The Fairfax board is crying out for some people with newspaper experience and at the same time should be ridded of merchant bankers linked to Kerry Packer and Rupert Murdoch. Read on and help get the ball rolling.
The headline on this story is not as stupid as it sounds because Australia’s media companies have some of the worst corporate governance practices around.
Rupert’s nomination committee comprises himself and his inhouse lawyer Arthur Siskind, Packer’s PBL board is choc-full of his mates such that no-one is in there batting for the people who own the other 65 per cent of the company.
But it is the John Fairfax board that is the cause of most alarm and one that we are particularly keen to focus on over the next two months ahead of the AGM on November 3 in Sydney.
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Australia’s high levels of media concentration have been extremely damaging to the nation. It has meant that dodgy politcians or lobby groups can prevail just by doing some deal with one or two media outlets.
This is what makes Fairfax so important because it does not have a controlling shareholder. It certainly dominates the financial press in Australia like no other company and is an opinion leader in Canberra, Sydney and Melbourne through The Age and The Sydney Morning Herald.
However, you now have a situation where the chairman of John Fairfax, Brian Powers, is a close mate of Kerry Packer’s who lives in America. There are two other close Packer mates on the board – lawyer David Gonski and former Hudson Conway chairman Sir Rod Carnegie.
Rupert Murdoch told me after the News Corp AGM last year that “all” of the Fairfax directors are Packer stooges. Now Rupert often sees things in black or white whereas this is an issue that is decidedly grey.
They certainly are not “all” Packer stooges because some would argue that merchant banker Mark Burrows is a Murdoch stooge. It was Burrows who brought Rupert into the Seven float with 15 per cent and a quick read of Mark Westfield’s recent book on Australia’s pay-TV industry would suggest the two are very familiar with each other.
A Complete Lack Of Media Industry Expertise
One former Fairfax editor told me recently that presenting to the board was like “presenting to a group of monkeys” because none of them appeared to have much of a clue about the subject matter.
The first rule of good corporate governance is that non-executive directors should have some experience in the industry that a company is operating in.
Crikey has raised this issue at the last two Fairfax AGMs and Brian Powers has answered it by saying that suitable people with newspaper experience are very hard to find.
However, on both occasions he has created the impression the board is about to appoint a second Melbourne-based director – Sir Rod Carnegie being the only one at the moment.
Now Sir Rod should not be on the board for a number of reasons: He’s been discredited on other boards, he’s too old, he’s associated with Kerry Packer and he has a conflict of interest through his investment in Eric Beecher’s Text Media group.
Crikey is working up a list of Australian directors that should be ousted from boards and Sir Rod’s Fairfax gig will definitely be in the top 10.
The Hunt is on for a Melbourne-based Fairfax Candidate
Despite Brian Powers’ promises at recent meetings, Fairfax has still not appointed a second Melbourne-based director. Therefore, maybe it is time someone with newspaper experience put themselves forward to shareholders at the November AGM.
Crikey has already approached The Age’s Stephen Bartholomeusz and the Fin Review’s Ivor Ries but both have declined our suggestion to stand.
Ivor, a seven year veteran of the Chanticleer column, would be particularly good because he is looking to leave the Fin Review and get into funds management or stockbroking when the right opportunity arises.
He was also passed over in favour of Michael Gill to take charge of the group’s Business Publications – in other words chief executive Fred Hilmer had shortlisted Ivor as someone with management talent.
Ivor is very bright, well-connected and well-respected. And it would give the publishers a good shake-up to finally have someone on the board asking them well-informed questions.
But alas, the Fairfax board is not a particularly attractive combination of people for a quality outsider to join. And that’s why we need someone who will step up and start arguing the case for wholesale changes to the board before quality candidates such as Ivor would be prepared to step forward.
I’m quite happy to stand as the candidate of last resort but would prefer to find someone of the callibre of Ivor to take up the fight. Does anyone know of any names or can anyone twist the arms of the obvious Melbourne-based candidates? Why doesn’t the union or some of the staff get involved and stand a candidate?
The Changes That Need To Be Made At Fairfax
It really is unbelievable that a boring operational company like Fairfax has three investment bankers on the board. It has done so few deals over the past 10 years that one investment bankers would probably be too many. Then we get to the conflicts and associations. Two of them, David Gonski and Brian Powers, have worked extensively for Packer over the years and the third, Mark Burrows, has worked extensively for Murdoch. They really should all go.
The Westfield clique is also a bit of a worry. Three Fairfax directors – Gonski, Dean Wills and CEO Fred Hilmer – are all great mates of Frank Lowy’s and sit on some of his boards. However, Wills is a well-respected marketing man who did a good job building Coca-Cola Amatil so the removal of Gonski would be enough to deal with this problem.
Luis Vuitton boss Julia King brings some advertising and magazine publishing experience to the board and David Shein, despite being associated with the Packers, brings some IT experience which would be more than useful for the expansion of Fairfax’s online businesses.
That leaves former Freedom Furniture CEO and Brierley Investments representative Jonathon Pinshaw who has done nothing we know of to deserve the boot as deputy chairman.
So all you need to do is throw off the merchant bankers, find a new chairman and find a couple of directors with newspaper experience. Fred Hilmer seems to be doing a reasonable job but is surely damaged goods for what happened at Pacific Power. Alan Kohler’s article in the Saturday Fin said it all. NSW taxpayers appear to have blown hundreds of millions of dollars in these crazy power contracts that Pacific Power struck with Powercor. The Supreme Court battle has been quietly settled with no details revealed publicly. Fred Hilmer was the chairman when these deals were done and Peter Graham was chief executive. Now these two people are running Fairfax and no-one seems to care about the disaster that took place at Pacific Power. One thing is for sure at the AGM, we will be raising this issue with chairman Powers and we expect more than the usual “not a matter involving us” line.
For the time being we’d just like Fairfax company secretary Gail Hambly to stop being so obstructionist and provide us with the board nomination rules for Fairfax. A total of 23 companies have responded to our survey so far and Foster’s Brewing is the only other one that has tried on this “only for shareholders” line. We’re surveying the boards as a journalistic exercise for a story that will appear on shareowner.com.au so Fairfax should just cough up the information.
Any other company secretary keen to earn some unsolicited Crikey brownie points and get a free subscription to shareowner.com.au should email us at [email protected] advising the rules of board nomination for “outsiders”, the directors coming up for re-election and the date, time and venue of this year’s AGM.