In a land mark victory for shareholders, the board of Southern Cross Broadcasting were forced into an embarrassing withdrawal of an outrageously generous retirement scheme after shareholders threatened to vote it down.
Crikey received only 857,418 votes in favour of his nomination for the board of Southern Cross Broadcasting this morning and the no vote was 21 million, so our primary vote in favour was only 4.1 per cent. Oh well, this one would have been a $165,000 three-year sinecure.
But there was a major victory for shareholders because the board were mightily embarrassed by the withdrawal of the resolution boosting their retirement payouts.
So embarrassed in fact that this was the ASX announcement that went out at 5.51pm last Friday night:
“The Chairman of Southern Cross Broadcasting (Australia) Limited, Mr Geoffrey Crawford-Fish announced that the directors have decided that the business agenda item relating to increasing the Directors’ Retirement Allowances will not be moved as a resolution at the forthcoming Annual General Meeting.
In reviewing the situation, directors decided that in the current environment it was appropriate to consult further with shareholders and advisers.”
So there you have it. Rather than getting rolled by the proxies, they snuck out an announcement to the ASX when no-one would notice. Presumably the three largest shareholders, Deutsche Bank, Perpetual and the Commonwealth Bank had threatened to vote it down.
It really was one of the most scandalous snout in trough exercises I’ve seen for a while.
The remuneration committee comprises chairman Geoffrey Crawford-Fish and company founder John Dahlsen, both of whom are in their late 60s and approaching retirement.
The new retirement package would have seen these two old boys pick up a lump sums equivalent to 5-times their annual fees because they had both served more than eight years on the board.
Even worse was the proposal to increase the maximum payable to non-executive directors from $400,000 to $600,000, which got through relatively comfortably.
Chairman Crawford-Fish took over the reins in March 2000 and saw his annual fees soar from only $57,585 in 1999-2000 to $128,000 in 2000-2001, and presumably is now going to get another increase.
Based on the new retirement deal, he was nominating himself for a package worth $640,000 – and that’s assuming no increase now that the NED maximum has been lifted to $600,000.
Based on the way he stuttered and stammered his way through the meeting and refused to answer questions properly, this former liquidator has to rate as one of the worst chairs of an AGM I’ve ever seen.
And the Fish has some baggage. He was the liquidator who decided to finish the Twin Waters resort near Noosa when Tricontinental’s exposure was only $25 million. It has now turned into the second biggest single bad debt disaster for Trico with losses easily topping $100 million. As liquidator, the Fish should have walked away from the project leaving a great big hole in the ground.
And when I asked the question about why the related party transactions between John Dahlsen and legal firm Corrs Chambers Westgarth weren’t mentioned, the Fish claimed the former long-time partner of Corrs was no longer a consultant to the firm.
That’s funny, Crikey rang the Corrs switchboard after the meeting and asked if John Dahlsen still worked there.
“Yes, he’s a consultant to the corporate advisory division,” the receptionist replied.
Presumably he picks up handy consultancy fees whenever Corrs does the legal work on big deals such as the recent $260 million merger with Telecasters Australia.
For the record, it should be disclosed that Corrs are acting for 3AW program director Steve Price in both a defamation and contempt of court action against Crikey Media and me personally.
After the meeting, Dahlsen wondered over with a puzzled expression on his face and asked: “what are you so angry about? The company is performing outstandingly.”
I think he was serious and explained that I had a long track record of opposing cash for comment such that I was concerned about how the company was making it’s money as well as the amount it was making.
During the meeting, The Fish responded to my speech opposing cash for comment at 2UE by reading from a letter the Australian Broadcasting Authority had supplied that morning confirming that the ABA was not presently investigating anything to do with cash for comment or Southern Cross Broadcasting.
So, clearly they think it is okay for the Penrith Panthers Leagues Club to pay John Laws a six-figure sum each year and for Laws to go soft on the gambling industry, despite the fact NSW has more poker machines per head than any other jurisdiction in the world apart from Nevada.
Southern Cross are to be commended for not unilaterally declaring that there was no vacancy on the board, but what about the way those institutions voted heavily against Crikey and then gave Marina Darling, another ex Corrs person, a yes vote of 99.9 per cent.
Do all of these dopey institutions forget that Marina was one of the GIO directors who cost shareholders more than $1 billion when its reinsurance book exploded. The Fish refused to comment on this saying it was sub judice.
Do they forget that she was one of the directors who recommended against the $5.35 a share takeover from AMP and is now being sued in a class action after the GIO share price subsequently plunged to about $2.50 as the reinsurance disaster became public?
Institutions seem increasingly willing to tackle the pay of directors – witness the surprisingly high 28.4 per cent no vote on the resolution issuing another 200,000 options to CEO Tony Bell – but just can’t bring themselves to actually oppose the re-election of a director.
Given the scandalous nature of the retirement packages put up, the shareholders should have voted against the directors up for re-election as a further protest.
Then again, the company has been a spectacular financial success and is forecasting record profits of $37 million this year.
The snouts in the trough for directors, surging profit and rising share price make it ludicrous that 3AW is demanding to pay even less for the right to broadcast AFL football next year.
The AFL should stick to their guns and demand a much bigger fee as 3AW would instantly tumble down the ratings survey if they lost the football. One of the reasons that 3AW is the most profitable station in the country is the cheap price it pays for football rights. This is all about to change.
Directors with skeletons who win landslide re-election
Now, here is a list of directors with skeletons in their closets who should be getting much lower votes from institutional shareholders than they do:
Maree Callaghan: this civil celebrant is a Labor Party hack and the former mayor of Cessnock who just should not be on the NRMA Insurance Group Ltd board but last year she somehow received 243.1 million shares in favour and only 9.92 million against, a yes vote of 95.4%.
Ken Cowley: He was responsible for Super League and helped send Qantas NZ and PMP into the abyss but Rupert’s discredited long-time Aussie lieutenant still got 1209 million shares in favour and only 1.72 million against at this year’s AGM, a yes vote of 99.9 per cent.
David Crawford: the longest serving BHP director should have suffered for his role in the $7 billion written off since he joined the board in 1994. Instead, he was recently re-elected with 811.25 million shares in favour and 19.24 million against, a yes vote of 97.7 per cent.
Tony Daniels: The former Tubemakers CEO has the triumvirate of duds in Pacific Dunlop, Pasminco and Orica and last year he got another 3 years on Orica with 50.19 million shares in favour and only 2.43 million against, a yes vote of 95.4 per cent.
Marina Darling: despite being one of the GIO directors who resided over the $1 billion loss and is currently embroiled in a class action, Marina was voted back onto the Southern Cross Broadcasting board with 20.53 million shares in favour and only
Ian Webber: Despite sitting on the Pacific Dunlop board since 1991, shareholders recently gave him another 3 years with 211.9 million votes in favour and only 6.47 million against, a yes vote of 96.95 per cent.
Nick Whitlam: After truckloads of information came out about how dodgy and destructive Nick Whitlam was as chairman of the NRMA, the shareholders of NRMA Insurance Group Ltd last year still voted 228.06 million shares in favour and only 23.21 million against, a yes vote of 90.77 per cent. ASIC subsequently took civil action against him for this and is trying to have him banned as a director.
Now, this is the preview we published before the Southern Cross AGM:
Southern Cross demands the cash for comment evidence
Crikey has nominated for the board of Southern Cross Broadcasting as part of our ongoing campaign against cash for comment but the board have censored this out from my platform that was sent to shareholders.
You will remember that SCB bought 2UE and those cash for comment rorters Alan Jones and John Laws earlier this year in a $90 million deal. Crikey has previously stood for the boards of NRMA and Commonwealth Bank on anti-cash for comment platforms and also raised concerns about this appalling practice at AGMs of Colonial, Optus and Qantas.
It was most amusing to receive this fax from SCB company secretary Eddie Chia in late September:
“Dear Mr Mayne
I refer to your nomination for the board of Southern Cross Broadcasting (Australia) Ltd and confirm that your nomination is effective.
On 10 September 2001, I wrote to you requesting details in support of your allegations that John Laws and Alan Jones have so-called “cash for comment” arrangements. Would you kindly provide such details.
Ummm, well this is the link to the findings of the Australian Broadcasting Authority report into cash for comment: http://www.aba.gov.au/what/investigate/commercial_radio/report/html/2ue_codes.html
Eddie will find a reference to 60 breaches of the Commercial Radio Code of Practice for Jones and Laws combined if he cares to look.
And Eddie should not delude himself that cash for comment has been stamped out. Far from it. As a current example I draw Eddie’s attention to the way Jones and Laws have consistently failed to put any pressure on Qantas for its predatory pricing, abuse of power and general pig-headedness in dealing with the Ansett administrator.
The 2UE website states that Jones has just been scaled back to a new 3 year contract with Qantas that says “no services are required to be provided under the contract”.
Presumably this is just a few free first class flights but you should remember that Jones has collected more than $1 million from Qantas over the years. Also, the cash for comment inquiry revealed that one of Jones’s contracts with colorful Sydney developer Lang Walker specified that “no services are required”.
The John Laws situation is a little unclear because the 2UE website says the six-figure contract with Qantas expired on August 31 last year but it remains on the site.
The deal requires Laws “to record radio commercials; voice overs, staff videos and appear at functions. To provide the personal endorsement of John Laws.”
How the hell does SCB think the two most powerful radio shock jocks in the country can properly cover the Ansett debacle when they are both on the Qantas payroll?
Skeletons in the Southern Cross closet
The Southern Cross Broadcasting AGM starts at 11am on November 1 and they have changed the venue from the traditional location at 3AW in Bank St to 60 Park St, South Melbourne.
After all this takeover activity during the year, the board have really got their hands out for more moolah from the shareholders. There is a resolution to increase directors’ retirement payouts such that anyone serving more than 8 years gets a 5 year payout.
The only directors currently in this category are company founder John Dahlsen, chairman Geoffrey Crawford-Fish and Charles Clark.
The scheme was already pretty generous because long-standing chairman and former National Party Minister Peter Nixon walked away with a golden hand-shake of $387,480 in 1999-2000, bringing his total pay to $474,527 when you included his normal chairman’s fees of $85,000.
But not only is the retirment package getting more generous, the board is proposing pay rises with total non-executive director fees set to rise by 50 per cent from $400,000 to $600,000.
So if we assume that chairman Crawford-Fish is going to enjoy a pay rise to $120,000 a year, his golden hand-shake on retiring would be a massive $600,000. This has got to be one of the generous schemes in corporate Australia.
The man delivering most of these profits is CEO Tony “Slasher” Bell, who is lining up for another 200,000 options over shares worth about $4 million.
The board election could be interesting because the Ten Network has sold its 14.9 per cent stake after the merger with Telecasters Australia.
This leaves the share register completely open and you have a board pushing for more cash on a number of levels.
One of the directors who stands to benefit is Marina Darling who struggles for credibility given the GIO skeleton rattling in her closet.
You see Marina, a former senior associate at Corrs Chambers Westgarth, was one of those directors who recommended GIO shareholders reject the $5.35 a share takeover offer from AMP back in 1999-2000.
The share price subsequently plunged, GIO’s reinsurance division copped a $1 billion write-down and disgruntled GIO shareholders who followed the board’s advice launched a class action against the directors, including Marina Darling.
I’m planning to write to the major shareholders pointing out Marina’s baggage and suggesting that they vote against her re-election and in favour of Crikey instead.
If Australia is to ever develop a culture of shareholder pressure and boardroom accountability then people who reside over $1 billion write-downs will not be just waved through for another 3 year term on their other boards.
And if institutional investors have any sense of ethics, they will attempt to clean up the grubby practices of people like Alan Jones and John Laws by punishing their employers who tolerate them in the name of making a fast buck.
Southern Cross’s disclosure practices also seem to have slipped as this year they fail to mention the related party transactions between Corrs Chambers Westgarth and the company. John Dahlsen remains a consultant to the Corrs corporate division and in past years Southern Cross have always disclosed the amount of annual legal fees earnt by Corrs which is this year thought to be more than $500,000.
Finally, we’re in the market for a proxy or two for this meeting and if you also have any general feedback try [email protected]
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