Crikey’s primary vote plunge from 45 per cent to almost 10 per cent at this year’s AGM but Anne Keating posted arguably the lowest yes vote for an incumbent director in Australian corporate history.

In his debut Chairman’s address, Strong highlighted his reasons for taking on the job as being NRMA’s sound business with a promising future, and his determination to be a part of growing the company. His thoughts on corporate governance and management something that outsiders might think has been seriously lacking at the NRMA under Strong’s predecessor were that best results were achieved if the company cultivated positive relationships within the company, and with customers and staff.

Strong’s wrap of the company’s financial performance for the year noted that the insurance business’s profits increased by 91% during the year, written premiums increased 21% to $3.2 billion, and the company completed a successful share buy-back during the year. But the one sore point was the company’s losses on equity investments thanks to the poor performance of equity markets during the 2001 year, a factor which he noted will only be exacerbated by the events of September 11.

Strong also mentioned that the company’s acrimonious de-mutualisation litigation, an unseemly spat between the company and former director Richard Talbot, had been settled during the year at a cost of $25 million.

Strong ended by saying that the company’s core business was on target to deliver another strong performance, but weak equity markets will again have a negative impact on profitability in 2002.

Acting CEO Ian Brown and proposed CEO Michael Hawker each had a chance to address shareholders, with Hawker particularly impressing with his penchant for referring to himself in the third person. “Let me give you a few insights into Michael Hawker, 05” These insights included that he had represented ‘Straaaaya on the sporting field (the Australian Rugby Union Wallabies, no less), he was a passionate ‘Straaaayan, and showed his commitment to the company by purchasing 100,000 shares. Maaaaaaaate. Hawker got plenty of applause when he noted that his job was “all about increasing shareholder return, but not at the expense of customer service, employee morale and social obligations. In fact, it means the opposite.”

Half an hour into the meeting, and it was “game on” with question time.

First up, our old favourite, Crazy Jack Tilburn. A heckler from the crowd implored Crazy Jack to “go easy on him, he’s only new”.

CJ started off by noting that he and Mr Strong “have not seen eye to eye”. Really?! But the shareholder who won’t be silenced was “very pleased that Mr Strong is not the re-incarnation of Mr Whitlam”. So were plenty of other shareholders, judging by the round of applause that this comment inspired.

Jack was “quite disappointed with the Annual Report the Bible” (really?!) and had a few questions about why retained profits had been shunted to Note 32, why it wasn’t disclosed on a particular page as to whom a retirement payout had been made to (Eric Dodd) and whether this was indicative of NRMA’s lack of ethics and morals. Jack’s first issue was explained on the basis that the accounts were prepared in accordance with accounting standards, while it was pointed out that the termination payments was identified elsewhere in the accounts as being made to Dodd.

Jack then turned his thoughts to the Contingencies Note in the accounts, where “there is always some ongoing soap opera”. Jack asked what had happened to the High Court appeal on the de-mutualisation case, but Chairman Strong politely repeated his earlier comments that this had been settled at a cost of $25 million.

Jack then turned to the SMH/Age “Good Reputation” index, which has provided him plenty of fodder over previous AGMs, and which he again relied upon to demonstrate the company’s lack of leadership, ethics and morals. He noted the NRMA’s poor overall ranking of 30 out of 100 and then rattled off their ranking in each category: employee management 21; environment 31; social impact 29; ethics 35; financial 76; market position 23.

Chairman Strong joked that “Mr Hawker’s going to fix them all”, to which Crazy Jack replied “pull the other leg”.

Strong noted the many questions surrounding the methodology applied to arrive at the rankings. But instead of dismissing the index out of hand, he commendably noted that the company has room for improvement and that he hoped shareholders got the impression from himself and Hawker that they were determined to improve the company’s ranking.

But after 15 minutes of having the blowtorch applied to the belly by the Corporate Terminator, Strong emerged unscathed from his gruelling interrogation. Strong deflected CJ’s flurry of jabs quite well, but had the advantage of being a clean-skin as far as NRMA’s 2001 performance is concerned, so CJ couldn’t really nail his adversary on the many controversies that plagued the company in 2001.

By his high standards, it was a pretty subdued performance by Crazy Jack especially given that he had a target that had presented itself plenty of times during the year so obviously the medication had kicked in today.

The chairman was then subjected to fairly intense scrutiny, which he fielded patiently over an hour and a quarter, some of which was solid criticism, on a couple of occasions though it was just mind-numbing waffle.

Some of the better points were:

– The prospectus claimed that there would be no premium increases as a result of de-mutualisation, yet some motor vehicle premiums had risen 30%. Strong indicated that detailed representations had been made to various regulatory authorities that the premium increases were caused by factors other than de-mutualisation, and average increase were not nearly as high as 30%. (Some premiums had in fact gone down.)

– Profitability was around $100 million shy of the prospectus. Strong repeated earlier comments that it was hard to forecast profitability. Acting CEO Ian Brown noted that profitability was about $3 million in the first half of the year and around $147 million for the second half. The poor first half result was caused mainly by the dive in equity markets.

– The Chairman was quizzed on the financial terms between the NRMA Insurance company and the motoring association and whether an estimate of “cost plus 5% mark-up” was in the ball park. Strong didn’t go into specifics on whether that was accurate.

– A shareholder noted that Current Liabilities were greater than Current Assets and wondered if this was good corporate governance. CFO George Venardos explained that this outcome was a function of their business their claims liabilities have a duration of 3 years so they must have matching non-current assets. This outcome was in line with their risk management policies.

– A shareholder questioned why Citicorp appeared in the top 20 shareholders 7 times, why couldn’t this be consolidated into one entry and who would be the next six shareholders to appear on the list. Investor Relations General Manager, Anne O’Driscoll, said that Citicorp had different groups of beneficial shareholders and the shares for each of these groups were owned through different nominee companies, hence the multiple listing.

– A disaffected shareholder who had his own sour experience asked what the company was doing to ensure genuine claims were all being paid. Acting CEO Ian Brown said that they were doing their utmost to ensure all fair claims were being paid out quickly and in full.

The ASA also wheeled out the big guns, with chairman Ted Rofe asking a question about the note indicating that certain amounts “may become payable” to naughty Nicky Whitlam. Rofe joked that as a lawyer, Strong would be familiar with the term “expressio unius est exclusio est alterius” (the express mention of one is to the exclusion of the other) and therefore they don’t seem to have closed the book on payments to Whitlam.

Strong quipped that he used the phrase with his kids every day, but said there is no accrual of amounts in favour of Mr Whitlam (or any director for that matter). Perhaps before making such claims in the future Rofe might do well to remember the expression “abundans cautela non nocet”.

Rofe also noted the company’s share sale plan for shareholders who owned less than a marketable parcel and wondered whether the company could also have a share purchase plan so small shareholder could get up to a marketable parcel. Strong said the company would give it a geek.

Amid all of this insightful probing by shareholders, there had to be the obligatory fruitcake and the obligatory soapbox monopolist with no meaningful question.

A Mr Manson took at least 5 minutes and then some to ask a question about whether the resolutions to be held in the AGM and the Special Meeting which would immediately follow the AGM were in breach of the Corporations Law. Mr Manson “I’m an engineer (long retired obviously), not an LLB” – said he “bought the Corporations Law in its entirety, read through the whole lot of it” and couldn’t see anything in the Corps Law that allowed the company to pass the resolutions that it intended.

After several exchanges with Chairman Strong, none of the esteemed Directors nor anyone in the auditorium could get a handle on what Mr Manson’s point of illegality was. After spending more than enough time trying to decipher Mr Manson’s cryptic message, Strong gave up and suggested he get a company representative to talk to him after the meeting. Whoever gets that gig must have been a very naughty boy or girl.

The record for most time spent going absolutely nowhere went to a former NRMA director David Parker, who from a lengthy exchange with the Chairman we gathered was a long-time opponent of the de-mutualisation. It all started off well with his opening remarks that the “meeting was very well attended because of great unease caused by the fact that the company was never out of the press”. He then rambled on for a while before his comments that the de-mutualisation Information Memorandum was misleading and deceptive and the resolution to de-mutualise was procured by this misleading and deceptive document.

Strong pulled him up at this point and noted the country’s defamation laws, but our man continued on undeterred. Strong challenged him after a good five minutes of grandstanding to ask his question, but after several opportunities, none was forthcoming, just more of a whinge about the de-mutualisation. Strong rightly pointed out that this was done and dusted and that nothing could be achieved at the AGM to address Nosey Parker’s qualms and then, sensing support from shareholders, asked for an indication whether the meeting supported his move to silence Mr Parker. A not-surprising rousing cheer followed.

Next was the resolution to vote 8 candidates into 5 Board positions. The Mayne Man was one of 3 external board candidates, and while none had a chance of winning, all three struck a chord with the shareholders in attendance for various points.

I read out a prepared statement on behalf of the absent Mayne Man, who came up with some lame excuse about not being able to get through to QANTAS to re-arrange his flight details. Yeah, right pal as if anyone is kept on hold by QANTAS for six hours! (Ed – You’re sacked you cheeky recalcitrant)

Unfortunately I was just running into a sore throat and the voice was a bit croaky so thankfully a couple of cheers from the audience gave this speaker a chance to clear the larynx. The speech in its entirety is re-printed below, but the parts which really got shareholders on side were:

“The NRMA needs to untangle itself from the right wing faction of the NSW Labor Party and removing these two directors (Anne Keating and Mary Easson) will go a long way to achieving this”; and

“A vote for Stephen will tell the NRMA board you want them to more vigorously manage our investment funds by rooting out bad directors and voting against excessive executive packages”.

Unfortunately there was no show of hands on the vote for Directors so it was impossible to tell how much the average punters out there warmed to the external candidates, which was unfortunate because there was obviously a fair bit of support.

Ted Rofe said that the ASA would be supporting the incumbents and “hoped that Mr Mayne was not offended” but he thought the Mayne Man has a more important role to play which isn’t served by joining the “fat cigar and long lunch” clique.

On to another question, and the Computershare lacky doing microphone introductions started off on a polite spiel but Chairman Strong interrupted with “I don’t need any introduction to Mr Tilburn”. Jack said “thank you for recognising me Mr Strong I’m not in my usual $2,000 Armani suit today” and that he’d already put an “X” in the against box for Anne Keating before launching into a long spray against her candidature.

I knew things weren’t looking terribly bright for the Mayne Man when Jack seconded the motion when will the instos listen to the voice or reason? and the proxies that were revealed by the Chairman during the meeting (which were the preliminary proxies) told a depressing story. Excluding abstaining voters and open proxies, our man only managed 29 million for and 246 million against a disappointing 10.5% in favour. The other external candidates fared only marginally better, getting 12.8% in favour and 13.8% in favour respectively.

But the big story from the meeting was the huge no vote cast against Anne Keating. With 209 million votes for and 73.6 million votes against, her for vote of “only” 74% would have to be about the worst performance by an incumbent director in Australian corporate history it’s certainly nowhere near the 98% plus that we’re accustomed to seeing.

Perhaps instos are railing against under-performing directors. More likely this was a case of the motoring organisation voting their shares against Keating.

In any event, it was encouraging to see a Board member being held at least somewhat accountable at the ballot box.


Here’s what was read on Stephen’s behalf in support of his spectacularly unsuccessful candidature:

Thank you chairman, my name is Neal Woolrich and I’m here to speak on behalf of Stephen Mayne who sends his apologies after being messed around by Qantas on the flights to get up from Melbourne. I’m sure no customers spent 6 hours on hold when you were CEO of Qantas, Mr Chairman.

Stephen stood for the board last year and got 45 per cent of the primary vote whilst Nick Whitlam got 90 per cent in spite of the controversy surrounding him.

The platform last year included opposition to the NRMA’s ongoing cash for comment arrangement with John Laws and Stephen is pleased that this contract was not renewed when it expired on June 30.

However, it remains Stephen’s firm belief that the NRMA Insurance Group Ltd board should not have any common directors with the road service mutual, especially now that litigation has broken out between the two.

And given all the factional history, he is specifically offering himself as an alternative to Anne Keating and Mary Easson, two directors of the mutual who seek re-election today.

The NRMA needs to untangle itself from the right wing faction of the NSW Labor Party and removing these two directors will go a long way towards achieving this.

Stephen also believes that institutions like the NRMA should become far more active as shareholders and should ask questions at dozens of annual meetings each year.

Australia needs to develop a greater culture of shareholder pressure and institutional silence is one of the biggest obstacles standing in the way of this.

A vote for Stephen will tell the NRMA board you want them to more vigorously manage our investment funds by rooting out bad directors and voting against excessive executive packages.

In terms of what he would bring to the board, Stephen has strong personal knowledge of the insurance industry as he has spent 12 years as a business journalist including a year as the insurance writer on the Melbourne Age.

When working as a press secretary for Jeff Kennett, he had specific responsibility for Victoria’s workers compensation and compulsory third party insurance schemes, two vital parts of the NRMA business.

He would also bring an in-depth knowledge of corporate governance and funds management to the business through his experience travelling around Australia attending more than 50 AGMs a year.

Finally, the NRMA needs another Melbourne-based director to get a breadth of perspectives so I would urge shareholders to consider voting for Stephen Mayne in today’s ballot. Thank you.


CRIKEY: Fat lot of good that did.

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