Best reaction yet from shareholders but media get stuck in
The David Jones AGM on December 11 was one of the best of the season in terms of good debate but despite an apparent majority of votes from the floor, only 13 per cent of proxy votes were in Crikey's favour.
This was well short of what was required to knock John "whatever it takes" Coates or Katie Lahey off the DJs board.
The Olympics can-do man got 79.56 million in favour and 3.18 million against; a yes vote of ONLY 96 per cent.
Katie Lahey, the Yorkshire lass who heads the NSW Chamber of Commerce, was far more popular with only 812,000 votes against and 82.21 million votes in favour for a yes vote of 99 per cent.
Chairman Dick Warburton told the meeting he would use the 19.6 million open proxies in favour of Katie and "whatever it takes" but he did not say he would use them against Crikey.
DJs had done their homework. Company secretary John Simmonds had been to three meetings that I'd contested and chairman Dick Warburton and CEO Peter Wilkinson had me in for an hour last week.
This enabled Dick to genuinely tell the meeting they'd checked me out and decided that the incumbents were the best two candidates.
I couldn't agree more but made the point strongly that the existing eight directors should not unilaterally decide how big the board should be.
The DJs constitution allows for 12 directors yet the existing eight still declared there was no vacancy which meant this Crikey board tilt was doomed from the outset.
When addressing the meeting on my election, I openly said that John Coates and Katie Lahey were better candidates. But shareholders should not have been told you have to dump one of them in order to get me elected.
A couple of gossip columnists cottoned onto this aspect of the board speech in a bizarre way.
Check out this item by Kate Askew in the Sydney Morning Herald's CBD gossip Column.
SO WHY BOTHER THE REST OF US?
By Kate Askew
Some self-proclaimed shareholder activists' general meeting antics are coming perilously close to antagonising, if not completely riding roughshod over, the very shareholders they purport to act for.
Standing against Olympics impresario John Coates and business pin-up Katie Lahey for a seat on the board of David Jones was one of these activists, who advised shareholders at yesterday's AGM they would be better off not voting him in.
"Probably the two incumbents are a better choice than me as someone that doesn't have any retail experience," he admitted. "DJs needs someone with retail skills, which is probably not me."
Given this shareholder is there for the benefit of his fellow shareholders - to ask hard questions and gee the board up - we're sure he won't want to be mentioned by name, because then he might be accused of going to all this effort as a publicity stunt.
After chastising Coates and Lahey for their teensy DJs holdings, in a rare show of goodwill the activist said he actually thought the board was doing a good job and praised chairman Dick Warburton for his running of the meeting.
Acknowledging that he had "Buckley's" of winning a board seat, he said he wouldn't waste shareholders' time by going to a formal poll.
One shareholder called out "how many shares has he got, Mr Chairman?", to which the activist deftly replied: "What ever the minimum you've got to have to get the shareholder discount."
And if that wasn't enough, Crikey's replacement as Rear Window editor on the Fin Review, Andrew Burrell, called me a "ratbag activist" in this following column item:
CAPTAIN WARBURTON KEEPS THE GOOD SHIP DJS RIGHT ON COURSE
By Andrew Burrell
AFR Rear Window Editor
The stock is still underwater from the 1995 float, but David Jones shareholders were nonetheless satisfied with their lot at yesterday's AGM in Sydney.
Perhaps they were pacified by the chairmanship of veteran Dick Warburton (who might like to teach a few of his less-capable contemporaries a thing or two about running a meeting in an open, efficient manner.)
Even ratbag activist Stephen Mayne, a candidate for the board, caused little trouble for Warburton, telling shareholders they really shouldn't bother voting for him as the present board was doing a good job.
Mayne did, however, query why the two incumbents seeking re-election, Katie Lahey and John Coates, owned only about $34,000 worth of shares between them, despite pulling in hundreds of thousands in directors' fees in recent years.
A substantial portion of the largely elderly audience might have felt excluded when Warburton announced that the ideal DJs shopper is a woman aged between 35 and 65, who is cash rich and time poor. "I don't know about cash rich but I'm certainly time poor," said Dick, whom we suspect actually has a fair bit tucked under the pillow after such a stellar, handsomely paid career.
The irony of the CBD attack is that DJs chairman Dick Warburton actually told the meeting Crikey's questions were "all extremely good".
They covered things such as a more specific explanation of Olympic trading, the ongoing costs of administering the GST after last year's one-off $18 million hit, more detail on Christmas trading this year which was curiously described by Peter Wilkinson as "different", some commentary on the shareholder discount scheme, questions about the board structure and why finance director Robert Wright was retrenched late last year and several questions about the small shareholdings of some directors and the director shopping discount scheme which ranges between 0 and 35 per cent depending on the item in question.
If the feedback from the board was positive, it was even more so from the shareholders at the meeting, perhaps even the most positive we've ever received.
Despite recommending against myself to shareholders I received what appeared to be a slight majority of votes from the floor.
The press did not report that my proxy vote floundered to just to just 13 per cent of the primary, well shy of the 58 per cent achieved at Woolworths which is performing better than DJs.
This serves to demonstrate that the voting system is the key to any board tilt. If the directors don't recommend against you or say there is no spot, a donkey vote can almost get you over the line.
It was curious that no papers discussed the director discounts issue and a campaign around this can hardly be described as "antagonising" and "riding roughshod" over the interests of shareholders.
The discounts alone are very interesting and more interesting was the board's censorship of Mayne's platform.
Dick Warburton observed that DJs has a better board than you would expect for a company the size of DJs. The recent additions of former Woolworths CEO Reg Clairs and former IBM Australia boss Robert Savage are to be welcomed. This might explain why Dick went through the board one by one explaining what they bring to the company.
The director discounts are probably one of the things that attract good directors so rather than speaking against it, the argument was refined to calling for it to be more fully disclosed.
Chairman Dick never explained why my platform was censored. They told me last week the notice of meeting was restricted to CV material. Says who? ASIC and the ASX really need to work up some guidelines on this.
Clearly the board was sensitive about the shopping entitlement they get of up to 35 per cent on some goods. They were even prepared to be labelled censors to prevent this being distributed to their 65,000 shareholders.
There was not a lot of anger about this at the meeting and both Katie and John Coates refused to personally explain how much director shopping discounts they each get.
I asked both of them to explain their relatively small personal shareholdings but on both occasions chairman Dick answered for them.
However, to his credit the chairman got all candidates to speak for about three minutes explaining what they could bring to the board.
Coatsie got up and talked about all his property and legal experience and managed not to once mention the Olympics. Katie Lahey talked about all the extensive contact she has with government and commerce.
This was certainly better than NRMA where Nick Whitlam did not let the board candidates talk to shareholders.
Whilst I appeared to win the vote on the show of hands by about 55-45, I did not call for a poll because the proxies were so convincingly against me.
However, this meant the 118,000 shares that I held as proxy were not all voted. In the scheme of things this was pretty minor.
Lastly, this is the flyer that was distributed to shareholders before the meeting which demonstrates that any anger had largely dissipated after the meeting Wilkinson and Dick Warburton the previous week. I'd also been told that DJs is one of the best rated companies in terms of corporate governance.
DISCLOSE DIRECTOR PERKS
VOTE FOR STEPHEN MAYNE TO GET DIRECTOR PERKS DISCLOSED
Monday, December 11, 2000
Stephen Mayne, the only external candidate for the David Jones board, is hoping you can help send a message to the directors today.
Stephen is trying to create a greater culture of shareholder pressure and accountability in Australia by standing for several boards to pressure them into improving their corporate practices and performance.
David Jones is still giving their directors shopping discounts averaging about 20 per cent without disclosing the size of the benefit in the annual report. A vote for Stephen would tell the board you want these discounts to be disclosed in more detail.
Stephen met with David Jones CEO Peter Wilkinson and chairman Dick Warburton last week and was generally impressed with the level of disclosure and corporate governance practices across the group.
" I stood for the board on a platform that the director discounts be disclosed but was disappointed when the notice of meeting was censored by the board such that shareholders were not informed of this," Stephen said.
"It seems directors could buy large amounts of goods for their family without any limits or disclosure. Whilst these goods are never sold at a loss to shareholders, there is clearly a benefit conferred to directors."
"However, given the improved financial performance in recent times and the company's high regard on other corporate governance issues, shareholders should think carefully before voting for me given my lack of retail experience."
Mr Mayne said that in most other respects David Jones is heading in the right direction. The board has been strengthened recently with two additions, the most important being former Woolworths CEO Reg Clairs who has given DJs some much-needed retail experience amongst its non-executive directors.
Stephen hopes as many shareholders as possible will ask questions today to keep the pressure on David Jones to further improve their performance. And if a few shareholders vote for me that would be nice but I have absolutely no chance of getting on the board because directors have declared there is no vacancy.
Given that shareholders own the company it would have been preferable if the board had not required that I get more votes than one of the incumbents to win a board seat. David Jones should have followed the lead of Woolworths where a simply majority of votes was sufficient. The shareholders should determine the size of the board.
For further information: www.crikey.com.au
Stephen Mayne: [email protected]