The mainstream media is paying increasing attention to shareholder activism – but you will not read a more comprehensive report than this of last Friday’s Telstra AGM anywhere.
The disgruntled, the retired and the disaffected flooded into Jeff’s Shed last Friday for one of the largest AGMs of Melbourne’s financial calender – Telstra’s Annual General Meeting. A number of interest groups were handing out flyers, while a small army of Telstra personnel guided the throng to registration.
Chairman Bob Mansfield and CEO Ziggy Switkowski each spoke for half an hour while their images were projected in simulcast onto a large screen behind them. Mansfield confirmed that the prices paid for T2 had little relevance to today’s post-bubble environment. With investors who paid $7.40 a share in the second share sale in 1999 – including this reporter – now down almost 40%, and with Ziggy declining to estimate when growth will resume, the sale of Telstra Mk III is looking more doubtful.
The Government has already put the Telstra sale in its Budget as reaping $35 billion over three years. A price analysts say is unrealistic given the outlook for the telecommunications sector over the next 12 months. It is estimated that the share price would need to be around $6 to reach the Governments target for the third and final Telstra float. Indeed just last week, the Government signalled that a low share price could halt further privatisation, even if the Senate approved it.
Items of business for the AGM were the re-election of board members and general business. Crikey’s own Stephen Mayne was the first of many to step up to the microphone with a question for John Ralph on the re-election of Samuel Chisholm. Mayne was concerned about the connection between Chisholm and Alan Jones, and asked the board whether Chisholm was involved in Telstra’s decision to sponsor 2UE – a decision that had seen Telstra brought before the ABA and its name blacked by association.
Ralph backed Chisholm as a valuable contributor to the board who had done some good work on the Foxtel and Optus agreement. Mansfield said the contracts were entirely open and visible, unlike the contracts 2UE had previously been involved in during the cash-for-comment scandal. Ziggy repeated the old line that money spent on the contract was designated for marketing and that they had formed the view that the audience Jones reached was in Telstra’s interest.
Where are the pretty young girls?
A representative from the ASA got up to remind people of their intention to vote against all the people on the board, except for Chisholm, on the grounds that they were over-committed. There was an interesting moment when a Telstra employee said the board was corrupt and had been cooking the books. He had been collecting evidence since 2000, contained in his briefcase, and told the meeting: ‘By jeez this has made me bloody wild.’
Other stockholders were also concerned the directors held too many positions. Others wanted a staff member on the board, or to hear the board members standing for election make a speech (to which Ralph replied that unlike a political party the members did not have political platforms – they worked together). Shareholders asked whether Telstra had people who spoke Chinese, whether board members gave themselves bonuses, and why their friends couldn’t get the internet installed in the room they wanted.
A fellow from Taylors Lakes wanted to know why there hadnt been any pretty, young, marketing girls coming round to his place to offer him a good deal like Optus did. A union representative asked about occupational health and safety for battery-cage call centre workers, while another complained of the lack of coverage across the Nullarbor Plain.
As it happened, the results of the poll saw Anthony Clark, Bob Mansfield, Samuel Chisholm and Catherine Livingstone all returned to the board.
There was a large press presence at the meeting. Four wire services were present (AAP, AFP, Dow Jones and Bloomberg), The Age, The Australian, Herald Sun and Financial Review, plus channels Ten, Nine, Seven and SBS. The ABC had the largest contingent with representation from radio, news and current affairs, while 3AK were the only commercial radio station.
A quick Crikey survey of the journalists indicated there were no real surprises at Telstra; it was just bigger and well stage-managed. One journalist who declined to be named said it was a good time for shareholders to air their grievances, but their concerns were all pretty much the same from one meeting to another.
Why not telecast the press conference?
Altogether there were 43 questioners over three and a half hours. Had Ziggy and Mansfield not agreed to meet with some particularly aggrieved shareholders at a later date, the meeting may well have continued on into the night. In contrast, the press conference which followed the meeting was over in half an hour. The journalists asked about 20 question of Ziggy and Mansfield in this time, without asking any repetitive, naive, self-serving or merely obvious questions. Perhaps it may have been more useful and instructive for the shareholders if the press conference had been televised.
In the relative seclusion of the media room, away from the watchful eyes of the shareholders, Ziggy and Mansfield discussed Telstra’s past and future. Mansfield pointed out the difficulty with Telstra shares was that everyone had a common entry point into Telstra by which performance was easily measured (Editor: the kind of performance measurement that executives in theory should be welcoming, but turns out to be a huge embarassement for Mssrs Ziggy & Bob).
Ziggy said he couldn’t promise capital growth, but was confident there would be a better share price in the future. He also spoke enthusiastically about the outcome of the Foxtel deal, before descending into the arcane world of technobabble, in which ‘content repurposing’ and ‘bundling’ combine with set-top box formats to produce a bright new world of Pay TV, where currently a gigantic financial black hole exists.
Dr S said he though the mood of the AGM had been constructive in comparison with other AGMs and that overall they achieved a solid result in a tough year. Ziggy said it was time for people to move into the future.
And for those unable to get to the AGM, Telstra broadcast the proceedings via the web. A clever move which would have effectively prohibited all those shareholders in country Australia from seeing the four and a half hour webcast, due to exorbitant costs or poor access.
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