Murdoch, piracy, AFR, pokies, rem debate, BoQ rip-off, council super blowout, ASA and then some
April 16, 2012
Dear 15,000 Mayne Report readers,
Greetings for the first time since our last bumper email edition on February 20. If you'd rather not receive these occasional email newsletters, click here to unsubscribe.
First up today, Crikey declined to run this latest wrap on the various Murdoch controversies, so a slightly expanded version appears as our lead story today. There will also be more Murdoch matters discussed on 774 ABC Melbourne from 5.20pm this arvo, as well as an appearance on ABC News24 program, The Drum, after 6pm to discuss the James Murdoch resignation as chairman of BSkyB.
News Ltd, Fairfax, Crikey...we all go over the top sometimes
Stephen Mayne writes:
The best thing about buying The Australian in hard copy each morning is that there will always be something to surprise, amuse, challenge or disgust. Rupert's rolling brawling machine of a broadsheet Down Under will certainly never die wondering.
On Monday, I was really looking forward to reading Mark Day's attempted defence of The AFR's pay-TV piracy claims, as opposed to counter-attacks launched through a junior reporter called Darren Davidson or anonymously through The Australian's editorials and Cut & Paste.
Alas, Day took the view that a Cut & Paste headline writer might describe as “Move on. Nothing to see here.”
Instead, we got an excellent Mark Day column declaring that billionaire mining heiress Gina Rinehart was unfit to serve on the Fairfax board. Such an obvious conclusion was a long time coming from anyone at News Ltd, but the column was so well argued that it deserved strong public support, so the following was submitted to The Australian's letters editor:
Rinehart unfit for Ten board too
Mark Day was spot on in his column yesterday ("Rinehart can forget Fairfax board seat", 3/4) attacking Gina Rinehart for litigating The West Australian and trying to force reporter Steve Pennells to reveal his sources.
This is just the latest of many reasons why Fairfax's largest shareholder would be inappropriate for the media company's board.
Perhaps Gina's Perth-based iron-ore business partner and friend Sam Walsh should have a quiet word about the sanctity of source protection for media companies. After all, Rio Tinto's iron-ore boss sits on the board of Seven West Media, the company Ms Rinehart is suing in the WA Supreme Court.
Mark Day should also have extended his theory to Network Ten, where Rinehart does sit on the board with the apparent voting support of media luminaries such as James Packer, Bruce Gordon and chairman Lachlan Murdoch.
If Gina is inappropriate for Fairfax, what are all the journalists who work for Ten and companies associated with those three gentlemen to think?
Even worse, based on the huge dollars and effort she spent trying to suppress her family's court battles, it appears that Gina doesn't even believe in Australia's democratic system of open justice.
The mining heiress was elected to the Ten board with 97% in favour at last year's AGM, but in light of recent events it appears likely she'll be the subject of a removal resolution at this year's AGM in December.
Stephen Mayne
Manningham
The Australian's brawler-in-chief, Chris Mitchell, was also sent the letter but decided it wasn't worth publishing.
Why would that be? Well, Lachlan Murdoch has been known to personally phone Mitchell and complain about the paper's coverage of his disappointing performance leading Network Ten. John Hartigan didn't take these complaints too seriously and look what happened to him. Kim Williams is much closer to Lachlan and has certainly earned himself some loyalty bonus points over the past week with his over the top attacks on The AFR.
While the Rinehart letter didn't make the grade, the anonymous Cut & Paste section went to town on me today and did quite a good job.
I certainly did call for Media Watch to “umpire” the Fairfax vs News Ltd war and Jonathan Holmes did indeed choose to tread a middle path, contrasting my “give Neil Chenoweth the Gold Walkley” approach, which Crikey led with last Wednesday.
Alan Kohler was another who came out yesterday at the Ownership Matters governance conference in Melbourne suggesting directly to Fairfax Media CEO Greg Hywood that the scale and breadth of The AFR's coverage was a little over the top.
There have certainly been mixed message from The AFR and another came yesterday with Hywood's blithe claims that the pay-TV piracy coverage was just another news story with no broader implications.
When asked by moderator Gideon Haigh, Hywood explicity rejected my suggestion in Crikey on Monday that Fairfax should withdraw from industry collaboration with News Ltd on issues such as Newspaper Works, The Right to Know Coalition and the co-ordinated attacks on Ray Finkelstein's recommendations.
Despite Hywood's "just another story" argument, the scale of The AFR's treatment of the pay-TV piracy story has been bigger than anything the paper has produced since Chenoweth's fabulous Swiss bank accounts story implicating Graham Richardson, Trevor Kennedy and the late Rene Rivkin.
Chenoweth collected the Gold Walkley in 2004 for this Offset Alpine scoop, but that didn't stop The Australian and Sky News putting the forever colourful Richardson on the payroll again last year. When you consider all the dodgy private investigators, corrupt public officials, hackers and unethical piracy merchants that News Corp has paid over the years, there wouldn't be too many other public companies in history which has stooped so low when it comes to the dark arts of business success.
Like most things in life, the debate around The AFR's pay-TV piracy coverage is not black and white. It comes down to proportionality. Some of the lines used by The AFR – such as linking it to the current Austar takeover - were an over-reach. But the overall substance of what it has in those 14,400 NDS emails is still incredibly revealing about News Corp and a drama that can only be comprehensively told in a large package of stories over several days.
Indeed, Chenoweth has so much stuff that a major global publishing house has commissioned him to write a 100,000-plus word book on the saga, which will be released later this year. I hope it comes out a few days before the 2012 News Corp AGM, which will be a beauty, especially when you consider these early signs of institutional activism to force change.
Even if 20 pages was too much, it is ironic to see News Ltd attacking a rival for going over the top.
The Australian goes OTT yet again
For instance, The Australian has gone completely over the top today with its coverage of the Auditor General's report into the aborted Australia Network contract. Was it really worth the splash, several other stories, the lead editorial, a Dennis Shanahan opinion piece, a comment piece from Sky News CEO Angelos Frangopoulos and a massive Hillary Bray feature on the cover of A-Plus?
The bottom line of Labor's approach to the Murdochs is this: after being subjected to a totally disproportionate jihad by The Australian and Daily Telegraph and after the Milly Dowler story broke, it decided Sky News simply would not get the Australia Network contract.
There was also a leadership sub-text as Kevin Rudd was attempting to win News Ltd support for his second tilt at The Lodge. And like with the Rudd execution, Gillard never properly explained the real reasons for shafting Sky. Once phone hacking blew up last July and News Corp voluntarily walked away from its BSkyB bid, Gillard should have simply called a press conference with Steve Conroy and declared the tender was being aborted because the government didn't believe the Murdoch family were "fit and proper" to be associated with Australia's soft diplomacy efforts across Asia.
Too easy. Unfortunately, like with many issues of political management and communication, Julia Gillard's government isn't very effective.
Winning a remuneration debate with Ziggy Switkowski
Ownership Matters, the hard-charging boutique proxy advisory firm set up by the old Risk Metrics crew last year, convened its first corporate governance conference at the Melbourne Business School yesterday.
There were plenty of heavy hitters assembled such as ASIC deputy chair Belinda Gibson, Lindsay Tanner, former RBA governor Ian Macfarlane, activist fund manager Simon Marias, capital raisings guru Guy Foster and Fairfax Media CEO Greg Hywood.
I was a relatively late recruit for the lunch time debate on the topic: "That remuneration consultants lead to higher pay".
OM boss Dean Paatsch is a Machiavellian character as he set the debate up so that participants would be arguing against positions they believed in.
Forrmer Telstra CEO Ziggy Switkowski and I were given the job arguing that remuneration consultants don't drive up pay, whilst the leading academic in the sector, Dr Kym Sheehan, and Ernst & Young's Asia Pacific remuneration chief Mike Hogan were required to argue they were driving up pay.
Frankly, it was terrifying having to perform with luminaries like Lindsay Tanner, Ian Macfarlane, Gideon Haigh and Alan Kohler sitting 3 metres away.
The debate was Oxford-style where the audience voted before and after debate to see which side moved the most votes.
I'd been on the losing side of two of these debates over the last 3 years, each time clearly failing to confirm an audience pre-conception that the media have no morals.
Therefore, it was good to notch up a win yesterday as the pre-debate vote was 64-32 in favour of blaming sky-rocketing executive pay on remuneration consultants.
We turned it around to 30-66 after the debate by going strongly on the attack blaming greedy CEOs, compliant boards, weak shareholders and even proxy advisers. Here is a summary of my 6 minute spray wrapping up proceedings:
Why remuneration consultants are not to blame for rocketing executive pay
Stephen Mayne's speaking notes to Ownership Matters remuneration debate
It doesn't matter what industry – journalists, lobbyists, PR people, financial analysts, investment bankers – it is human nature for people to overstate their importance.
And it is no different with big talking remuneration consultants like EY's Mike Hogan, who, like many of his colleagues, is clearly deluded in thinking that he actually influences remuneration decisions.
Let's be honest, the people who are most responsible for the CEO wages break-out are as follows:
1. Greedy CEOs who employ pattern bargaining and American benchmarking.
2. Compliant boards who lose their collective spines when negotiating.
3. The shareholders who continually re-appoint these compliant directors with an average 96% vote in favour.
I'll never forget the 1998 AMP press conference when chairman Ian Burgess handed over to George Trumbull to explain why the big-talking American was getting 1 million free shares worth about $20 million as part of the demutualisation.
Sure, remuneration consultant John Egan put his name to this deal, but it was Ian Burgess who approved it and was so embarrassed he wouldn't even publically explain it.
When Geoff Dixon walked out of Qantas with $10.7 million after just 5 months work in his final year, it wasn't some remuneration consultant who was to blame.
Dixon was the greedy bloke who stuck his hand out, then chair Margaret Jackson failed to resist and the jealous former CEO James Strong, who later came back as chair of the Qantas remuneration committee, failed to negotiate away some of the Jackson largesse.
So what did the shareholders do in 2009? They voted 44% against the Qantas remuneration report but re-elected James Strong with more than 95% in favour. There you have it: Ziggy and I blame the shareholders for not holding the directors to account.
I well remember one PBL AGM in Sydney when James Packer was asked about excessive executive pay packets and he literally said: “Yeah, we do benchmarking, Egan, you know. Look, basically I decide what they get, okay?” James Packer was making it very clear the remuneration consultant was nothing more than a fig leaf of external validation.
It wasn't some remuneration consultant who decided that Welshman Paul Anthony should get $17 million for 17 months work at AGL. It was AGL chairman Mark Johnson who did the deal.
Coming from the Millionaires Factory Macquarie Bank, Johnson was hardly in a position to resist.
Overpaid CEOs suddenly becoming chairs and remuneration committee members is partly to blame for the executive wages break out in Australia and the best example I can find is Don “Don't Argue” Argus.
Remember when Don left NAB in 1999 to take the chair at BHP and the NAB board let him keep all his options.
Without getting into detail about the breakdowns, here are total salary packages that appeared in various annual reports when CEOs departed companies where Don Argus was a director:
The Don Argus CEO payouts
Don Argus: NAB, $9.26m
John Prescott: BHP, $11.17m
Tom Park: Southcorp, $10.1m
John Fletcher: Brambles, $8.65m
Paul Anderson: BHP, $18m
Brian Gilbertson: BHP, $30m (including $US1.5m indexed pension)
Frank Cicutto: NAB, about $9m, (Don's hand-picked successor but he didn't negotiate exit)
Keith Lambert: Southcorp, $6.2m
Sir CK Chow: Brambles, $4.1m
Andrew Michelmore: about $10m from BHP in 2005
Chip Goodyear: BHP, $9m in final year 2007
Chris Lynch: $5.2m when he left BHP for Transurban in 2007
Kirby Adams: his contract included a 2 year payout and he made more than $20 million in total, largely thanks to taking out put options on 900,000 Bluescope shares when the stock was above $10 in 2005. It's now below 50c.
Blaming today's conference organisers, the proxy advisers
There's another guilty party which should also be identified today: the proxy advisers.
Dean Paatsch and Martin Lawrence, hosts today and key players at Risk Metrics, ISS and now Ownership Matters over the years, have you ever recommended against Westfield's remuneration report?
No problems with the Lowy family taking out $30 million a year? Year after year?
What about Macquarie Bank? You were in favour in 2006 weren't you? (debate moderator Martin Lawrence nods)
What happened that year? The top seven Macquarie executives in 2005-06 lifted their overall pay packets from $89.15 million to $110.76 million, meaning the average leapt from $12.73 million to a staggering $15.82 million. The only resolution these so-called proxy advising gurus recommended against at Macquarie in 2006 was my nomination for the board.
What about that last Babcock & Brown rem report in 2008? Yep, $10 billion lost across the stable, $300 million in cash salaries for the boys over 4 years as a listed company and final rem report was....125.75m votes in favour, only 3.6m against. That's more than 95% in favour. Forget about the remuneration consultants, thank you Dean and Martin, plus the compliant shareholders of Babcock & Brown.
I will admit that you can't always blame the independent shareholders and proxy advisers if you've got an overly generous controlling shareholder involved. Step forward James Packer, Frank Lowy and Rupert Murdoch as prime examples.
Which brings me to Toll Holdings, a company which used to be controlled by Paul Little and the Rowsthorn family and somehow handed them about $40 million in payments over the years.
The proxy advisers were onto Toll, they got 40%-plus against votes on their remuneration report three years in a row.
So, what happened. A board insider told me that Paul Little and Mark Rowsthorn basically wrote their own contracts. In other words, it was the fault of then Toll chair John Moule, who was hand-picked by the boys. It wasn't some remuneration consultant.
Finally, we really also should blame a few of those over-paid fund managers who control corporate voting in Australia.
Many of these turkeys don't even disclose their own fat pay packets, so they are hardly going to rail against similar telephone book numbers in public company annual reports.
And then you have the Big Four banks, which between them have close to a majorty market share of the Australian funds management business.
When you consider that Big Four bank CEOs have earned gross salary and equity profits of almost $500 million over the past 20 years, they are hardly going to lead the charge for wage restraint across the public company space. Forget the rem consultants, we blame the big bank bosses too.
ends
Finally, click here to read feedback after some earlier speeches and click on the image below if you fancy an engagement.
Victorian local government sector facing big superannuation hit
Unlike the Federal Government and all other state governments with the notable exception of Queensland, Victorian councils have maintained fully funded superannuation schemes ever since the Kennett reforms of the mid-1990s.
Victoria's 79 councils have very little debt, fully funded super and net assets worth close to $100 billion. They have a good financial story to tell.
However, the sector was required at very short notice to write out a cheque for $77 million last year after a blow out in liabilities for public service members of the generous defined benefit superannuation schemes which Jeff Kennett closed in 1992-93.
I was press secretary to Kennett's Finance Minister, Ian Smith, at the time and well remember the defined benefit liability time bomb which was created by previous Labor governments and then exploited by the public sector unions.
Bruce Guthrie wrote an interesting column in The Sunday Age last week arguing that the Cain-Kirner government was much better than history would suggest.
He laid out the positive acheivements as follows:
Cain's reformist zeal more than matched Jeff Kennett's in scope if not execution and was head-spinning compared with Ted Baillieu. In quick time he and his team overhauled everything from drinking laws to shop trading hours and prostitution to nude bathing regulations. They established Workcover, the Transport Accident Commission, the Ethnic Affairs Commission and the Equal Opportunity Board and gave Melbourne the National Tennis Centre, Southbank and the city's bar culture. By any definition, they changed the social fabric of the state.
And this was his take on the negatives:
It was their finances that got them into trouble, eventually unravelling in their third term, which started under Cain in 1988 and ended under Victoria's first female premier, Joan Kirner, four years later. Central to their demise was a series of financial mishaps that beset the Pyramid Building Society, Tricontinental, the State Bank and the Victorian Economic Development Corporation.
In terms of rating their own performance, Bruce Guthrie quoted former Victorian Treasurer Rob Jolly giving his government an 8 out of 10 and describing his performance in these terms: ''We were an outstanding government by any measure when you consider the period as a whole. I don't regret one decision I made as treasurer.''
As a local government councillor in 2012, I certainly regret the ridiculous generosity of those old defined benefit superannuation schemes which Cain, Jolly and Kirner allowed to proliferate.
The sector is bracing itself for another actuarial review which the jungle drum suggests will produce another unexpected liability running into hundreds of millions dollars. No one knows for sure, but all is expected to be revealed in the next few weeks as council budgets and rate rises are decided.
In an election year, it will be a brave council which jacks rates up by 10% to help meet a multi-million dollar pension liability. The soft option would be to slip into unfunded territory but that would be illegal in the private sector and only replicates the arguably dishonest budgeting of successive state and federal budgets which stick these liabilities on the credit card.
Whilst the Kennett Government was right to close down these schemes, it did create a two tier system. The lucky public servants had the magnificent pensions schemes and a strong incentive to stick around the sector and maximise the final average salary - which is the key determinant of the life-time indexed pension.
For some reason that I don't understand, public sector wage negotiations ignored these two classes of employee, despite the fact that it could mean disparities of more than 30% when you took a life-time view.
Anyone council employee who joined the sector after 1993 is taking equity market risk on a standard accumulation scheme, yet they get the same pay rises as colleagues in the defined benefit schemes who are guaranteed generous life time pensions, regardless of what happens on investment markets.
If the mooted $200 million-plus blowout on defined benefit pension schemes does emerge, Victoria's local government sector will have some hard decisions to make.
And John Cain's ministers should think about this as they gather for lunch at Parliament House tomorrow to reflect on the 20th anniversary of their election in 1982.
Running for Melbourne City Council
The Age and the Melbourne Leader both reported last month that I won't be recontesting in Manningham, but instead will have a crack at Melbourne City Council at the October elections.
Seeing as the Victorian Electoral Commission is recommending an expansion from 7 to 9 councillors in one undivided ward, it shouldn't be too hard to get elected in Melbourne where the quota will only be 10% and many of the best candidates are focused on the separate Lord Mayoral vote.
Here is a summary of how the Melbourne City Council votes panned out last time.
In the direct election for Lord Mayor, Robert Doyle got twice as many votes as anyone else and ended up defeating Catherine Ng courtesy of Labor Party preferences. The final vote was 31,348 votes to 26,614, so Doyle received 54% of the 57,962 formal votes.
More than 80% of voters followed Lord Mayoral tickets when it came to the separate council election, so it will be important to have a mayoral running mate. The top 7 candidates for Lord Mayor each got their lead council candidate elected. The results in 2006 were as follows:
1. Robert Doyle: 15,135 (26.11%) for mayoralty and 11,294 on ticket for Carl Jetter. First elected.
2. Adam Bandt: Greens got 8729 (15.05%) for mayoralty and 10,084 on council ticket for Cathy Oke. Second elected.
3. Peter McMullen: (ALP) 7267 (12.53%) for mayor and 7072 for Kevin Louey on council ticket. Third elected.
4. Catherine Ng: 6315 (10.89%) for mayoralty and 5656 on council ticket for Brian Shanahan. Sixth elected.
5. Gary Singer: 6056 (10.45%) for mayor and 6309 for Ken Ong on council ticket. Fifth elected.
6. Will Fowles: (ALP) 5004 (8.63%%) for mayoralty and 5401 for Jennifer Kanis on council ticket. Seventh elected.
7. Gary Morgan: 4526 (7.8%) for mayor and 5018 for Peter Clarke on council ticket. Fourth elected on Green preferences.
8. Nick Columb: 2712 (4.68%) for mayor and 2937 for Fiona Sneddon on council ticket. Not elected.
In terms of analysing the council election, there were 59,315 formal votes, meaning a quota was 7414 votes or 12.5%.
With an expanded 9 councillor positions in 2012, the quota will be 10% and it would seem quite likely that if Robert Doyle recontests, his council ticket would deliver two of the 9 spots.
BoQ deliberately dilutes its biggest class of shareholder
The AFR ran the following letter earlier this week:
Has Bank of Queensland learnt nothing from the massive dilution of retail investors during the $100 billion capital raising splurge we witnessed during the GFC?
The proposed $450 million BoQ capital raising is a shocker because it deliberately dilutes retail investors, who currently own 55% of the bank.
If institutional investors, who only own 45% of the bank, are getting selective access to a $150 million placement at a 17% discount of $6.05, then retail investors should be offered a comparable share purchase plan at the same price.
Indeed, to retain the relative class holdings, the SPP should be capped at $183 million.
But wait, there more. The $450 million two-pronged capital raising also shafts all foreign retail and institutional shareholders in BoQ because they will not be offered the 8-for-37 entitlement offer at $6.05, which is raising $300 million.
If Australia wants to be treated as an honourable corporate citizen in a globalised world, then issuers who deny entitlements to excluded foreign holders should at least conduct a book build to sell the shares and pay the premium as compensation for dilution.
You would have expected better from sole underwriter, Citigroup, which will no doubt be dishing out the cheap placement shares to its favoured clients with no public disclosure.
Stephen Mayne
BoQ shareholder
I also submitted this follow-up letter to The AFR two days ago, but it didn't make the cut.
BoQ raising very different from Bendigo
It was good to see The AFR belatedly producing a story ("Equity issues - a question of equity", April 2, page 24) about retail shareholders being ripped off by Bank of Queensland's selective institutional placement, albeit a week after the regional bank unveiled what has been accurately described by governance advisers as a "dinosaur raising".
However, your report erred when it concluded with the following:
"Shareholders did not raise concerns about BoQ's rival Bendigo & Adelaide Bank's $150 million placement in December, in part because retail shareholders who dominate the register are less vocal."
As Australia's most vocal retail shareholder, I can explain why: Bendigo offered retail investors a share purchase plan on exactly the same terms as the institutional placement.
BoQ should follow suit as there is absolutely nothing stopping them doing the right thing. What possible justification can there be for the BoQ board placing $150 million to institutions at a 17% discount to market, diluting all retail investor? Issuers like Transfield and Westfield have previously responded to pressure from retail shareholders and announced an "after the capital raising event" SPP when in a similar situation. I look forward to BoQ extracting itself from the sin bin of companies which have shamefully and needlessly shafted their retail shareholders.
Stephen Mayne
Manningham
Update from the Australian Shareholders Association
The AGM mini-season for companies with December 31 balance dates kicked off today with QBE Insurance in Sydney.
Check out this summary of forthcoming AGMs over the next two months.
The Australian Shareholders' Association is delighted that Michael Ansell has this week started as our new research manager. Michael has seen all sides of the equity research and governance space over a long career and will be a valuable addition to our capability.
We need to work in numbers to be effective so click on the image below to join the ASA.
Manningham takes the plunge on a double pokies rate
Manningham councillors voted 4-2 last Tuesday in favour of introducing a double rate on 7 pokies venues.
The move will raise an additional $112,000 which will be used to fund a detailed research project into the $65 million our residents lose on the pokies each year and then some specific programs to mitigate the damage.
Woolworths and Bruce Mathieson control 5 of the 7 venues and will contribution about $80,000 to the program, which is much appreciated and can be well afforded by the $35 billion company.
Check out this preview piece in Crikey ahead of the council meeting vote and you can listen to the debate, which is item 12.4, by clicking here.
Finally, check out the latest from Paul Bendat's Pokieact website and this package of our past pokies coverage.
And try watching this 30 second anti-pokies ad made by Paul Bendat three years ago featuring our daughter Alice, who was 6 at the time:
Firing up our Youtube channel again
When The Mayne Report first launched in 2007 we were posting daily videos on our Youtube channel. Alas, the cost and time of in-house video production, plus the lack of any revenue, made this model unviable. Besides, daily videos wasn't necessarily the best way to campaign for better corporate governance through shareholder activism.
In the end, it made more sense to channel our efforts into appearing on other people's videos, such as these two appearances in 2010 on Ten's The 7pm Project, rather than trying to build an audience from scratch.
However, when you look back at all the video spanning our own productions, one-off interviews, profiles or lengthy interviews such as Nine's Sunday program or ABC TV's Talking Heads, the regular spot on Sky's Business View and webcasts of AGMs, it turns out we've got a rather large library of material.
Cross-posting has become much easier now, so we have relaunched our Youtube channel and hope you enjoy our many playlists of material.
Some of the playlists on our video site including the following:
11 rounds with Rupert Murdoch
A few rounds with the Millionaires at Macquarie Group
Bye bye Babcock & Brown
The pokies
Gender equity and media trustworthiness in Intelligence Squared debates
Lateline appearances
Campaigning to end the farmer gerrymander at AWB
Skewering Col Allan on Channel Nine's Sunday program
Memoir contract signed, now for the 100,000 word manuscript
The contract has been signed and the first installment of the advance banked, so the pressure is on to deliver a 100,000 manuscript by June 1, 2011.
We haven't made nearly enough progress yet so I'll be winding back most other activities over the next three months.
You only ever get one chance to write a memoir so we're hoping to produce a rollocking tale on politics, media and business, including 7 years working for Murdoch, the Kennett press secretary years, turning whistleblower against the Premier, the Crikey battles, defamation struggles, 400 AGM encounters, 52 election defeats and the last 3 years on Manningham City Council.
There will also be an element of polemic about Australia's various power management and transparency systems, along with our corporate, media and institutional performance.
If you'd like to pre-order a signed copy - and receive occasional email updates about the research and writing process over the next six months - just donate $40 to The Mayne Report through the donations section below and we'll put you on our "Memoir Sealed Section" email list.
Assessing power in Australia
It won't be easy penning 100,000 words but a flavour of what is likely to come can be seen in this Stephen Murray-Smith annual lecture delivered at the State Library of Victoria on October 13, 2011.
SLV chairman and former Victorian Premier John Cain is now 80 and delivered an introduction which focused on the importance of making genuinely independent commentary, something which will be evident in the memoir.
Check out a video of the full box and dice here.
Donate to help keep us going
The Mayne Report has wracked up losses of more than $300,000 since we launched in October 2007 and we moved to a free model in June 2009 after struggling along seeking subscriptions for the first 21 months.
It has been nice to receive more than $20,000 worth of donations over the past the years and if you fancy giving us a hand to help fund our activism and keep us going on the political and AGM circuit, just click on the image below:
The Mayne Report Rich List
BRW magazine does a great job with its various Australian Rich Lists but we've broadened their efforts to track any Australian who has ever been worth more than $10 million. We've got more than 1500 names with those who've fallen back below $10 million now italicised.
Crikey yarns since last edition
Fairfax should stand up to News Ltd's bullying attacks
Crikey, Monday, April 2, 2012
AFR steps up with new Chenoweth Murdoch bombshells
Crikey, Wednesday, March 28, 2012
Preview of Manningham vote on double rating pokies
Crikey, Tuesday, March 27, 2012
Preview of tomorrow's knife-edge Paperlinx EGM vote
Crikey, Thursday, March 22, 2012
How David Gonski can help solve Gina Rinehart's problems
Crikey, Tuesday, March 14, 2012
Jamie Packer's strange political contradictions
Crikey, Tuesday, March 13, 2012
Why Fairfax should make Gina Rinehart wait 56 years
Crikey, Monday, March 12, 2012
Suggestions going forward after the Finkelstein Report
Crikey, Wednesday, March 7, 2012
After 20 year push, Packers renew campaign for Sydney casino
Crikey, Wednesday, February 29, 2012
Why Wayne Swan should follow Mark Arbib's lead
Crikey, Tuesday, February 28
Cranking up the Tweeting
Click on the image above to join more than 9300 followers on Twitter. We are regularly dropping out observations about journalism, politics, breaking stories, local government and shareholder activism. Click here to see what has been averaging about 10 tweets a day in recent times, include a spot last Thursday as guest Tweeter on Lateline.
From the member edition archive
The Mayne Report goes to almost 15,000 people but if you're a relatively new reader, here are links to some of the email editions sent out over the past year.
Murdoch special, media inquiry, pokies, Manningham, Zara, secretive councillors, Vodafone and then some
Thursday, September 15, 2011
Bumper August edition: Bolt, Gillard, pokies, Murdoch, Gunns, unions, ASA, Manningham and Woolies
Tuesday, August 30, 2011
Special email edition to News Corp analysts ahead of earnings conference call
Wednesday, August 10, 2011
One last trip to New York for Rupert AGM
Tuesday, July 19, 2011
Murdoch, hacking, councillor conduct, ASA, ranking Queensland councillors, Richo and capital raisings
Friday, July 8, 2011
Elected to ASA board, pokies, Rio, Santos, RHG, Hartigan, Manningham, capital raisings and Rich List
Thursday, May 19, 2011
Elected to ASA board, pokies, Rio, Santos, RHG, Hartigan, Manningham, capital raisings and Rich List
Thursday, May 19, 2011
Council super slug, rate rises, Woodside AGM, lost $1000 bet, pokies article and then some
Wednesday, April 27, 2011
Rio, Santos and ASA board tilts, councillor misconduct, David Clarke, Woolies, pokies, Rich List, capital raisings and Murdoch
Tuesday, April 19, 2011
Mark McInnes, Hanson, Boomers, Manningham, MAV elections, defamation, expense claims and conflicts of interest
Friday, March 25, 2011
Bumper March monthly edition: sued, Rio, Packer, MAV, Cornwall, Rich List, Westfield, AGMs and much more
Monday, March 7, 2011
Meetings chairmen, Fairfax, Murdoch, pokies, VLGA, Santos, Alumina, Rich List, SPPs, Manningham and staffers
Monday, February 7, 2011
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.
Greetings for the first time since our last bumper email edition on February 20. If you'd rather not receive these occasional email newsletters, click here to unsubscribe.
First up today, Crikey declined to run this latest wrap on the various Murdoch controversies, so a slightly expanded version appears as our lead story today. There will also be more Murdoch matters discussed on 774 ABC Melbourne from 5.20pm this arvo, as well as an appearance on ABC News24 program, The Drum, after 6pm to discuss the James Murdoch resignation as chairman of BSkyB.
News Ltd, Fairfax, Crikey...we all go over the top sometimes
Stephen Mayne writes:
The best thing about buying The Australian in hard copy each morning is that there will always be something to surprise, amuse, challenge or disgust. Rupert's rolling brawling machine of a broadsheet Down Under will certainly never die wondering.
On Monday, I was really looking forward to reading Mark Day's attempted defence of The AFR's pay-TV piracy claims, as opposed to counter-attacks launched through a junior reporter called Darren Davidson or anonymously through The Australian's editorials and Cut & Paste.
Alas, Day took the view that a Cut & Paste headline writer might describe as “Move on. Nothing to see here.”
Instead, we got an excellent Mark Day column declaring that billionaire mining heiress Gina Rinehart was unfit to serve on the Fairfax board. Such an obvious conclusion was a long time coming from anyone at News Ltd, but the column was so well argued that it deserved strong public support, so the following was submitted to The Australian's letters editor:
Rinehart unfit for Ten board too
Mark Day was spot on in his column yesterday ("Rinehart can forget Fairfax board seat", 3/4) attacking Gina Rinehart for litigating The West Australian and trying to force reporter Steve Pennells to reveal his sources.
This is just the latest of many reasons why Fairfax's largest shareholder would be inappropriate for the media company's board.
Perhaps Gina's Perth-based iron-ore business partner and friend Sam Walsh should have a quiet word about the sanctity of source protection for media companies. After all, Rio Tinto's iron-ore boss sits on the board of Seven West Media, the company Ms Rinehart is suing in the WA Supreme Court.
Mark Day should also have extended his theory to Network Ten, where Rinehart does sit on the board with the apparent voting support of media luminaries such as James Packer, Bruce Gordon and chairman Lachlan Murdoch.
If Gina is inappropriate for Fairfax, what are all the journalists who work for Ten and companies associated with those three gentlemen to think?
Even worse, based on the huge dollars and effort she spent trying to suppress her family's court battles, it appears that Gina doesn't even believe in Australia's democratic system of open justice.
The mining heiress was elected to the Ten board with 97% in favour at last year's AGM, but in light of recent events it appears likely she'll be the subject of a removal resolution at this year's AGM in December.
Stephen Mayne
Manningham
The Australian's brawler-in-chief, Chris Mitchell, was also sent the letter but decided it wasn't worth publishing.
Why would that be? Well, Lachlan Murdoch has been known to personally phone Mitchell and complain about the paper's coverage of his disappointing performance leading Network Ten. John Hartigan didn't take these complaints too seriously and look what happened to him. Kim Williams is much closer to Lachlan and has certainly earned himself some loyalty bonus points over the past week with his over the top attacks on The AFR.
While the Rinehart letter didn't make the grade, the anonymous Cut & Paste section went to town on me today and did quite a good job.
I certainly did call for Media Watch to “umpire” the Fairfax vs News Ltd war and Jonathan Holmes did indeed choose to tread a middle path, contrasting my “give Neil Chenoweth the Gold Walkley” approach, which Crikey led with last Wednesday.
Alan Kohler was another who came out yesterday at the Ownership Matters governance conference in Melbourne suggesting directly to Fairfax Media CEO Greg Hywood that the scale and breadth of The AFR's coverage was a little over the top.
There have certainly been mixed message from The AFR and another came yesterday with Hywood's blithe claims that the pay-TV piracy coverage was just another news story with no broader implications.
When asked by moderator Gideon Haigh, Hywood explicity rejected my suggestion in Crikey on Monday that Fairfax should withdraw from industry collaboration with News Ltd on issues such as Newspaper Works, The Right to Know Coalition and the co-ordinated attacks on Ray Finkelstein's recommendations.
Despite Hywood's "just another story" argument, the scale of The AFR's treatment of the pay-TV piracy story has been bigger than anything the paper has produced since Chenoweth's fabulous Swiss bank accounts story implicating Graham Richardson, Trevor Kennedy and the late Rene Rivkin.
Chenoweth collected the Gold Walkley in 2004 for this Offset Alpine scoop, but that didn't stop The Australian and Sky News putting the forever colourful Richardson on the payroll again last year. When you consider all the dodgy private investigators, corrupt public officials, hackers and unethical piracy merchants that News Corp has paid over the years, there wouldn't be too many other public companies in history which has stooped so low when it comes to the dark arts of business success.
Like most things in life, the debate around The AFR's pay-TV piracy coverage is not black and white. It comes down to proportionality. Some of the lines used by The AFR – such as linking it to the current Austar takeover - were an over-reach. But the overall substance of what it has in those 14,400 NDS emails is still incredibly revealing about News Corp and a drama that can only be comprehensively told in a large package of stories over several days.
Indeed, Chenoweth has so much stuff that a major global publishing house has commissioned him to write a 100,000-plus word book on the saga, which will be released later this year. I hope it comes out a few days before the 2012 News Corp AGM, which will be a beauty, especially when you consider these early signs of institutional activism to force change.
Even if 20 pages was too much, it is ironic to see News Ltd attacking a rival for going over the top.
The Australian goes OTT yet again
For instance, The Australian has gone completely over the top today with its coverage of the Auditor General's report into the aborted Australia Network contract. Was it really worth the splash, several other stories, the lead editorial, a Dennis Shanahan opinion piece, a comment piece from Sky News CEO Angelos Frangopoulos and a massive Hillary Bray feature on the cover of A-Plus?
The bottom line of Labor's approach to the Murdochs is this: after being subjected to a totally disproportionate jihad by The Australian and Daily Telegraph and after the Milly Dowler story broke, it decided Sky News simply would not get the Australia Network contract.
There was also a leadership sub-text as Kevin Rudd was attempting to win News Ltd support for his second tilt at The Lodge. And like with the Rudd execution, Gillard never properly explained the real reasons for shafting Sky. Once phone hacking blew up last July and News Corp voluntarily walked away from its BSkyB bid, Gillard should have simply called a press conference with Steve Conroy and declared the tender was being aborted because the government didn't believe the Murdoch family were "fit and proper" to be associated with Australia's soft diplomacy efforts across Asia.
Too easy. Unfortunately, like with many issues of political management and communication, Julia Gillard's government isn't very effective.
Winning a remuneration debate with Ziggy Switkowski
Ownership Matters, the hard-charging boutique proxy advisory firm set up by the old Risk Metrics crew last year, convened its first corporate governance conference at the Melbourne Business School yesterday.
There were plenty of heavy hitters assembled such as ASIC deputy chair Belinda Gibson, Lindsay Tanner, former RBA governor Ian Macfarlane, activist fund manager Simon Marias, capital raisings guru Guy Foster and Fairfax Media CEO Greg Hywood.
I was a relatively late recruit for the lunch time debate on the topic: "That remuneration consultants lead to higher pay".
OM boss Dean Paatsch is a Machiavellian character as he set the debate up so that participants would be arguing against positions they believed in.
Forrmer Telstra CEO Ziggy Switkowski and I were given the job arguing that remuneration consultants don't drive up pay, whilst the leading academic in the sector, Dr Kym Sheehan, and Ernst & Young's Asia Pacific remuneration chief Mike Hogan were required to argue they were driving up pay.
Frankly, it was terrifying having to perform with luminaries like Lindsay Tanner, Ian Macfarlane, Gideon Haigh and Alan Kohler sitting 3 metres away.
The debate was Oxford-style where the audience voted before and after debate to see which side moved the most votes.
I'd been on the losing side of two of these debates over the last 3 years, each time clearly failing to confirm an audience pre-conception that the media have no morals.
Therefore, it was good to notch up a win yesterday as the pre-debate vote was 64-32 in favour of blaming sky-rocketing executive pay on remuneration consultants.
We turned it around to 30-66 after the debate by going strongly on the attack blaming greedy CEOs, compliant boards, weak shareholders and even proxy advisers. Here is a summary of my 6 minute spray wrapping up proceedings:
Why remuneration consultants are not to blame for rocketing executive pay
Stephen Mayne's speaking notes to Ownership Matters remuneration debate
It doesn't matter what industry – journalists, lobbyists, PR people, financial analysts, investment bankers – it is human nature for people to overstate their importance.
And it is no different with big talking remuneration consultants like EY's Mike Hogan, who, like many of his colleagues, is clearly deluded in thinking that he actually influences remuneration decisions.
Let's be honest, the people who are most responsible for the CEO wages break-out are as follows:
1. Greedy CEOs who employ pattern bargaining and American benchmarking.
2. Compliant boards who lose their collective spines when negotiating.
3. The shareholders who continually re-appoint these compliant directors with an average 96% vote in favour.
I'll never forget the 1998 AMP press conference when chairman Ian Burgess handed over to George Trumbull to explain why the big-talking American was getting 1 million free shares worth about $20 million as part of the demutualisation.
Sure, remuneration consultant John Egan put his name to this deal, but it was Ian Burgess who approved it and was so embarrassed he wouldn't even publically explain it.
When Geoff Dixon walked out of Qantas with $10.7 million after just 5 months work in his final year, it wasn't some remuneration consultant who was to blame.
Dixon was the greedy bloke who stuck his hand out, then chair Margaret Jackson failed to resist and the jealous former CEO James Strong, who later came back as chair of the Qantas remuneration committee, failed to negotiate away some of the Jackson largesse.
So what did the shareholders do in 2009? They voted 44% against the Qantas remuneration report but re-elected James Strong with more than 95% in favour. There you have it: Ziggy and I blame the shareholders for not holding the directors to account.
I well remember one PBL AGM in Sydney when James Packer was asked about excessive executive pay packets and he literally said: “Yeah, we do benchmarking, Egan, you know. Look, basically I decide what they get, okay?” James Packer was making it very clear the remuneration consultant was nothing more than a fig leaf of external validation.
It wasn't some remuneration consultant who decided that Welshman Paul Anthony should get $17 million for 17 months work at AGL. It was AGL chairman Mark Johnson who did the deal.
Coming from the Millionaires Factory Macquarie Bank, Johnson was hardly in a position to resist.
Overpaid CEOs suddenly becoming chairs and remuneration committee members is partly to blame for the executive wages break out in Australia and the best example I can find is Don “Don't Argue” Argus.
Remember when Don left NAB in 1999 to take the chair at BHP and the NAB board let him keep all his options.
Without getting into detail about the breakdowns, here are total salary packages that appeared in various annual reports when CEOs departed companies where Don Argus was a director:
The Don Argus CEO payouts
Don Argus: NAB, $9.26m
John Prescott: BHP, $11.17m
Tom Park: Southcorp, $10.1m
John Fletcher: Brambles, $8.65m
Paul Anderson: BHP, $18m
Brian Gilbertson: BHP, $30m (including $US1.5m indexed pension)
Frank Cicutto: NAB, about $9m, (Don's hand-picked successor but he didn't negotiate exit)
Keith Lambert: Southcorp, $6.2m
Sir CK Chow: Brambles, $4.1m
Andrew Michelmore: about $10m from BHP in 2005
Chip Goodyear: BHP, $9m in final year 2007
Chris Lynch: $5.2m when he left BHP for Transurban in 2007
Kirby Adams: his contract included a 2 year payout and he made more than $20 million in total, largely thanks to taking out put options on 900,000 Bluescope shares when the stock was above $10 in 2005. It's now below 50c.
Blaming today's conference organisers, the proxy advisers
There's another guilty party which should also be identified today: the proxy advisers.
Dean Paatsch and Martin Lawrence, hosts today and key players at Risk Metrics, ISS and now Ownership Matters over the years, have you ever recommended against Westfield's remuneration report?
No problems with the Lowy family taking out $30 million a year? Year after year?
What about Macquarie Bank? You were in favour in 2006 weren't you? (debate moderator Martin Lawrence nods)
What happened that year? The top seven Macquarie executives in 2005-06 lifted their overall pay packets from $89.15 million to $110.76 million, meaning the average leapt from $12.73 million to a staggering $15.82 million. The only resolution these so-called proxy advising gurus recommended against at Macquarie in 2006 was my nomination for the board.
What about that last Babcock & Brown rem report in 2008? Yep, $10 billion lost across the stable, $300 million in cash salaries for the boys over 4 years as a listed company and final rem report was....125.75m votes in favour, only 3.6m against. That's more than 95% in favour. Forget about the remuneration consultants, thank you Dean and Martin, plus the compliant shareholders of Babcock & Brown.
I will admit that you can't always blame the independent shareholders and proxy advisers if you've got an overly generous controlling shareholder involved. Step forward James Packer, Frank Lowy and Rupert Murdoch as prime examples.
Which brings me to Toll Holdings, a company which used to be controlled by Paul Little and the Rowsthorn family and somehow handed them about $40 million in payments over the years.
The proxy advisers were onto Toll, they got 40%-plus against votes on their remuneration report three years in a row.
So, what happened. A board insider told me that Paul Little and Mark Rowsthorn basically wrote their own contracts. In other words, it was the fault of then Toll chair John Moule, who was hand-picked by the boys. It wasn't some remuneration consultant.
Finally, we really also should blame a few of those over-paid fund managers who control corporate voting in Australia.
Many of these turkeys don't even disclose their own fat pay packets, so they are hardly going to rail against similar telephone book numbers in public company annual reports.
And then you have the Big Four banks, which between them have close to a majorty market share of the Australian funds management business.
When you consider that Big Four bank CEOs have earned gross salary and equity profits of almost $500 million over the past 20 years, they are hardly going to lead the charge for wage restraint across the public company space. Forget the rem consultants, we blame the big bank bosses too.
ends
Finally, click here to read feedback after some earlier speeches and click on the image below if you fancy an engagement.
Victorian local government sector facing big superannuation hit
Unlike the Federal Government and all other state governments with the notable exception of Queensland, Victorian councils have maintained fully funded superannuation schemes ever since the Kennett reforms of the mid-1990s.
Victoria's 79 councils have very little debt, fully funded super and net assets worth close to $100 billion. They have a good financial story to tell.
However, the sector was required at very short notice to write out a cheque for $77 million last year after a blow out in liabilities for public service members of the generous defined benefit superannuation schemes which Jeff Kennett closed in 1992-93.
I was press secretary to Kennett's Finance Minister, Ian Smith, at the time and well remember the defined benefit liability time bomb which was created by previous Labor governments and then exploited by the public sector unions.
Bruce Guthrie wrote an interesting column in The Sunday Age last week arguing that the Cain-Kirner government was much better than history would suggest.
He laid out the positive acheivements as follows:
Cain's reformist zeal more than matched Jeff Kennett's in scope if not execution and was head-spinning compared with Ted Baillieu. In quick time he and his team overhauled everything from drinking laws to shop trading hours and prostitution to nude bathing regulations. They established Workcover, the Transport Accident Commission, the Ethnic Affairs Commission and the Equal Opportunity Board and gave Melbourne the National Tennis Centre, Southbank and the city's bar culture. By any definition, they changed the social fabric of the state.
And this was his take on the negatives:
It was their finances that got them into trouble, eventually unravelling in their third term, which started under Cain in 1988 and ended under Victoria's first female premier, Joan Kirner, four years later. Central to their demise was a series of financial mishaps that beset the Pyramid Building Society, Tricontinental, the State Bank and the Victorian Economic Development Corporation.
In terms of rating their own performance, Bruce Guthrie quoted former Victorian Treasurer Rob Jolly giving his government an 8 out of 10 and describing his performance in these terms: ''We were an outstanding government by any measure when you consider the period as a whole. I don't regret one decision I made as treasurer.''
As a local government councillor in 2012, I certainly regret the ridiculous generosity of those old defined benefit superannuation schemes which Cain, Jolly and Kirner allowed to proliferate.
The sector is bracing itself for another actuarial review which the jungle drum suggests will produce another unexpected liability running into hundreds of millions dollars. No one knows for sure, but all is expected to be revealed in the next few weeks as council budgets and rate rises are decided.
In an election year, it will be a brave council which jacks rates up by 10% to help meet a multi-million dollar pension liability. The soft option would be to slip into unfunded territory but that would be illegal in the private sector and only replicates the arguably dishonest budgeting of successive state and federal budgets which stick these liabilities on the credit card.
Whilst the Kennett Government was right to close down these schemes, it did create a two tier system. The lucky public servants had the magnificent pensions schemes and a strong incentive to stick around the sector and maximise the final average salary - which is the key determinant of the life-time indexed pension.
For some reason that I don't understand, public sector wage negotiations ignored these two classes of employee, despite the fact that it could mean disparities of more than 30% when you took a life-time view.
Anyone council employee who joined the sector after 1993 is taking equity market risk on a standard accumulation scheme, yet they get the same pay rises as colleagues in the defined benefit schemes who are guaranteed generous life time pensions, regardless of what happens on investment markets.
If the mooted $200 million-plus blowout on defined benefit pension schemes does emerge, Victoria's local government sector will have some hard decisions to make.
And John Cain's ministers should think about this as they gather for lunch at Parliament House tomorrow to reflect on the 20th anniversary of their election in 1982.
Running for Melbourne City Council
The Age and the Melbourne Leader both reported last month that I won't be recontesting in Manningham, but instead will have a crack at Melbourne City Council at the October elections.
Seeing as the Victorian Electoral Commission is recommending an expansion from 7 to 9 councillors in one undivided ward, it shouldn't be too hard to get elected in Melbourne where the quota will only be 10% and many of the best candidates are focused on the separate Lord Mayoral vote.
Here is a summary of how the Melbourne City Council votes panned out last time.
In the direct election for Lord Mayor, Robert Doyle got twice as many votes as anyone else and ended up defeating Catherine Ng courtesy of Labor Party preferences. The final vote was 31,348 votes to 26,614, so Doyle received 54% of the 57,962 formal votes.
More than 80% of voters followed Lord Mayoral tickets when it came to the separate council election, so it will be important to have a mayoral running mate. The top 7 candidates for Lord Mayor each got their lead council candidate elected. The results in 2006 were as follows:
2. Adam Bandt: Greens got 8729 (15.05%) for mayoralty and 10,084 on council ticket for Cathy Oke. Second elected.
3. Peter McMullen: (ALP) 7267 (12.53%) for mayor and 7072 for Kevin Louey on council ticket. Third elected.
4. Catherine Ng: 6315 (10.89%) for mayoralty and 5656 on council ticket for Brian Shanahan. Sixth elected.
5. Gary Singer: 6056 (10.45%) for mayor and 6309 for Ken Ong on council ticket. Fifth elected.
6. Will Fowles: (ALP) 5004 (8.63%%) for mayoralty and 5401 for Jennifer Kanis on council ticket. Seventh elected.
7. Gary Morgan: 4526 (7.8%) for mayor and 5018 for Peter Clarke on council ticket. Fourth elected on Green preferences.
8. Nick Columb: 2712 (4.68%) for mayor and 2937 for Fiona Sneddon on council ticket. Not elected.
In terms of analysing the council election, there were 59,315 formal votes, meaning a quota was 7414 votes or 12.5%.
With an expanded 9 councillor positions in 2012, the quota will be 10% and it would seem quite likely that if Robert Doyle recontests, his council ticket would deliver two of the 9 spots.
BoQ deliberately dilutes its biggest class of shareholder
The AFR ran the following letter earlier this week:
Has Bank of Queensland learnt nothing from the massive dilution of retail investors during the $100 billion capital raising splurge we witnessed during the GFC?
The proposed $450 million BoQ capital raising is a shocker because it deliberately dilutes retail investors, who currently own 55% of the bank.
If institutional investors, who only own 45% of the bank, are getting selective access to a $150 million placement at a 17% discount of $6.05, then retail investors should be offered a comparable share purchase plan at the same price.
Indeed, to retain the relative class holdings, the SPP should be capped at $183 million.
But wait, there more. The $450 million two-pronged capital raising also shafts all foreign retail and institutional shareholders in BoQ because they will not be offered the 8-for-37 entitlement offer at $6.05, which is raising $300 million.
If Australia wants to be treated as an honourable corporate citizen in a globalised world, then issuers who deny entitlements to excluded foreign holders should at least conduct a book build to sell the shares and pay the premium as compensation for dilution.
You would have expected better from sole underwriter, Citigroup, which will no doubt be dishing out the cheap placement shares to its favoured clients with no public disclosure.
Stephen Mayne
BoQ shareholder
I also submitted this follow-up letter to The AFR two days ago, but it didn't make the cut.
BoQ raising very different from Bendigo
It was good to see The AFR belatedly producing a story ("Equity issues - a question of equity", April 2, page 24) about retail shareholders being ripped off by Bank of Queensland's selective institutional placement, albeit a week after the regional bank unveiled what has been accurately described by governance advisers as a "dinosaur raising".
However, your report erred when it concluded with the following:
"Shareholders did not raise concerns about BoQ's rival Bendigo & Adelaide Bank's $150 million placement in December, in part because retail shareholders who dominate the register are less vocal."
As Australia's most vocal retail shareholder, I can explain why: Bendigo offered retail investors a share purchase plan on exactly the same terms as the institutional placement.
BoQ should follow suit as there is absolutely nothing stopping them doing the right thing. What possible justification can there be for the BoQ board placing $150 million to institutions at a 17% discount to market, diluting all retail investor? Issuers like Transfield and Westfield have previously responded to pressure from retail shareholders and announced an "after the capital raising event" SPP when in a similar situation. I look forward to BoQ extracting itself from the sin bin of companies which have shamefully and needlessly shafted their retail shareholders.
Stephen Mayne
Manningham
Update from the Australian Shareholders Association
The AGM mini-season for companies with December 31 balance dates kicked off today with QBE Insurance in Sydney.
Check out this summary of forthcoming AGMs over the next two months.
The Australian Shareholders' Association is delighted that Michael Ansell has this week started as our new research manager. Michael has seen all sides of the equity research and governance space over a long career and will be a valuable addition to our capability.
We need to work in numbers to be effective so click on the image below to join the ASA.
Manningham takes the plunge on a double pokies rate
Manningham councillors voted 4-2 last Tuesday in favour of introducing a double rate on 7 pokies venues.
The move will raise an additional $112,000 which will be used to fund a detailed research project into the $65 million our residents lose on the pokies each year and then some specific programs to mitigate the damage.
Woolworths and Bruce Mathieson control 5 of the 7 venues and will contribution about $80,000 to the program, which is much appreciated and can be well afforded by the $35 billion company.
Check out this preview piece in Crikey ahead of the council meeting vote and you can listen to the debate, which is item 12.4, by clicking here.
Finally, check out the latest from Paul Bendat's Pokieact website and this package of our past pokies coverage.
And try watching this 30 second anti-pokies ad made by Paul Bendat three years ago featuring our daughter Alice, who was 6 at the time:
Firing up our Youtube channel again
When The Mayne Report first launched in 2007 we were posting daily videos on our Youtube channel. Alas, the cost and time of in-house video production, plus the lack of any revenue, made this model unviable. Besides, daily videos wasn't necessarily the best way to campaign for better corporate governance through shareholder activism.
In the end, it made more sense to channel our efforts into appearing on other people's videos, such as these two appearances in 2010 on Ten's The 7pm Project, rather than trying to build an audience from scratch.
However, when you look back at all the video spanning our own productions, one-off interviews, profiles or lengthy interviews such as Nine's Sunday program or ABC TV's Talking Heads, the regular spot on Sky's Business View and webcasts of AGMs, it turns out we've got a rather large library of material.
Cross-posting has become much easier now, so we have relaunched our Youtube channel and hope you enjoy our many playlists of material.
Some of the playlists on our video site including the following:
11 rounds with Rupert Murdoch
A few rounds with the Millionaires at Macquarie Group
Bye bye Babcock & Brown
The pokies
Gender equity and media trustworthiness in Intelligence Squared debates
Lateline appearances
Campaigning to end the farmer gerrymander at AWB
Skewering Col Allan on Channel Nine's Sunday program
Memoir contract signed, now for the 100,000 word manuscript
The contract has been signed and the first installment of the advance banked, so the pressure is on to deliver a 100,000 manuscript by June 1, 2011.
We haven't made nearly enough progress yet so I'll be winding back most other activities over the next three months.
You only ever get one chance to write a memoir so we're hoping to produce a rollocking tale on politics, media and business, including 7 years working for Murdoch, the Kennett press secretary years, turning whistleblower against the Premier, the Crikey battles, defamation struggles, 400 AGM encounters, 52 election defeats and the last 3 years on Manningham City Council.
There will also be an element of polemic about Australia's various power management and transparency systems, along with our corporate, media and institutional performance.
If you'd like to pre-order a signed copy - and receive occasional email updates about the research and writing process over the next six months - just donate $40 to The Mayne Report through the donations section below and we'll put you on our "Memoir Sealed Section" email list.
Assessing power in Australia
It won't be easy penning 100,000 words but a flavour of what is likely to come can be seen in this Stephen Murray-Smith annual lecture delivered at the State Library of Victoria on October 13, 2011.
SLV chairman and former Victorian Premier John Cain is now 80 and delivered an introduction which focused on the importance of making genuinely independent commentary, something which will be evident in the memoir.
Check out a video of the full box and dice here.
Donate to help keep us going
The Mayne Report has wracked up losses of more than $300,000 since we launched in October 2007 and we moved to a free model in June 2009 after struggling along seeking subscriptions for the first 21 months.
It has been nice to receive more than $20,000 worth of donations over the past the years and if you fancy giving us a hand to help fund our activism and keep us going on the political and AGM circuit, just click on the image below:
The Mayne Report Rich List
BRW magazine does a great job with its various Australian Rich Lists but we've broadened their efforts to track any Australian who has ever been worth more than $10 million. We've got more than 1500 names with those who've fallen back below $10 million now italicised.
Crikey yarns since last edition
Fairfax should stand up to News Ltd's bullying attacks
Crikey, Monday, April 2, 2012
AFR steps up with new Chenoweth Murdoch bombshells
Crikey, Wednesday, March 28, 2012
Preview of Manningham vote on double rating pokies
Crikey, Tuesday, March 27, 2012
Preview of tomorrow's knife-edge Paperlinx EGM vote
Crikey, Thursday, March 22, 2012
How David Gonski can help solve Gina Rinehart's problems
Crikey, Tuesday, March 14, 2012
Jamie Packer's strange political contradictions
Crikey, Tuesday, March 13, 2012
Why Fairfax should make Gina Rinehart wait 56 years
Crikey, Monday, March 12, 2012
Suggestions going forward after the Finkelstein Report
Crikey, Wednesday, March 7, 2012
After 20 year push, Packers renew campaign for Sydney casino
Crikey, Wednesday, February 29, 2012
Why Wayne Swan should follow Mark Arbib's lead
Crikey, Tuesday, February 28
Cranking up the Tweeting
Click on the image above to join more than 9300 followers on Twitter. We are regularly dropping out observations about journalism, politics, breaking stories, local government and shareholder activism. Click here to see what has been averaging about 10 tweets a day in recent times, include a spot last Thursday as guest Tweeter on Lateline.
From the member edition archive
The Mayne Report goes to almost 15,000 people but if you're a relatively new reader, here are links to some of the email editions sent out over the past year.
Murdoch special, media inquiry, pokies, Manningham, Zara, secretive councillors, Vodafone and then some
Thursday, September 15, 2011
Bumper August edition: Bolt, Gillard, pokies, Murdoch, Gunns, unions, ASA, Manningham and Woolies
Tuesday, August 30, 2011
Special email edition to News Corp analysts ahead of earnings conference call
Wednesday, August 10, 2011
One last trip to New York for Rupert AGM
Tuesday, July 19, 2011
Murdoch, hacking, councillor conduct, ASA, ranking Queensland councillors, Richo and capital raisings
Friday, July 8, 2011
Elected to ASA board, pokies, Rio, Santos, RHG, Hartigan, Manningham, capital raisings and Rich List
Thursday, May 19, 2011
Elected to ASA board, pokies, Rio, Santos, RHG, Hartigan, Manningham, capital raisings and Rich List
Thursday, May 19, 2011
Council super slug, rate rises, Woodside AGM, lost $1000 bet, pokies article and then some
Wednesday, April 27, 2011
Rio, Santos and ASA board tilts, councillor misconduct, David Clarke, Woolies, pokies, Rich List, capital raisings and Murdoch
Tuesday, April 19, 2011
Mark McInnes, Hanson, Boomers, Manningham, MAV elections, defamation, expense claims and conflicts of interest
Friday, March 25, 2011
Bumper March monthly edition: sued, Rio, Packer, MAV, Cornwall, Rich List, Westfield, AGMs and much more
Monday, March 7, 2011
Meetings chairmen, Fairfax, Murdoch, pokies, VLGA, Santos, Alumina, Rich List, SPPs, Manningham and staffers
Monday, February 7, 2011
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.