporate enemies like James Packer.

Woolies censorship, Tatts AGM, Tabcorp, PacBrands and much

There's been plenty happening since our last major edition to the full data base on October 23, including this AGM mid-season update which was sent to subscribers on November 1. Given the anti-pokies political campaign kicks off today for the Victorian election, here are the three pokies related items from that edition:

October 29 - Tatt's Group AGM

A 90-minute AGM where made 14 contributions ranging through pokies regulation, executive pay, gender diversity, political risks, director records and the Tabcorp demerger. Listen to audio highlights. Quite a bit came out of it, but there was limited mainstream media. Indeed, the Herald Sun produced this paragraph on Saturday:

Shareholders passed Tatts' remuneration report and re-elected directors Lyndsey Cattermole and Brian Jamieson despite some shareholders questioning their performance on other company boards.

I was actually the lone speaker against both. Anyway, below is the best of the audio highlights from a lively AGM where chairman Harry Boon was suitably pugnacious and informative:

Are the CFO and CEO keeping their fees from outside board seats?

What is the potential impact of a change in government in Victoria on the pokies licence?

Could CEO Dick McIlwain explain what he means saying the pokies industry is on the nose globally?

Speaking in favour of remuneration report

Is there any at-risk pay for senior executives based on diversity measures?

Speaking against Lyndsey Cattermole's re-election given Foster's wine debacle

Lyndsey Cattermole's speech about gender diversity

Speaking against Brian Jamieson's re-election given Sigma and Oz Minerals

Told to "sit down" twice by chairman at Tabcorp AGM

The PacBrands AGM dragged on a bit last week, so by the time I got to Melbourne Park at about 11.10am, Tabcorp shareholders had raced through the agenda and we only had the remuneration report and a CEO share issue to deal with.

Indeed, it was a case of heading straight to the microphone with the bag still over the shoulder just to get a quick remuneration question in, which related to whether largest shareholder Perpetual had ever threatened to vote against various pay issues as part of its long campaign against the company.

There were absolutely no plans to bring on a fight about remuneration going into the meeting where the intention was to raise political and pokies issues during general business.

However, the last resolution hit all the buttons because it related to long term incentive payments to CEO Elmer Funke Kupper who one week earlier declared he was quitting after the casinos demerger was finalised.

Elmer's 413,000 free shares for the next three years of performance were meant to reflect a $1.5 million LTI, but after the demerger announcement they are now worth almost $3 million on paper, assuming performance hurdles are met.

I was incensed that the board allowed the price setting date of September 14 to remain, even though they should have known the demerger announcement would trigger a substantial re-rating in the share price, which it did.

The result was the following 6 minute slug-fest with chairman John Story over CEO payouts. Have a listen because it got pretty willing, although we ended up having a long chat afterwards with remuneration committee chair Ziggy Switkowski.

Woolies joins censorship shame file list over pokies tilt

During 40 external board tilts over the past 11 years, there have been plenty of hardball tactics by various companies.

I've been subjected to some unfortunate censorship as you can see from this list and the latest effort comes from Woolworths which only printed this in the notice of meeting ahead of the November 18 contested election in Brisbane:

The following statement is based on information provided by Mr Mayne with his nomination. The biographical details have not been verified independently by Woolworths.

"Stephen Mayne is a Walkley Award winning business journalist, an elected local government councillor in the City of Manningham and a professional shareholder advocate who publishes the corporate governence ezine www.maynereport.com. Mr Mayne has stated that he is standing on a platform that Woolworths divests its gambling interestsor, in the alternative, publicly pledge to implement a system of compulsory, non-transferable and binding pre-commitment for gamblers. Age 41."

Don't you love the way they raise credibility doubts by refusing to independently verify the biographical elements of the platform they unilaterally censored without consultation. It takes about 30 seconds on google to establish it's all true. Anyway, enough moaning, this is the full platform that was submitted to Woolies and then butchered by Australia's biggest pokies venue operator:

What we submitted:

Stephen Mayne, age 41. Bcom (Melb). Stephen Mayne is a Walkley award winning business journalist, an elected local government councillor in the City of Manningham and a professional shareholder advocate, who publishes the corporate governance ezine www.maynereport.com.

Mr Mayne believes Woolworths needs more directors in tune with the global focus on corporate social responsibility. In particular, Mr Mayne is concerned about potential damage to the Woolworths brand and franchise from its operation of more than 12,000 pokies at its pubs and clubs through the ALH joint venture with Bruce Mathieson. Woolworths is the only major retailer in the world to have built such a large gambling business and Australians lose more per capita gambling than any other citizens. Mr Mayne believes Woolworths should exit the pokies business or, at the very least, manage its 12,000 pokies in a sustainable and responsible manner.

In addition to the harm sustained by the Australian community from more than $10 billion lost each year on the pokies, existing practices have resulted in an increase in crime both as a result of pokie gambling and upon gamblers themselves. There is also a reported government investigation into management practices at the Woolworths-controlled Richmond Tavern and Aces Sporting Club relating to a defunct basketball and social clubs.

The company's junior pokies partner, Mr Mathieson, is also reportedly able to grant pokie licenses in favour of his preferred football club. Woolworths must show leadership, without waiting for prescriptive legislation from the Federal Government, by embracing full pre-commitment as detailed in the final report of the Productivity Commission. This is paragraph 7.5 of the agreement between MP Andrew Wilkie and Prime Minister Julia Gillard.

This leadership can be demonstrated by publicly pledging to implement a system of compulsory, non-transferable and binding pre-commitment for gamblers in its associated pokies venues. While such a pledge would reduce Woolworths' gambling income derived from addicted gamblers, if not undertaken, Woolworths risks significant damage to shareholder and brand equity. Ultimately, in this era of greater corporate social responsibility, it also risks being unfavourably screened by professional investors who are signatories to the United Nations Principles for Responsible Investment.

* Check out this package on our Woolies tilt, including some historical coverage and videos.

Racing around in a very busy cup week

As for the past few days, here's the diary from our home page:

Thursday, November 4: News Ltd article on Bendigo Bank AGM protests yesterday and interviewed on ABC regional Victoria. In Sydney for Leighton AGM where fired in a range of question on board relations and pay. Interview on Sky Business in afternoon and then quick grab on Lateline Business.

Wednesday, November 3: attended Bendigo & Adelaide Bank AGM and Darebin council meeting. The Australian followed up Nick Falloon election issue, plus read this article in The Weekly Times about Murray Goulburn pay controversies.

Tuesday, November 2: The AFR published letter on Nick Falloon's election dodge.

Monday, November 1: comprehensive AGM mid-season update for subscribers emailed out. Interview about the Singapore ASX takeover on 666 ABC Canberra. Check out latest cartoons in our gallery, and have a look at the latest animation by our cartoonist Mark Cornwall.

Bendigo & Adelaide Bank AGM

The video webcast put on by Bendigo & Adelaide Bank was first class on Wednesday because they literally run a dual venue AGM with half the board at the Intercontinental in Adelaide and the other half at Bendigo's delightful Capital Theatre.

The AGM lasted almost three hours and The Advertiser in Adelaide gave some of the issues a decent run.

For starters, chairman Rob Johanson copped a 20%-plus protest vote which we spent 5 minutes explaining this morning on ABC regional radio for the Bendigo market and then later on Sky Business during this chat with Bridie Barry.

The AGM was also remarkable for the fact that former chairman Richard Guy got up and asked a couple of curly questions about the $600 million exposure to tax driven Great Southern Plantations margin loans.

Whilst 30% or more than $200 million of the portfolio is in arrears, this is largely because of legal advice to clients to stop paying pending a class action. The bank has already had a couple of legal wins and should be fine, but there will certainly be a few houses sold up in Adelaide before that messy situation is resolved in a few years time.

My opening question asked whether the board now admitted the Adelaide Bank merger was a mistake but the chairman was having none of it, although he did agree Bendigo had gone from trading at a premium to a discount, which he speculated was the end of a takeover premium. I reckon it's a risk discount around those Great Southern exposures, in part.

Anyway, have a listen to some of the edited audio highlights:

Last year's capital raising was unfair for retail shareholders

Question for the auditor about gambling driven fraud

How long is the relationship with Grant Samuel?

Is there still an Adelaide connection on the board?

Speaking against re-election of former MFS chair Terry O' Dwyer

Remuneration report, proxy advisers and diversity driven bonuses

Finally, have a look at the video of a strong attack on former MFS chairman Terry O'Dwyer. Whilst he did hand over to Andrew Peacock before the $1 billion-plus collapse, he still chaired those white show brigade operators from the Gold Coast as they grew like topsy and then collapsed in an all too predictable mess when the GFC hit. One shareholder in Adelaide took great exception to this criticism and called for an end to "the garbage coming out of Bendigo".



Bendigo has clearly fixed their remuneration policies as last year's AGM account was dominated by the 47% protest on pay, which earned the much-loved community bankers a spot on our list tracking the largest protest votes against remuneration reports.

Also, check out this piece for Business Day about last year's remuneration protest: Time for pay revolt

Bank cartel, Bendigo, Transpacific and Leighton on Sky Business

Check out this 5 minute chat on a few business issues on Sky Business last night and you should particularly enjoy the attack on the banks:



Audio highlights from Tatts, Reece and Newcrest AGMs

Tatts 2010 AGM

That's all for now.

Do ya best, Stephen Mayne

* The Mayne Report is a multi-media governance website published by shareholder activist, local government councillor and Crikey founder Stephen Mayne with regular email editions. To unsubscribe from the free emails click here.