We’ve got a long way to go before a true culture of shareholder pressure is created in Australia if yesterday’s pathetically compliant PBL and ecorp AGMs are anything to go by.

Looking, sounding and smelling every bit the bloke who had three hours sleep and far too much beer the night before, I sat through the ecorp AGM in silence, mentally firing up for the big one. ecorp is not setting the world on fire, but the directors were optimistic and its main businesses Ninemsn. EBay, Wizard and Ticketek – were all moving towards profitability.

It was a fairly uneventful AGM except for a couple of issues. The first was that there were no questions on the accounts. For a company that has performed poorly financially, it is incomprehensible that shareholders would not raise criticism at the AGM and I couldn’t because the Mayne man had failed to get me a proxy.

The second eyebrow-raiser was the vote on a proposal to reduce the exercise price of options held by new CEO Alison Deans. (Acting) Chairman Peter Yates explained that this was necessary because, at their current exercise price, the options failed in their two objectives to provide a performance incentive and to adequately remunerate the CEO. After the show of hands, this observer was quite surprised that Yates said “I declare the motion passed” when it appeared the vote was a close call. A shareholder asked for a re-count and it turned out that the vote was 21 for and 30 against! The result was already decided by proxies anyway, so when put to a poll the “for” vote prevailed, but it was cheeky of Yates to try to slip this one past the sentry.

Although Crikey usually rails against obscene executive remuneration, this was probably a fair proposal. There is no point in the CEO having which they will never exercise because the strike price is too high.

The very tame meeting was all over in 40 minutes. The only voice of dissent was a shareholder questioning why executive salaries rose when the company made a loss. Outgoing Chairman Daniel Petre explained that these were calculated by reference to the company’s performance against targets and analysts’ forecasts. But if the company has a poor result and executive salaries go up, hasn’t the bar been set too low?

Hoping for some more fireworks at PBL, I came armed with plenty of questions and was confident that the shareholders would be all over James after OneTel. How sadly disappointing it was.

Aside from OneTel, PBL’s business was pretty sound in 2001. But you can’t have a $375 million write off without some recriminations.

Yours truly was one of only two in the meeting to raise a question about OneTel and there wasn’t the shareholder vitriol that has been seen at recent AGMs where companies have fronted their constituents after one-off disasters (e.g. AGL, Coates Hire).

In his all-to-brief Chairman’s address, James mentioned that he had apologised for OneTel at the time of the write off and he repeated that apology again today. He mentioned that it should be viewed in the context of the company seeking to develop new opportunities. But notwithstanding this welcome contrition, surely shareholders would have been rankled by the disastrous investment?

Not so.

Big Kerry was looking to be in reasonable health but despite having two hearing aids had a bit of trouble hearing questions from the floor. The KP razor sharp wit was still there though. After a shareholder prefaced a question with “most shareholders would be unhappy with the result”, Big Kerry chimed in with “you mean there are some shareholders who are happy with the result?!” After the meeting passed a motion to grant a package of shares to CEO Peter Yates, KP quipped “Let’s hope he makes a fortune out of it!”

Crikey’s operative opened up with a question on the termination payout to Nick Falloon ($3 million on top of his salary of almost $2 million). While noting that the Packers once again had set a commendable example to their rivals such as the Murdochs and the Lowys by not taking a salary out of PBL, the payout to Falloon seemed excessive given the ordinary result for the year. James noted that Falloon had been an employee for some years and had contributed considerably to the growth of the group over those years, and the $3 million was reasonable in that context.

An ASA representative asked whether the OneTel losses had been fully accounted for or whether there were more nasties lurking. James confirmed that all potential OneTel losses had been brought to account.

After a few more questions, the meeting seemed to be coming to an unexpectedly quick conclusion so I hopped to my feet and rattled off a series of questions to drag the meeting out to a painful half-hour. The issues we canvassed were:

* Channel 9’s A Current Affair is big on bank bashing and talking up the banks’ community service obligations, but we don’t hear much about Crown’s community service obligations and what they do to ameliorate the problem of excess gambling. I pointed to the fact that a company such as Fosters is required to commit a certain amount to dealing with excessive drinking and queried whether there were similar obligations on Crown. James trotted out a number of stats about how Crown was contributing to the community a billion dollars in Victorian state taxes, 6,000 employees etc etc and also made mention of the fact that Crown was trading at a loss, so it wasn’t exactly profiteering on the misery of others. Big Kerry also piped up that Fosters has more pokies than Crown. But the fact is that gambling businesses are a license to print money, so why shouldn’t they pump more back into the community?

* I cheekily asked Big Kerry whether his opinion before the 1998 election that “Labor needs a few more years in the wilderness” still holds. He laughingly said “no comment” and that it was not appropriate for him to comment. I mentioned that he hadn’t been shy about it in the past but had no luck in extracting anything controversial today!

I then turned on a spiel about OneTel, first thanking James for his contrition in again apologising to shareholders at the AGM and agreeing that the company must take risks and invest in new areas to grow the business. My qualm was that at the time and as has been proven in retrospect the company was fundamentally flawed (no earnings, bad business plan etc). It seemed that the only reason why PBL invested was that it was caught up in the dot.com hype rather than standing its ground and defying the irrational market forces. James again agreed that it was a mistake and said the company would now be making sure that investments were cash flow positive before taking the plunge. Fair enough that the company has to take risks to expand, but you don’t throw $375 million at a turkey. Surely a more modest investment is appropriate in riskier ventures.

After all that, I couldn’t get even a little bit of aggro into the meeting, which was disappointing and a sad indictment on PBL shareholders that they weren’t up in arms at their AGM when the company has written off a $375 million investment during the year. Do they care that their money has been blown like that?

The Packers have run roughshod over competitors and Governments for years and it seems they’ve cultivated a timid and compliant shareholder group as well. Perhaps someone might want to gift some shares to Jack Tilburn to up the ante at future AGMs?

But perhaps the continued probing by your Crikey operative did have James flustered. After discussion on the accounts had finished, James went straight on to the next piece of official business, re-election of Directors, without calling for a vote on the accounts. This seemed highly unusual but nobody seemed to pull James up. Perhaps there is a reason why there was no vote on the accounts, but we’d hate to see the accounts sitting in limbo and an AGM having to be re-convened! In true Crikey fashion, I’ll take the credit for softening James up and inducing the false shot.

James, Big Kerry and Sir Laurence Muir were all re-elected unanimously, except for your Crikey correspondent voting his proxy against the younger Packer. Well, the bloke still should cop a bit more flak about OneTel.

In fairness, OneTel is James’ first disaster while at the helm and for now can be viewed as an aberration. Any more though, and heads on platters should be the order of the day.

But the meeting was all over in an incredibly short 30 minutes. Having sat through some marathon AGMs recently and listened to some garbage from various soap box addicts, a short AGM was welcome relief. But a disaster as big as OneTel should not go unpunished, and the least shareholders can do is make the Board squirm through an arduous AGM at least once.

After the meeting, James and I had a “kiss-and-makeup” photo shoot for the assembled press and he asked “you’re with Stephen, are you?”. Obviously the Packers were well briefed by all those PBL executives who subscribe to Crikey.

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Peter Fray

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