Telstra does not quite seem to get the concept of shareholders’ rights. When I last looked the government had not just a controlling shareholding (you only need 20% in a large company like Telstra to meet the control tests) but a majority. And it will have a majority until T3.
The dispute over the proposed appointment of Geoff Cousins to the Telstra board is a fight Telstra can’t – and shouldn’t – win.
There are plenty of issues that could be raised: is Cousins the right person? Is he too close to the Prime Minister? Should the government have consulted the Telstra Board about the appointment earlier than it did? All good debates. The Opposition is already engaged in them.
But questioning whether the government should be nominating directors at all is mistaken. A shareholder who only does what a Board tells them to, even if circumstances change or new thinking emerges, is acting unwisely. A majority shareholder who has concerns about how a company is being directed by its Board not only has a right to suggest changes to the Board, it’s almost a dereliction of duty not to do so.
Telstra might legitimately want to fight the government over regulation, and that’s a different story. On the Board appointment, the government is quite within its rights to insist on making its own nominations.