By Stephen Mayne, candidate for the Gunns board


The Gunns
Ltd board, led by the unelected executive chairman John Gay, has pulled
a swifty and declared there is no vacancy for Crikey at the forthcoming
AGM in Launceston on October 27. Check out the notice of meeting here and you’ll see what a rort this really is.

Even
though the Gunns constitution allows for more than double the current
number of five directors, the constitution also allows the board to
declare that any number is the maximum. Whilst some companies such as
Telstra and News Corp have adopted the appropriate line of allowing
shareholders to decide if they’d like an extra director, the majority
of the 19 public company boards I’ve run for since 2000 have adopted
the same dodgy tactic as Gunns.

However, the old “no vacancy”
trick has never been quite as brazen as this because Gunns already has
the equal smallest board in the ASX 200 with Chris Corrigan’s Patrick
Corporation. How can the smallest major company board declare there is
no vacancy? What sort of a closed shop are they running?

The
effect of this rort is that a simple majority of 50% plus one will not
suffice like in most normal elections. Instead, Crikey will have to
knock off one of the incumbents, David McQuestin or Cornelius Van del
kley, but that is very difficult when they usually get 99% of the vote
in favour.

Add to that the average 6% of all voted shares which
are donkeyed into the chairman’s backpocket by lazy shareholders who
just sign the form and send it back and you have an interesting
mathematical equation. Let’s see if it is statistically possible for
Crikey to get elected based on the last few Gunns AGMs.

In 2004,
former Tasmanian Liberal Premier Robin Gray was re-elected with 50.03
million proxies in favour and only 82,708 votes against. However, all
6.086 million open proxies were voted in favour, so the final yes vote
after the poll went up to 58.667 million or 99.86%.

If Crikey
had received 70 million votes in favour and no votes against, I still
would not have been elected because executive chairman John Gay would
have cast those 6.086 million open proxies against me. It would have
been Gray’s Saddamesque vote versus my 92% even though my yes vote
would have been 40% higher. With no proxies against, I still wouldn’t
have been elected because of the rort that is undirected proxies given
to the chairman.

Check out what happened when McQuestin and Van del kley last faced a Gunns board vote in 2002.
Van del kley would have romped home with his 39.16 million proxies in
favour and just 2,090 against. He didn’t need the 1.763 million
undirected proxies with the chairman to maintain Saddamesque support of
99.99%.

However, McQuestin’s old Eddie Rouse ENT baggage is
obviously remembered by some shareholders as 820,185 proxies went
against him, dragging his primary vote down to a hardly miserable
97.73%, but his final vote rose to 97.94% after the open proxies went
his way.

If I’d run in 2003 and received 50 million proxies in
favour in and none against, I still would have lost if chairman John
Gay had used the 1.763 million open proxies against me to drag a 100%
primary vote down to 96.59%.

When you can receive 100% of
proxies cast in favour and a substantially higher primary vote and
still lose, you know the system is rotten and that is precisely what we
have on display yet again with these disgraceful election rorts being
used by Gunns. So much for the will of shareholders prevailing.

The
next test will be whether Gunns actually provides a list of the top 200
beneficial owners for canvassing purposes. I wrote to the company
secretary yesterday asking for precisely that yesterday, but I’m not
holding my breath.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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