Crullers was overjoyed that Lend Lease has ditched political donations, while a member of the Crikey Army, “James Shire”, has penned his account of the Goodman Fielder AGM.

Their share price has taken a battering and despite Jack Tilburn turning on one of his most stinging performances ever, the shareholders who spoke at the AGM were generally supportive of the company’s direction, albeit hoping that management delivers on promised improvement.

But Lend Lease got a huge tick on Crullers’ report card for throwing political donations out the window.

Although they’d made just over $130k in donations during the year, their annual report contains the announcement that “In line with best practice corporate governance, the Board has decided to cease making cash political donations commencing 1 July 2002.”

This is a God-send for crusaders on this topic like Crullers, because it gives us some ready made ammo to fire at the recalcitrants who continue with this nefarious practice, starting with Frank Lowy at Westfield later this week.

Not surprisingly, the meeting was dominated again by discussion on executive pay.

One shareholder made a lengthy speech with a few questions thrown in on the issue.

He spoke well and made several points that I agreed with and the odd one that I didn’t. One that lost me was his suggestion that the company could get someone who was prepared to do the CEO’s job for $200,000 a year, himself included, and he’d be happy not to take a cracker if he flunks the gig. I suspect, though, that the speaker was deliberately exaggerating to make the point.

But his best argument for mine was to challenge the company to set out on one page the justification for the bonuses paid to the top execs. The chair of the company’s remuneration committee, Peter Goldmark, took up the challenge at the meeting, but as far as I could tell, still didn’t get to the nub of the question – that is, what specifically were the performance targets, and how were they met?

We want numbers, Peter!

Instead, he spoke in general terms about tough the targets were and how pleased the company was that the executives’ minds had been focused by the criteria that was applied to their bonus incentives.

The shareholder concluded that he was none the wiser and I’d have to agree with him.

Plenty of other shareholders had a whinge about exec pay, so I didn’t add my two cents worth on that one.

Chairman Jill Ker Conway – who I bagged last year for shutting down question time early in a contentious meeting – asked speakers to limit themselves to two questions, with the opportunity to come back later. This wasn’t a bad approach, as there was a pretty large number of shareholders with questions.

Another positive was the fact that she indulged in a long question time, but when she saw numerous shareholders heading for the hills, she called for the vote on the accounts and the election of a director, and then continued with question time for those who wanted to stick it out.

A definite improvement on last year’s AGM.

Naturally I piped up with a few questions.

The first was a perceived lack of direction from the top – the board was being sliced from 12 to 7, the company had announced in May that the CEO was on his way out yet no successor had been named and the company couldn’t even groom an interim CEO from within, and the company had been pontificating on the direction of its US business for too long.

Ker Conway had addressed the concerns over the US business prior to question time, citing that it was a complex and sizeable business and they weren’t anxious to make a hasty decision, but for mine it seems to have dragged on an inordinate time.

The chairman disagreed on the board reduction showing a lack of direction, citing the current trend of reducing board numbers to make them more “hands on” and not fussing about in confounded committees all the time.

Again, I’ll have to agree to disagree on this one – a drop in one year from 12 to 7 seems pretty drastic and one suspects that if there was stability then it might have been staggered over a couple of years.

I’m not sure that my point on succession planning was actually addressed.

My second question was on some qualms about corporate governance.

First, former KPMG insolvency expert David Crawford chairs the audit committee and KPMG is the company’s auditor. Secondly, I asked whether they have a policy of audit firm rotation – KPMG and its antecedent firms have been their bean counters for 44 years! Thirdly, why have non-audit fees almost doubled despite a stated policy of meting out non-audit work as much as practicable? Finally, I queried whether it was best practice to have 2 execs on the substantially reduced board of 7, including former KPMG man David Crawford.

I said some kind words about how lucky Lend Lease were to have a person of Crawford’s skills and experience on the board, and it was refreshing that Crawford – obviously a bloke who knows a lot about corporate governance – didn’t take a question about his perceived “independence” to be a sleight on his “integrity”.

Ker Conway and Crawford both answered these concerns pretty well, citing Crawford’s role as an insolvency advisor, not an auditor, and the fact that he’d ceased with KPMG some time ago and has no ongoing financial relationship with the firm whatsoever, as evidence of his independence.

Crawford gave a lengthy response and made an interesting observation that in the major Australian and US studies on governance that nowhere was audit firm rotation identified as a corporate governance “best practice” principle.

The ASA’s Brian Johnson made some detailed reflections on the company’s financial results but at this stage I was getting a bit restless and wasn’t following his forensic work – sorry Johnners! – but CFO Robert Tsenin applauded his understanding of the business.

Crazy Jack didn’t make his appearance until reasonably well into question time and gave the board a spray that registered about 11 on the Tilburn AGM Richter Scale. He was big (or should I say, bigger than usual) on the personal invective against the board, big on gripes about the pathetic dividend payout (an old fave) and absolutely huuuge on plugs for his autobiography, “The Corporate Terminator”.

I did him a favour by plugging it in a later question, but the Tilburn supporters were definitely in the minority, at least as far as speakers at the meeting went.

The bloke who had asked the prickly questions on remuneration said “I’ve never heard such drivel”, a couple of others echoed that sentiment and one shareholder suggested the company get a slice of Jack’s revenue.

One wag said that he hadn’t heard the name of Jack’s meaty tome mentioned – he obviously wasn’t listening, because it only got half a dozen plugs! – but suggested it should be called “Jack and the beanstalk”!

Jack was definitely having an off day, suggesting that shareholders join him in voting against the re-election of two retiring directors. The only problem was that these chaps weren’t submitting themselves for re-election!

But even his critics would have to (well, maybe they don’t have to) admire the old stager’s passion, getting in his question at Goodman Fielder and then making the dash down Pitt Street to blast the Lend Lease board.

Goodman Fielder breach an ASX listing rule, but what the hey?

The meeting began unconventionally with new Chairman Dr. Keith Barton introducing himself by reading out what he had done since he left University. The rest of his 13-minute spiel was pretty much all time-fillers and didn’t tell much other than what could be found in the Annual Report. He talked a little about the concept of Economic Value and gave us a definition (something about the amount of profit in excess of the cost of shareholders and debt funds).

I get a little surprised by new concepts being introduced and even more surprised when the CEO later repeats the definition in his speech as it is usually used to dress up results. He later mentioned this term on no less than 7 occasions. His spin was unbelievable and everything seemed to be ‘going forward’.

In all fairness, the company did manage a turnaround NPAT $162M compared to last years loss of $78M. They did this by slashing expenditure and divesting of non-core assets. We all know that anyone can improve earnings by slashing expenditure and similarly, anyone can pay back debt from selling assets. The question is whether they can sustain earnings in the long run and this is so much harder when you have a smaller base.

The first questioner needed no introduction with the Chairman jumping the gun by saying ‘Good morning Mr Tilburn’.

Rarely does any Chairman get the first word before Crazy Jack but he succeeded on this occasion. Have Jack’s reflexes started to slow with age? Apparently not, as we were to find out that Jack’s microphone hadn’t been switched on. Jack congratulated the board on their revival but lashed out at them not paying out a bigger dividend. This echoed the sentiment of grey shareholders who wanted a fatter dividend rather than the company using proceeds from asset sales to buy back shares. Jack then abruptly left the meeting and looked all revved up for another (watchout Lend Lease).

Shareholder Patrick Chan asked why the R & D expenditure had been slashed by $7m. The CEO gave a vague response that it was due to divestments. This makes you wonder if the company is sacrificing future growth for short-term earnings.

The highlight for me was a question from shareholder Heather Reed who asked if the board could consider a softer muesli bar for those that were teeth challenged. She stressed that the same question got fobbed off at last years AGM and she didn’t want to worry about a dental bill each time she ate an Uncle Toby’s muesli bar.

Keith brushed her off by saying that advertising people from the company were at the meeting and listening.

Apart from the receipt of Accounts and Reports the other business of the day was the appointment of Directors – Dr Keith Barton, Sir Ross Garland and John Grant.

Giles Edwards from the Australian Shareholders Association took Keith and John to task over their numerous board positions in addition to Goodman’s. Most of his criticism was pointed at John who sits on four other boards (holds the additional position of Chairman for two of these). One of those that he chairs is facing a hostile takeover (Biota Holdings Ltd). Keith defended John by saying he was always available and told how during John’s recent hip replacement operation, he was able to attend a board meeting that lasted 4-5 hours via teleconference. John was presumably lying in a hospital bed on his back!

Yours truly asked a question about the shareholdings of Keith (the only shares he holds are Restricted Shares given to him under the Directors’ Remuneration Plan). I started by praising the other two directors up for election on their commitment and confidence in the company demonstrated by holding substantial shares. I asked if he was going to buy any ordinary shares and if not why not? He almost dismissed the question out of hand but nevertheless said 25% of his director’s fee goes into restricted shares. Pretty pathetic given that he has been paid $61,666 for only 3 months work.

Unexpectedly, Tom Park came up to me after the meeting and advised ‘I better buy some shares’. You see, Tom does not own a single share despite being paid over $1.5M but he does have 5M options. I told him that if he did so, I wouldn’t question him on this matter when he comes up for re-election if the future. To say I was surprised about what he said next would be an understatement; he said that he doesn’t come up for re-election. Try figuring that one out!

But the biggest bombshell was the admission by the Chairman at the end of the meeting that they had breached an ASX listing rule relating to appointment of directors. Director Janet Holmes a Court should have faced re-election but by the time the board had discovered this error, all the reports and notices of meeting had already been sent to shareholders. They did however succeed in getting a waiver from the ASX and Holmes a Court will have to face shareholders next year. How about that for Corporate Governance?! Not even the chance to quiz the board on this point as the Chairman closed the meeting immediately.

Speaking of Holmes a Court, she was checking out Goodman’s products in the display stands at the end of the meeting. With her entourage of senior staff, she was familiarising herself with the labels probably in response to a couple of earlier questions about why some of the products don’t have a ‘Australian Owned’ and ‘Product of Australia’ labels. Perhaps she could take a leaf out of the book of fellow director, Sir Ross Buckland, who told the meeting that since stepping down as a CEO of Uniq PLC, he visits the supermarket at least once a week and although his wife would disagree, he was indeed a “homemaker”. Good on you Rosco!

Peter Fray

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