The NRMA appears to have perpetrated a big stitch up on Crikey by using 163 million open votes against us after imploring shareholders to "only tick three boxes".
When it came to the board elections, I got 45 per cent of the primary vote with 60.5 million in favour and 73.2 million against.
However, my primary vote would have been a clear majority had the NRMA Ltd - the road service mutual - not used its 30 million shares against me and in favour of the incumbents.
Given that the board unilaterally decided there was no vacancy for an outsider, my vote would still have been well short of what was needed even without the road service opposing my candidacy with their 30 million shares.
Nick Whitlam finished third of the three incumbents with 228.6 million in favour and 23.2 million against - a primary vote of about 89 per cent. Crikey had to knock off one of the incumbents to get elected because there were four candidates for three spots.
Dodgy use of open proxies by Whitlam
The open proxies sealed my fate with Whitlam using the 63.84 million open votes on his resolution in his favour and the 163 million open votes on my resolution against.
Something strange is going on here. Why were there 100 million more open votes on my resolution than for the other director?
The proxy voting forms were very controversial because they erroneously advised shareholders to only tick three boxes. ASIC forced NRMA to take out ads advising shareholders that this meant only tick the "for" box for three directors.
I suspect that many shareholders have voted in favour of the three incumbents and left my resolution blank. Has the board then decided to deem those votes as open and then used them against me?
Why else would we have the extraordinary situation of only 132 million shares - about 9.5 per cent of the NRMA's total capital - voted for or against me and a massive 163 million shares left open to the chairman's discretion?
David Jones do it properly
I've emailed a David Jones executive asking how they will treat the open proxies at their AGM next Monday and this is what they said in reply:
"In answer to your question below, proxies which have no marks in the boxes "For", "Against" or "Abstain", appointing the Chairman or the Chairman of the Meeting, will be treated as open (undirected) proxies and will be voted by the Chairman as he deems fit.
As there are only two vacancies, if any person votes in regard to 2 candidates and leaves the 3rd box blank, it will be treated as a complete proxy and the blank box will not be deemed open or undirected."
This is exactly what NRMA should have done but I strongly suspect have not. The ASIC should force them to recount the votes and advise the ASX of the outcome.
The ASIC must be getting sick of telling Whitlam and his cronies to start behaving like normal directors of a major public company.
In mid-1999 ASIC threatened court action against the NRMA if Whitlam persisted with his plan to get final sign off from the board on demutualisation shortly before that year's board elections. They also told him to stop breaking the law by talking about share valuations in that year's elections.
Anne Keating's supporter Ernie Page has been telling the NSW Parliament that Pommy ad agency Saatchi & Saatchi got the $3.7 million NRMA ad agency contract this year in return for providing contra work for Whitlam's re-election campaign earlier last year.
For the record, Whitlam first got elected in 1995 when only 8 per cent of members bothered to vote. Closer to 30 per cent voted last year and Whitlam's faction had a 4-1 advantage over its rivals after running an expensive campaign complete with web sites, letter drops and advertising.
In that campaign Whitlam was widely quoting a Macquarie Equities report predicting the shares would be worth about $3.50 and the whole company around $5 billion.
Surprise, surprise, Macquarie was one of the joint lead underwriters for the float and one of their directors, Rowan Ross, has now joined Whitlam on the NRMA Insurance board.
NRMA uses Macquarie Equities for a lot of their funds management operations so you can guess which way Macquarie's funds management businesses would have voted in the board elections.
One of the great gravy trains
One of the many questions that Whitlam threw to his management deputies concerned the cost of the entire demutualisation process.
One of his managers got up and spelled out all these different amounts which totalled a whopping $125 million. What an amazing waste of money? Whitlam and his cronies have just been dishing out the members' capital like there is no tomorrow. Is it any wonder the stock price is wallowing below $3 when CS First Boston was promising it would be closer to $4 in their initial report.
The recipients of this largesse included the likes of Macquarie Bank, CS First Boston, PriceWaterhouseCoopers, Malleson Stephen Jacques, Corrs Chambers Westgarth, UBS Warburg, Tom Bathurst QC, Ricahrd McHugh QC and the PR agency Cannings.
Stooges were ever-present at the meeting. Jeff Brunsden, until recently of UBS Warburg, got up and spoke warmly in favour of the resolution that would see directors take some of their pay in shares. Was that almost $10 million for the Warburglers from NRMA was it?
This reminded Crikey of when Brunsden's former boss at UBS Warburg, Gordon Dickinson, stood up at the AMP AGM earlier this year and said Paul Batchelor's options were just fine.
With friends in the funds management game like these, my candidacy for the NRMA board was always doomed.
But as I told the meeting, it was pretty ordinary of the board to defeat my election with the use of affiliated votes and questionable open proxies without even discussing the candidacy with me.
Vote for Crikey, not Labor hacks
Usually I get up at meetings and say that the other candidates are better and shareholders should vote against me. But in the case of NRMA one of the candidates was the former Labor mayor of Cessnock and civil celebrant Maree Callaghan who has been on the board since 1991 and would appear to know very little about the insurance and financial services game.
Maree switched from being anti-float to voting in favour early in 1999, therefore breaking the 8-8 board deadlock and giving Whitlam's pro-float faction a 9-7 lead.
I'm very suspicious about what deal she was given in exchange for her vote. Perhaps it was the promise of a three year tenure on the NRMA Insurance Group Ltd board which paid a very handy $95,000 for the civil celebrant last year.
If this Labor party number cruncher was any good she'd at least have stood up and explained to the meeting what she'd bring to the board when I criticised her.
NRMA better without Whitlam
Similarly, Nick Whitlam is such an expensive chairman and such a destructive force that voting him off the board would have been good for the organisation and removed the "Whitlam discount" from the share price.
Whitlam has taken more than $1 million out of the organisation so far. There was $200,000 in 1998-99, a cool $500,000 last year and he told the meeting there'll be $300,000 this year. He went to last year's Davos gab-fest in Swtizerland with his wife this year at a cost of $30,000 to the NRMA and will be going again early in the new year.
If Whitlam was any good he would not have had to continually call on different senior managers to answer questions because he did not know the answers. A decent chairman such as John Ralph always gets right across his subject and handles most of the questions himself. Not Nick Whitlam.
Even Tilburn got a cheer
The meeting dragged on for almost five hours and there were many amusing exchanges. Jack Tilburn was as popular as he'll ever be and even pumped the air several times on his way back to his seat as the crowd cheered.
Unfortunately Jack overstepped the mark and was one of several people to try for some lame points of orders when remuneration consultant John Egan stood up to defend his own recommendation of Eric Dodd's one million largely free shares.
Big Jack grabbed the microphone off Egan and was screaming into his face that he shouldn't be talking. Why the hell not Jack? This was bloke who is an expert on executive pay and was prepared to stand up and explain himself.
I got up and congratulated Egan for having the courage to speak but then reached into the skeleton closet and pointed out that he was the same "independent" pay expert who said it was okay to give George "grab all" Trumbull one million AMP shares which were worth $23 million after the first day's trading.
This was the most extravagant pay deal ever propagated in Australia and when you consider what a disaster Trumbull was, Egan is a brave man to stick his head up at rival insurer NRMA and say Eric "the rhino" Dodd deserve one million freebies too.
Whitlam's mea culpa
Not surprisingly, Whitlam did a mea culpa on the dodgy 1998 vote which saw him not sign proxies voted against a resolution for a collective $190,000 rise in fees for directors.
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 has refused to release the video of the incident to the media or interested parties and reassured shareholders that the board had "at all times behaved legally and ethically in our acts on behalf of shareholders".
He did admit a mistake and said the board took "immediate corrective action".
Still, it remains incredible that this sort of thing goes on in corporate Australia.
The other great revelation that Pam Williams revealed in the Fin Review concerned Whitlam's proposed options package to get 50 per cent of what CEO Eric Dodd was getting.
This was rejected by John Egan but leaked draft board minutes show that the options had been approved. Who produced these inaccurate minutes?
Platform censorship another NRMA offence
Whilst the ballot paper confusion was disappointing, the censorship of my platform was a lot more disconcerting. The board decided that the following statement was defamatory and shouldn't be sent to NRMA's 1.6 million shareholders:
"Mr Mayne also believes the ongoing commercial relationship between the NRMA and broadcaster John Laws is inappropriate and should be terminated immediately."
Whitlam got Eric Dodd to defend the deals by saying that they were not in breach of the ABA guidelines and that the NRMA got terrific value. Yeah terrific Eric. You pay him 500k and Laws doesn't bag Whitlam, the float or your options. You've bought his silence pal and that is downright grubby.
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'.
Vote against passive funds management
Opposing cash for comment was half the platform but shareholders only saw the other half on the notice of meeting which talked about the need for Australia to have a greater culture of shareholder pressure.
The NRMA manages $8 billion 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.
When asked about this, Whitlam merely said that NRMA have a policy of always voting through its funds management division.
See you at Liberty One Nick
That's all for now. Two kind readers have offered their LibertyOne proxies so we'll give Nick Whitlam the send off he deserves at the EGM on November 22 in Sydney.
The son of Gough really does not have a good track record - just look at the $1 million he's lost in Liberty One.
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.
From what we've seen he shouldn't be there so we'll probably have another crack at the board next year when some other Labor party hacks or insurance novices will be up for re-election.