A new survey on shareholder activism has sparked a healthy debate about the performance of the various players.
Well Smiffy’s firm has conducted a very interesting survey of corporates and fund managers called “Disclosure and Shareholder Activism – Two Perspectives” which was released to the media on March 21.
In terms of PR, it would appear that Smiffy’s outfit has certainly gone for the negative spin on Crikey in the results summary section as follows:
“The corporate respondents frequently cited Crikey.com as an ‘other’ shareholder activist group. Most of them argue that Crikey lacks credibility. The corporate respondents commented that Crikey.com needs better judgment, that it is too self-promotional and should target the hard issues as opposed to the popular, emotional and often misguided concerns.
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The fund managers noted that there are industry or issue specific activist groups pursuing their own agendas. Unlike the corporates, only one fund manager mentioned that Crikey.com has come across his radar screen, commenting that he must be a minor player in the ‘scheme of things’.”
The problem is that the summary doesn’t quite seem to tally up with everything the respondents said. Some of the individual quotes from the CEO, finance director and investor relations respondents at the back of Smiffy’s were less critical but let’s open with the one which was absolutely insulting:
“Jack Tilburn and Crikey give shareholder activism a bad name because they are too self-promotional and irrational, even when they latch onto a good issue. Given that they know a bit more about the real issues, they do often latch onto real issues, but their credibility gets destroyed by their irrational presentation, self promotion and the fact that they come across as grandstanders.”
Naturally, The Age decided this was the one quote they would use in the story they ran on the survey last Friday which you can read here
Crikey is no Jack Tilburn
Anyone who has seen Crikey and Crazy Jack Tilburn at the same AGM know that we are chalk and cheese. Tilburn is a lunatic who raves on for a long time about complete trivia and I’ve gone out of my way at meetings to be as succinct as possible, polite and relevant. The write-ups on Crikey might occasionally be a bit over the top but the actual performance at the meeting is very measured. There is no yelling, no stunts and no abuse. Tilburn’s mad ravings and the complete silence of the institutions was the major reason Crikey got into the shareholder activism caper in the first place.
We are all about self-promotion
And people keep thinking that self-promotion or Crikey-promotion is a sin. That’s what the game is all about – raising the level of public awareness and debate about corporate performance. The whole basis of Crikey’s shareholder activism is to “create a culture of shareholder pressure in Australia”. If you don’t promote it as widely as possible you’ll never create the culture. What is the point publishing a website that no-one reads. The fact that so many of the respondents mentioned us in their answers says that at least we are getting noticed and that of itself is creating more of a culture of shareholder pressure.
Anyway, enough of me being all defensive and thin-skinned, here are some of the others quotes from respondents to the GA survey with some responses below:
Link to a credible body
“Shareholders have none to a small role. There is a big gap for more professional shareholder activism. Stephen Mayne has done some good work but he needs to link himself with a credible body. Shareholders groups are too bipolar at the moment with activists such as Mayne too distant from the credibility attributed to institutions.”
CRIKEY: I agree that a publication such as Crikey is not the ideal outlet for shareholder activism and we do have the separate website www.shareowner.com,au but have never had the time or resources to fire it up properly.
Retail shareholders play a small role
“Retail shareholders play a small role. The retail shareholding community really is yet to find a truly effective outlet for mass action. The ASA are somewhat effective but under resourced. Other groups like Crikey are driven by different motivations and while they can be somewhat effective ultimately this will always flaw the argument.”
CRIKEY: The ASA has annual revenues of about $400,000 compared with Crikey’s $150,000. We have given the ASA some healthy competition and they’ve improved their game but need to do more – especially outside of Melbourne and Sydney. Australia does need a vehicle for effective mass shareholder action and the aborted political party People Power which we launched last year was aiming to give shareholder issues a political arm but never really got off the ground.
Corporate democracy and accountability can cost time and money
“Yes we have experiences some activism. In 2000, Stephen Mayne ran for our board. This year we had some issues with the ASA. In both instances, yes, there was unnecessary expenditure of time and resources not to a huge extent though.”
CRIKEY: These corporates had better start to accept that democracy and accountability comes at a price. They happily give the auditors millions every year and should equally be prepared to spend a few thousand on contested elections and dialogue with their shareholders. That’s what it’s all about.
Talk to the fund managers
“Retail shareholders could be more effective by lobbying fund managers. It’s all about doing more background work and talking. At least the fund managers should be able to tell them when they’re talking rubbish, because they won’t believe us if we told them ourselves. It would be much more effective if they could talk to the fund managers first, and this would hopefully improve the quality of complaints and save from having to deal with baseless inquiries.”
CRIKEY: We’ve found that fund managers are very difficult to approach and usually give you the brush-off. Fund managers are a big part of the problem because they rarely publicly complain about anything and even more rarely vote against company sponsored resolutions. The other big problem is the concentration of fund managers and the huge cross-directorships with the companies they are supposedly keeping honest. How could ComBank vote against the BHP-Billiton merger when their chairman John Ralph was one of the BHP directors who signed off on it?
The role of CGI
“Shareholders activist groups do not have a role. They are ineffective because they are not organised or knowledgeable. They don’t do enough thinking, they just tend to jump on the bandwagon. I try to call them to talk through what we’re doing, but they are not organised enough to get back to me. Then this means in the case of some, for example Corporate Governance International (CGI), they produce misinformed comment, based on no discussion with the company or anyone else who knows. Nobody takes any notice of them any more because generally they haven’t thought through the issues and therefore have concerns that are not based on anything significant.”
CRIKEY: From Crikey’s experience, CGI are the best thing going in the Australian market. They provide a comprehensive proxy advisory service to the big end or town and are staffed by some excellent people and are prepared to have a go based on solid research. The big problem is that fund managers are too afraid to rock the boat and actually follow some of their recommendations and vote down controversial resolutions. If they did, we’d have a far more accountable and better performing corporate sector in Australia.