In a rare Crikey exclusive, we can report to you a calamitous mistake in the annual report of one of our greatest listed public companies, Westfield Holdings, an error which is sure to rock the very fabric of our society.
Edwards, in opposing the re-election of Hilmer to the board, mentioned that Hilmer’s other job as CEO of Fairfax is surely a full time gig that precludes him from giving an adequate commitment to Westfield.
Westfield chairman Frank Lowy said he was more than happy with the contribution Hilmer was making and he was satisfied that Hilmer “fulfills all of his commitments” to the company.
Edwards then raised the matter of Fiery Fred only making 8 out of 11 board meetings and 6 out of 7 committee meetings – how could this possibly be fulfilling his commitments?
Frank said this was wrong – he recalled that Fred only missed one meeting.
Edwards then pointed out that the accounts said something different, but who needs accounts – Frank stuck to his guns and insisted that Fred only missed one meeting.
I got up and agreed with Edwards’ comments and said that attending only 8 of 11 meetings was unsatisfactory for an ordinary board member, let alone the deputy chairman.
But before I could finish, Cranky was down my throat (not for the first time in the meeting) saying that I couldn’t read and hadn’t listened to him – Freddy only missed one meeting!
I then pointed out that the chairman signed the accounts, as did the external auditor, which said that Fred had missed 3 meetings.
I politely suggested that the chairman might want to read the accounts a little more carefully next time before he signs them off. (This of course was met with a gentle chuckle by the chairman and a playful quip of “oh, Crullers. You’ll kill us all one of these days, you loveable rapscallion. What a wag you are!” And then I woke up…)
So, did Hilmer miss three board meetings as the accounts say or was it only one, as the great Frank Lowy said at the meeting?
Shareholders are none the wiser following the AGM.
But if Lowy’s assertions at the AGM are correct – and given his strident pursuit of accuracy as you’ll read below, we have no reason to doubt him – this is indeed a grave, alarming, disturbing error in the accounts.
If so, Chairman Lowy and Brian Long from Ernst & Young have signed off on a terrible, terrifying mistake on what seems to be such a simple matter.
How then can shareholders sleep easy at night in the confidence that the rest of the accounts, dealing with far more complex matters than just how many meetings did Fabulous Freddy attend, are absolutely spot on?
These are indeed troubling times in the shareholder activism arena, and we hold grave fears that if Frank Lowy, such a stickler for accuracy and correctness, can sign off on such a troubling error, then we indeed fear that we are entering a dark age.
Say it ain’t so, Frank. Say it ain’t so.
Crullers v Cranky
Westfield chairman Frank Lowy confirmed his reputation as one of Australia’s crankiest AGM chairmen at their AGM in Sydney.
In the red corner was Cranky Frank, closing fast on Big Kerry as Australia’s richest man, and in the blue corner was Crikey’s very own Li’l Crullers, work-from-home bum with nary a cracker to his name.
Crullers was first up to the mike come question time – a pleasant change from last year when not a sole dared ask a question of Cranky – and it didn’t take long for the chairman’s angry pills to kick in.
In fact, it was straight after Crullers’ first question, when he abruptly asked Crullers to sit down!
Anyone who has seen Crullers in action knows that he is a most timorous sole at AGMs and the Westfield was no exception, where first of all I cautiously raised the spectre of Westfield’s “astro-turfing” activities. I mentioned the previous embarrassing example from 2000 and read out the chairman’s apology from the time:
“We have been guilty of a lack of transparency and openness and that is a matter of great regret and embarrassment to the company.
“Westfield values the good name it has built up over more than 40 years and is distressed at its failure to meet the high ethical standards expected of the company.
“I as chairman, and the company generally, apologise for what has happened. Steps have been taken to ensure that activities of this nature do not occur again.”
I then noted that this had seemingly happened again, with a green group reportedly set up in Sacramento to oppose a rival development.
Cranky opened with a few jabs about Crikey’s reputation for lack of accuracy and that my question was no exception today. Frank denied it and said my facts were all wrong, but I said I was just going by what had been reported in the Financial Review and perhaps Mr Hilmer might want to throw his weight around there to make sure that the record is corrected.
Sorry folks, we can’t provide a link to support my outrageous assertion, but if anyone wants to fork out the $2.20 to access the article in the Fairfax archives, it was published on 23 April this year and was titled “Westfield funds green group to fight rival in US”.
Just to prove that Crullers isn’t completely whistling Dixie, the teaser in the Fairfax archives says:
“The political puppeteering of Frank Lowy’s Westfield is back in the news, emerging in America in the form of an overt plot to stop a rival developer from building a shopping centre near one of Westfield’s own in California.”
This one is a little different to 2000 in that Westfield is being open about funding it, but does that make it right?
Anyway, Frank says I’m wrong, wrong, wrong, so we’ll have to take that as gospel and trust that Fred Hilmer will have the record corrected down there at Fairfax.
Not satisfied with being pummeled about the noggin, I got the microphone back and raised the issue of the $80,000 that, according to evidence in the Cole Royal Commission, was reportedly paid by Westfield to the CFMEU.
Frank claimed sub judice on this one and said the company had co-operated fully with the Royal Commission.
I then raised the issue of the controversial development at Helensvale on the Gold Coast, where Westfield paid a defamation settlement to a Gold Coast Greens councillor who changed his tune from being against every development on the Gold Coast to supporting the Westfield development. I asked that the company re-assure us that they hadn’t rolled over in the defo matter and had defended it to the hilt.
Frank assured shareholders that there was no cause for suspicion about it at all.
The fact that the local state member of parliament devoted about half of his maiden speech to singing the praises of the development – which had attracted the ire of numerous residents – was just a happy coincidence.
As was the fact that the Queensland state government wrested development control from the local council only last month to get the project to proceed after 7 years of wrangling.
Finally, on the matter of these payments that seem to keep making headlines when they’re simply run of the mill payments in the ordinary course of business which no-one should have any qualms about, I raised the matter of the consultancy fees to Lord Levy.
Frank firmly rebutted (does he rebut in any other manner?) my assertion that there was a lack of openness and transparency on this one.
Again, Fred Hilmer needs to get on the blower, this time to the crew at the Silly Morning Hilmer, who ran this yarn suggesting that Westfield was anything but open and transparent about the Lord Levy deal.
The article seems to suggest that it took a while for the true amount of the consultancy fee to emerge, so given that I was wrong, wrong, wrong on this one, Fred needs to put on his steel-capped butt kicking shoes and make some changes down there at the Herald.
And if anyone dare suggest that Lord Levy was hired for his political connections, watch out! He is a man of outstanding property development credentials. The SMH article is just oozing with them.
Corporate governance – “you are wrong, you are wrong, you are wrong”
Frank was losing patience with Crullers’ questioning by this stage – and he wasn’t afraid to say it either – so we moved on to corporate governance.
Frank expressed frustration that because we conduct our AGMs democratically, sometimes we have to tolerate the views of people like yours truly who just get up and complain at AGMs, get their facts wrong, and have nothing constructive to say about the company.
Sorry Frank – I’ll bring the pom-poms and cheerleader outfit next year. (And I cut a damn fine figure in a mini-skirt and crop top too, if I don’t mind saying so myself.)
I respectfully added that seeing it was a democracy and I was a duly appointed proxy holder, I’m within my rights to ask questions and Cranky is within his rights to say I’m wrong.
Crikey readers will no doubt recall the review conducted by Westfield’s external auditors, Ernst & Young, which concluded that Westfield’s corporate governance practices ranked at the “high end of the Australian corporate governance spectrum”.
I found this a little confusing, because those scurrilous muck-rakers at the University of Newcastle, who spend all their days studying corporate governance but still obviously know nothing about it, only awarded Westfield 2 stars out of 5 on corporate governance.
Moreover, they rated Westfield 214th out of the 250 listed public companies that they had surveyed.
I raised this only as a means of giving the chairman the opportunity to put these pencil-necked geeks in their place.
It goes without saying that the chairman duly obliged.
Perhaps the most amusing part of the meeting came when I suggested there were 10 points on corporate governance where the company wasn’t up to best practice.
The first one was that they have an executive chairman and Cranky scoffed at whether I expected him to resign.
No, but an independent chairman would be best practice.
After each of the next nine, Frank howled “you are wrong” as soon as the words had passed the bloodied and bruised Crullers lips!
There’s no point in repeating them all here because I was so patently wrong, as was the shareholder who stupidly backed up my assertion that there were no realistic performance hurdles on executive options.
Frank put this punter in his place by saying that they’re issued at a premium to market price – that’s the hurdle.
Political donations – do your homework, Crullers!
Finally, I asked about political donations – what the company’s policy was, why couldn’t we get a disclosure in the annual report, and why not ditch them altogether like Lend Lease has done in accordance with “best practice corporate governance”?
Crullers should have realised the stupidity of this question before asking it, but luckily Cranky Frank was on hand to point out how dumb I was.
You see, Frank had discussed this at length in last year’s chairman’s address, so obviously if stupid muck-rakers like Crullers did their homework and actually checked last year’s chairman’s address, we’d know all about it.
Of course, if you’re just a lazy, lazy half-baked hack like your Crikey correspondent who only looks to the current year’s annual report for these things, then you deserve to have your stupidity and laziness exposed.
After 15 minutes of questioning from yours truly, I sat down and suggested that I’d let other shareholders take their turn as there would surely be a few more.
Cranky again took the opportunity to scoff at your correspondent, wondering how I knew this would be so.
The other hardy foot soldiers
Luckily, in a pleasant change from last year, there were several shareholders up on their feet, most congratulating the company for getting on with business and not worrying about the trivial concerns of carpers like yours truly.
But a few green activists were concerned about developments at Bondi Junction, which, if you read the Sunday Tele gossip pages regularly, you’ll know is going to be the greatest thing since sliced bread for the long suffering residents of that cesspool that is Bondi Junction.
The ASA’s Giles Edwards asked a few questions on the accounts and despite being far less antagonistic than the rabble rouser from “crikey.com”, as Frank erroneously referred to it at every mention (tisk, tisk, tisk), still got a serve from Cranky Frank.
Frank conceded that his venom was really directed at another questioner – gee, I wonder who that could be? – so Edwards respectfully asked that the chairman save those comments for when that other much maligned questioner had the floor.
My advice to Edwards is to not fraternise with Crikey correspondents before AGMs and to sit more than 2 seats away from them.
Kiss and make-up time
Never one to hold a grudge though, I thought the only noble thing to do was to get up during the last item of business – the re-election of the legendary, always right, never cantankerous, thoroughly civilised chairman, Frank Lowy – and try to do some hatchet burying.
I proudly announced that, despite having some “minor differences of opinion” with the chairman on a few matters, I was in favour of his re-election and would be “whole-heartedly” casting my 1,100 proxy votes in his favour and urged all other shareholders to do the same!
See you next year, Cranky – and I’ll see if I can get my accuracy strike rate above .000!
How did the press view these extraordinary stoushes?
Not that I’m an attention-seeking media tart, but I’m starting to wonder whether I’ll have to self-immolate to get some decent media coverage from my AGM efforts.
The press coverage of the fiery exchanges at the Westfield AGM was pretty disappointing given that I’d wound Cranky Frank up and he was by far and away the most combative chairman I’ve ever come across at an AGM.
In the Fin Review, Kathryn House gave the question time exchanges a brief mention right at the very end of her report:
“Turning the floor over to shareholders, Mr Lowy came under fire on several fronts particularly on the issue of corporate governance.
“Under attack was Mr Lowy’s position as chair of Westfield’s remuneration committee, as well as the company’s failure to disclose political donations and account for executive options on its balance sheet.”
Kate Askew, always good for a bit of AGM colour commentary, wrote in this morning’s CBD column:
“While it was not the same degree of executive bashing that the Lend Lease board copped last Friday, Westfield’s executive chairman Frank Lowy was nonetheless taken aback at some shareholder questions.
“So much so that the usually cool retailer property developer’s eyes were seen to narrow somewhat and his voice rose an octave or two when he felt the heat was on.
“However he was humbled when, two minutes into his speech, his mobile phone rang.
“Asked about corporate governance from the incessant dissident shareholders and why he should also head the remuneration committee, Lowy replied: “It’s necessary for me to sit on the committee because I add value to these discussions.””
– Ends –
I don’t know if I’d describe him as “normally cool” – on the basis of yesterday’s exchange, it didn’t take much to yank Frank’s chain.
The SMH report on the AGM contained nothing at all about question time.
Probably the most detailed coverage of question time was in The Australian’s report by Cathryn Jiminez of AAP, who described the AGM as “a sometimes fiery meeting of shareholders”.
“The shareholder meeting wasn’t all smooth sailing for Australia’s second richest man. Mr Lowy faced a grilling from shareholders on everything from corporate governance to the level of dust at one of its Sydney redevelopments.
“The 72-year-old lost his patience with one shareholder [CRULLERS: that’s me!] several times, after being questioned about corporate governance, executive options and political donations.
“You are wrong,” he said. “You are wrong, you are wrong, you are wrong … It’s ridiculous that you are making these statements that are absolutely incorrect.”
“Mr Lowy was particularly annoyed when questioned about political donations and lack of disclosure.”