Time to start voting out dud directors. The business pages of most of the papers today picked up on this bolshie press release from corporate proxy voting advisory firm Risk Metrics which ripped into the directors’ club about the average 96% support that incumbents gets. The only problem with the Risk Metrics chest beating is that they have largely failed to recommend against incumbent directors. So what are they going to say when directors start getting targeted for poor performance. Heaven forbid! At the moment, failed directors just keep hanging around.
For instance, the chairman of the HIH audit committee, Justin Gardiner, has only just retired from the Austar board and remains a director of Hutchison Telecommunications. Radio National’s Background Briefing is broadcasting the first ever major mainstream media examination of shareholder activism at 8am this Sunday. The promo to Erica Vowles’ story describes it as follows:
“As corporations collapses as executives are paid in huge packages, shareholders are taking greater interest in just how companies are run. But they face a wall of complexity and legalistic and business jargon which is almost impenetrable.”
Indeed, but maybe things are about to change. The coming 2008 AGM season should be the most dramatic ever after the carnage of the credit crunch and Risk Metrics appears to be preparing the ground for a big move to break open the directors’ club. — By Stephen Mayne
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Mobile gambling. We have James Packer to thank for the latest ‘innovation’ in getting Australians to gamble more. According to this story in the SMH the online bookmaking agency Sportsbet is behind random calls to mobile phones enouraging people to bet by simply touching the phone keypad. It seems the betting company is using a separate group to make the calls and if a person accepts, they then receive a text message telling them to go to a webiste where they can redeem a $60 betting voucher.
Although NSW has stringent laws on gambling advertising, interstate online betting agencies have interpreted a High Court decision in March to mean they are not bound by them.
The court found that online agency Betfair has the right to operate in Western Australia despite legislation prohibiting betting exchanges in that state, after it was determined that restrictions on interstate trade contravened section 92 of the constitution.”
Sportsbet’s promotions manager, Matt Stewart, said there was no way of knowing if the Jackpot SMS service calls minors, but about 5000 people have registered on Sportsbet through the promotion and only “one or two” were under-age. They were promptly barred.
The company asks gamblers to provide their birth date on the website before they can bet. But identification is not required until it comes to claiming any winnings.
Mr Stewart said Jackpot SMS does not contact anyone registered on the Government’s Do Not Call Register.
James Packer owns half of Betfair in Australia, so we have him and his Pommie mates to thanks for this “wonderful innovation”. — Glenn Dyer
Save the schemes of arrangement. of The Corporations and Market Advisory Committee (CAMAC), an independent body setup to advise the Australian Government on corporations and financial issues announced that it is reviewing the “effectiveness and appropriateness of…schemes of arrangement”. Schemes are a controversial alternative to takeovers, whereby the target company shareholders vote to merge with the acquirer. This differs from a takeover, which involves the acquirer making offers directly to target shareholders.
Cynics, including your author, claim that almost the only reason companies ever conduct a deal via a scheme (as opposed to a takeover) is because they are trying to avoid the strict provisions from chapter six of the Corporations Act which regulate takeovers. (While the Act provides that Schemes can’t be used to circumvent the takeover provisions, the provision is virtually never enforced, especially since most schemes are friendly and the courts are loathe to intervene). For example, schemes require only 75% of shares to vote in favour (rather than 90% required to reach compulsory acquisition threshold), allowing appalling deals like Xstrata’s acquisition of MIM to proceed. Schemes also are not subject to provisions relating to escalators or collateral benefits, which allowed Solly Lew to shrewdly negotiate a step-up agreement with Wesfarmers last year.
One group who will be very keen to protect the sanctity of schemes (and who are even pushing to have the takeover avoidance provisions repealed) are corporate lawyers. A scheme involves far more legal work (including court document preparation) than your average takeover, with legal fees often stretching into the millions for a friendly deal. — Adam Schwab
If they only sack or lie to you once, it’s been a Crapyear. Thursday 26 June 2008 won’t be remembered as a red letter day for Goodyear Tyres, the US-based parent company of South West Tyres which yesterday announced its closure and the sacking of its 600 workers. According to South West Tyres CEO Judith Swales, the plant is closing as a result of poor cost-competitiveness, and because “we are not able to produce the high-value-added tyres foreign and domestic consumers are demanding.” While the company was trying to spin the news that the jobs are moving to Asia, Europe and the US, the ACCC announced Goodyear was apologising and offering compensation for making “unsubstantiated environmental claims”. According to the ACCC:
During 2007 and 2008, Goodyear Tyres made a number of representations regarding the environmental benefits of its new Eagle LS2000 range of tyres, to the effect that:
- the Eagle LS2000 is a revolutionary environmentally-friendly tyre
- the Eagle LS2000 is designed for minimal environmental impact
- the production process for the Eagle LS2000 results in reduced carbon dioxide emissions
- the Eagle LS2000 aims to have a major environmental impact by reducing carbon dioxide emissions during its production process, and
- Goodyear’s BioTRED technology, as used in the Eagle LS2000, increases the life of the Eagle LS2000, improves fuel economy and reduces the impact on the environment.
Goodyear Tyres has acknowledged that the environment benefits claimed could not be substantiated and has withdrawn all material containing the representations.