Just when you thought it could not get any worse for chairman Nick Whitlam, the Fin Review has revealed allegations of vote rorting and questionable record keeping at the NRMA. It all strengthens the arguments behind a vote against Whitlam and for Crikey at the upcoming AGM.

It appears there have been some major voting and record keeping irregularities at the NRMA under chairman Nick.

The bits that really leapt out at Crikey are as follows:

Nick Whitlam failed to sign and vote the proxies which were opposed to a resolution proposed at the 1998 AGM that directors get a collective $190,000 rise in fees.

The board failed to follow through on an inquiry as to how this happened even though an explosive report was prepared and given to the board suggesting Whitlam was at the heart of a debacle that saw the resolution passed when it really should have failed.

Whitlam received more than $500,000 last year even though members only approved his base fee of $105,000. This was done by getting paid for a variety of committee work.

Whitlam proposed an options package to get 50 per cent of what CEO Eric Dodd was getting but this was rejected by independent remuneration consultant John Egan. Even so, the draft board minutes incorrectly said the options had been approved.

Whitlam reconfirmed controversial company secretary Gaye Morstyn in her job even though this had not been referred to chief executive Eric Dodd. The company secretary is the key figure involved in board minutes and voting.


Anyway, this is my pitch for the NRMA board which is considerably stronger after all of these recent revelations.

When shareholders received their notice of meeting for the first AGM of NRMA Insurance Group Ltd as a listed company on November 28, confusion reined.

The nomination of Stephen Mayne as a candidate threw a spanner in the works and so the board decided that there would only be three vacancies for the four candidates.

However, the NRMA’s lawyers then came up with a highly ambiguous notice of meeting that said shareholders who ticked four boxes would be invalidated.

They failed to say that this only applied to shareholders who ticked four “for” boxes. You can vote in favour of three candidates and tick the “against” box for the other candidate and your vote will count.

With a chairman called Whitlam you would expect a body like the NRMA to at least get its ballot papers right. Now we have hundreds of confused shareholders deluging the shareholder information lines and even ASIC is getting involved forcing NRMA to run clarifying ads.

Platform censorship an even worse offence

Whilst the ballot paper confusion is disappointing, the censorship of my platform was a lot more disconcerting. The board decided that the following statement was defamatory:

“Mr Mayne also believes the ongoing commercial relationship between the NRMA and broadcaster John Laws is inappropriate and should be terminated immediately.”

Instead the platform sent out to shareholders in the notice of meeting was restricted to the following:

“Stephen D. Mayne has nominated himself for election as a director. Mr Mayne, aged 31, holds a Bachelor of Commerce degree from the University of Melbourne. Mr Mayne is the publisher of www.crikey.com.au and www.shareowner.com.au and has been a business journalist for 11 years with the papers including The Australian Financial Review, The Age, The Herald Sun and the The Daily Telegraph where he was both business editor and chief of staff. In 1999 he won the Walkley Award for business journalism for a series on shareholder activism. Mr Mayne believes the NRMA should become a more activist fund manager in order to create a greater culture of shareholder pressure in Australia.”

The censorship of the cash for comment aspect of the platform was ill-advised. It is embarrassing but hardly defamatory to claim the John Laws arrangement is inappropriate. The ABA said much worse about it. This is all about not admitting a grubby cash for comment deal to its 1.6 million shareholders. Then again, they might not have been shareholders if Lawsie had been sponsored by forces opposed to the demutualisation.

The NRMA has been paying John Laws a six figure sum in a cash for comment arrangement since July 1, 1998. We, like most working journalists, were horrified by cash for comment and are amazed that it still goes on. What sort of morality do companies like Optus, Qantas, Colonial and the NRMA have.

There has been systemic failure in that a government inquiry has been unable to deal with the two principal offenders – Alan Jones and John Laws – and companies such as the NRMA are still paying them.

As good cause activists roving across the business, media and political sphere, we have resolved to stand for the board of any company that is still paying these 2UE shock jocks.

It worked a treat with Cable & Wireless Optus because they cancelled their contract with Alan Jones two weeks after we announced plans to run for their board. As a result, we withdrew and Alan Jones is an estimated $300,000 a year worse off.

Let’s hope the same thing happens with the NRMA.

The contract is due to expire on June 30 next year and the 2UE website states that it requires Laws ‘to promote the image, products and services of NRMA’.

You can rest assured John Laws won’t have me on his show to talk about the board contest but what does his contract say about promoting incumbent directors?

Vote against passive funds management

Opposing cash for comment is half the platform but shareholders will only see the other half which talks about the need for Australia to have a greater culture of shareholder pressure.

The NRMA manages many billions of dollars worth of funds on behalf of its customers and policyholders but never says boo about any of the investments that go bad or where bad corporate governance is evident.

Therefore, my platform is to pressure the board into becoming a more activist fund manager to create a greater culture of accountability in Australia.

Shareholders can send a message to the board that they want this by voting for me. If elected, I would push the board from within to become more activist and would carry greater authority as an active shareholder attending about 50 meetings a year.

In terms of adding value to the board, I have some experience in financial services from when I was banking and insurance writer for The Age in the early 1990s and a media advisor to the Victorian government on their two monopoly insurance schemes – CTP and workers’ compensation.

The NRMA has important relationships to manage with the media and government and these are areas that I could assist with.

And I’ve been to more AGMs than just about anyone else in Australia so the knowledge you pick up from that and 11 years in business journalism should be helpful for the NRMA.

The NRMA share registry is interesting because it is dominated by small investors – not the usual cartel of institutions who blindly endorse everything that a board proposes. In fact the instos only have about 20 per cent.

Even so, I will still probably come a long last as occurred with the AMP when I got 27.4 per cent of the votes in favour and the next lowest vote was about 88 per cent for Ian Renard.

Chairman Nick Whitlam was remarkably arrogant at the various demutualisation meetings earlier this year so it will be interesting if any of his hand-picked candidates suffer some backlash from this. We hope you do send them some sort of message because the NRMA is your company afterall.

Nick does not have a good track record – just look at the $1 million he’s lost in Liberty One. He is also overpaid as a non-executive chairman and has a poisonous relationship with chief executive Eric Dodd and Anita Keating.

It is unfortunate that the NRMA has become a plaything of the NSW Right of the Labor Party. The faster the likes of Anne Keating and Nick Whitlam are removed the better it will be for shareholders.

The Keating-Whitlam feud has deepened in recent times when Keating insisted that John Egan come in and independently assess whether Nick Whitlam should get a big whack of options like Eric Dodd got.

Egan is the head hunter who said George Trumbull’s outrageous $20 million package to run AMP was okay but even he baulked at Nick’s proposed options package.

Whitlam was struggling to get a gig in corporate NSW after his troubled stints at the State Bank of NSW and Deloittes so he created his own gig by taking on the poisoned chalice of the NRMA.

Wouldn’t it be just ironic if he was thrown out by the shareholders at the first opportunity.

Given that I’m certain to come last, I’m recommending a vote against the other three candidates but if you want to only vote against one person then make it chairman Nick. The place would be a lot less tense if he was shown the same exit as Richard Talbot.

However, defeat for Whitlam is most unlikely because he will probably cast the open votes in his favour and he’s also got the two per cent being voted by the Road Service arm.

Assuming that 10 per cent of the votes cast are open, I’ll actually be starting 24 per cent behind Whitlam as he’ll be plus 12 and I’ll be minus 12. This makes it very tough but it will be very interesting to strip these figures out and see what the non-aligned shareholders think of all this.

Come on down to Darling Harbour at 4pm on Tuesday to check out what happens.

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