In a first for corporate Australia, Woolworths were forced to use open proxies to overturn a majority vote in favour of Crikey’s election to the retailer’s board. Read on to see what happened and the response from company secretary Rohan Jeffs.
Believe it or not, but a majority of Woolworths shares were voted in my favour on November 21 at the AGM at the Sydney town hall.
And because the board had said there was a vacancy for an outside candidate, that should have meant I was elected.
But two things conspired to stop this from happening in spite of 122 million shares worth about $1 billion being voted in my favour and 101 million shares being voted against me.
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Firstly, the board resolved to vote the open proxies against me and thus defeat the resolution. This left the final proxy vote at 44 per cent in favour and 56 per cent against.
But when I chatted to the company secretary after the meeting, he tried to claim the open votes were never actually voted because the resolution was defeated by a show of hands from the floor.
This show of hands was decidedly questionable. From where I sat it looked like about 50-50. Chairman John Dahlsen took about 10 seconds to count the yes votes and about 30 seconds to count the no vote.
If crazy Jack Tilburn hadn’t got up and spoken in favour of my election there is every chance I’d have received a clear majority of the vote from the floor.
The company secretary claims that an incredibly efficient team of 12 auditors actually counted the votes and we look forward to being advised what the vote actually was because he claims to have it precisely.
Because no-one called for a poll from the floor, the resolution did not go to a poll so none of the people at the meeting actually had their total shareholdings cast.
I for one held proxies from 60 different people for more than 100,000 shares but did not get to vote them in my favour.
In any case, we have a corporate first from this exercise. Incumbent directors were actually forced to over-ride the will of the majority of shares cast to vote down an external candidate.
This raises questions about what directors should do with open proxies. Chairman John Dahlsen does not like Crikey because of various things I’ve said publicly over the past 15 months about his role in neutering the former Victorian auditor-general Ches Baragwanath.
As I told the meeting, Dahlsen is a powerbroker behind 3AW in Melbourne which was a key part of Kennett’s political powerbase in Victoria through their sustained pro-Liberal bias over seven years. This dubious relationship contributed to the share price of Southern Cross Broadcasting rising 10-fold over the course of the Kennett government – a performance that has seen Dahlsen profit to the tune of about $5 million from his personal shareholding.
For this reason alone Dahlsen should not have taken on the Auditor-General review panel role for Kennett. If you then add the fact that the Sandridge Development company, which he was a director of, suffered at the hands of a scathing report from the Auditor-General, you have an even more compelling argument.
And what about Kennett’s introduction of 24-hour retailing in Victoria? That benefitted Woolworths and Dahlsen substantially – so much so that Dahlsen should not have then agreed to do Kennett’s dirty work in silencing his biggest public critic.
Given all of this, should Dahlsen and his fellow directors directed open proxies in favour of themselves and against someone who is not a member of the old boys network.
As I told the meeting, the nomination of the committee of the board should at the very least have consulted with me about what I could bring to the board.
Dahlsen read out a statement saying that the board already had the right mix of skills. Surely they should have interviewed someone who was backed by a majority of voted shares before unilaterally deciding to use open proxies against him.
That said, I’m still very surprised to have received such a large vote at Woolworths because the notice of meeting did not contain any specific platform.
Apart from concerns about his Auditor-General role, my other concerns about Dahlsen surrounded his continuing directorship at ANZ when Woolworths has the burgeoning Ezybanking joint venture with the Commonwealth Bank. Similarly, his other small conflict of interest surrounds the ownership by his family of 14 hardware and roof truss stores that compete with Woolies on a few products.
Dahlsen called me about these issues before the meeting and put up some good arguments which I related to the meeting.
This made my candidacy marginal to say the least. Afterall, the stock is performing brilliantly and the share price has risen 75 per cent this year to a record high of $8 a share. The board is pretty strong so no-one really has any grievances to run against the incumbents.
Maybe there was an element of donkey vote in there and a few institutions voted in my favour because the board did not tell them to oppose me or say that there was no spot on the board.
Woolworths should be commended for being the only company this season not to arrogantly over-ride its constitution and tell shareholders how many spots on the board are available.
They acknowledged that this should be a matter for the shareholders within the constraints of the company’s constitution.
Woolies were right to say that the constitution allows for 12 directors and given that there are only 10 directors at the moment, the shareholders could decide for themselves.
Compare this with Westpac which is proposing an amendment to its constitution at the upcoming AGM on December 15 which will allow them to declare there are no vacancies even the constitutional limit of 15 directors has not been filled. One suspects that Westpac is doing this to avoid a Woolworths-style situation. They will now be like most other companies and declare that there are only as many vacancies as there are incumbents standing.
The Woolworths meeting as a whole dragged on for four hours but was quite informative. While there were a few trolley issues raised, the standard of questioning was far better than the pathetic performance at Telstra, which was probably the worst meeting I’ve ever been to for quality debate.
Jack Tilburn aside, Melbourne has more eccentric shareholders than Sydney and they were all on display at Telstra.
From Crikey’s perspective, it was good to very publicly reveal the dodgy tactics that Westfield and bogus campaign man Ken Hooper used against Woolworths to stifle its Five Docks and Granville developments in Sydney.
Neither CEO Roger Corbett or chairman Dahlsen would bite on this one saying that with litigation pending it was inappropriate to comment.
Let’s hope Woolies sue Westfield in the public arena to stamp out this practice of bogus campaigning once and for all.
It is very interesting that Woolworths has a policy of making no political donations to councils or political parties. Westfield have no such policy and over the years have been large big donors to the Labor Party in NSW.
Is it any wonder that one of the controversial Woolies projects was rejected by a Labor Minister at state level and the other was defeated by one vote on the council.
It was amazing to see Keating’s former adviser Mark Ryan, who now works for Westfield, being quoted in the Weekend Australian saying Crikey’s questions at the Westfield AGM were “am abuse of due process”.
What a hypocrite. This is a company that runs bogus community campaigns and has ex Labor politicians like Stephen Loosely and Neville Wran on the payroll to fix up their problems.
As I told the meeting, the big worry is that Woolies will sweep it under the carpet as part of some broader settlement with Westfield which might involve some cheaper rent deals in other parts of the country.
In a PR and a legal sense, Woolies have Westfield over a barrel so let’s hope they give them the public spanking they deserve.
Woolies have a reputation for being squeaky clean so their handling of this issue is being closely watched.
Kerry Packer is also closely watching the retailer after lobbing a $20 million writ against them after he backed a buyout of the Rochmans fashion chain for $40 million.
Dahlsen admitted Woolies have made a small provision against this but hopefully they won’t have to take the chain back which we suspect Packer bought to give Jodie Meares a bigger platform for her swimwear range.
Crikey suspects this purchase had something to do with Jodie Packer’s swim suit aspirations but it has all turned pear-shaped and Dahlsen admitted Woolworths have made a small provision in the accounts for the pending litigation with Packer.
ends Woolies company secretary responds
Dear Mr. Mayne,
I have read with interest your ” Crikey. Com” item dated November, 21, 6pm.
There are a number of inaccurate and I believe misleading statements in this report which should be corrected for the record. I would then request that future published comments by you are accurate and reflect the matters set out below.
Firstly, the claim that ” a majority of shares were voted in your favour at the AGM ” is wrong. As I explained to you after the meeting (following your comments at the meeting which indicated to me you had not understood the voting process) the only vote that was taken on this resolution was on a show of hands as required by the Company’s Constitution. It is only if a poll is demanded in accordance with the Constitution, that proxies are voted.
You also state that the ” board resolved to vote the open proxies against (you) and thus defeat the resolution”. The resolution was not defeated by the proxies but by the shareholders voting at the meeting.
Your comment that ” the show of hands was decidedly questionable” is contrary to the advice of the Partner at the Auditor firm who was appointed as scrutineer for all voting and whom the Chairman called upon to indicate the count on a show of hands.
You also state that “none of the people at the meeting had their total shareholdings cast”. As advised, the Company’s Constitution requires a vote on a show of hands which entitles every shareholder present, in person or by proxy, to a vote. If you or any other shareholder wished to have all shareholdings counted, a poll could have been called. This was not done by any of the shareholders present.
Also your statement: ” Incumbent directors were actually forced to over-ride the will of the majority of shares cast to vote down an external candidate “is again both incorrect and misleading. The open proxies were not voted by the Directors and therefore did not participate in deciding the outcome of the resolution. The “will of the majority of shares” was never called upon in the form of a poll. If a poll had been called, as advised to the meeting, the Chairman and Board would have cast their ” open ” proxies against the resolution., It is worth noting that you supported the Board’s position in not endorsing your candidature when you stated at the meeting: ” ….the Chairman’s advice not to vote for me I would agree with as the best advice in the circumstances………”
The purpose of the above is to, simply correct the record on the manner in which the resolution proposing your election was determined. I had hoped that my explanation following the AGM had been sufficiently clear. It obviously was not. The above should satisfy you that it was the will of the majority of shareholders at the AGM who decided the outcome of your nomination, in an open, fair and democratic manner which is how Woolworths always seeks to deal with such matters.
Woolworths Comany Secretary
Crikey always gets the final word on his own website
Rohan’s claims might be technically correct, but the fact of the matter is that chairman John Dahlsen did not explain these voting procedures properly to the meeting.
If Rohan’s argument were sustainable, Dahlsen would have said the following to the meeting.
“Now here are the proxies for this resolution. As you can see, Stephen Mayne has received a majority of 55 per cent of the primary vote with 122 million votes in favour and 101 million votes against. There are 36 million open proxies which the board have resolved to vote against Mr Mayne which would bring his overall vote down to 47 per cent and see the resolution defeated. The resolution can be decided on a show of hands however you should be aware that if it is passed on a show of hands the board will request that it goes to a poll and then attempt to defeat the resolution by using the open proxies against it. We have not discussed any of this with Mr Mayne but you should be aware that if it is defeated on a show of hands it will only go to a poll if a shareholder requests this because the board will not request it.”
We’re all in new territory when it comes to corporate democracy and whilst Woolworths is to be commended for the way it allowed shareholders to decide on how many and which directors they wanted, the explanation of the voting procedure should have been much clearer.