Fairfax Media has pulled off quite a coup in poaching hard-hitting business commentator and two-time Walkley winner Adele Ferguson from The Australian.
The Age and SMH trumpeted the news on their businessday.com.au website last Friday but in one of her last News Ltd columns Ferguson today has pointed out a rort being exploited by none other than the Fairfax Media board.
Under the headline “Board pay reforms hit old boys club”, Adele opened the column as follows:
The “old boys” network deemed to dominate the boards of corporate Australia could be busted open if the Rudd government accepts a recommendation by the Productivity Commission to end the so-called no-vacancy rule, which allows boards to limit new nominations to themselves.
Associate Productivity Commissioner Allan Fels said yesterday he expected a significant reaction to this recommendation when its implications were fully considered.
“This wasn’t really picked up on day one of the release of the draft report on executive remuneration because the focus was on the ‘two strikes and you’re out’ rule, but it is a very important recommendation which could have a significant effect on the diversity of boards and the perception of board members as members of a club,” Professor Fels said.
Too right it is significant.
Check out pages 236 to 238 of these transcripts from the Melbourne hearings of the Productivity Commission inquiry and you’ll see how the no-vacancy rort made it statistically impossible to get elected in 17 of my 35 public company board tilts.
Powerful proxy adviser Risk Metrics proposed the specific legislative change needed to fix the rort — that only shareholders at a general meeting can set board size outside the range prescribed in a company’s constitution — and the PC have gone with it. Bravo. This is huge.
When combined with the end of undirected proxies held by the chairman, which typically average close to 10%, corporate voting in Australia will finally become a level playing field.
And forcing institutions to disclose how they vote will further expose the old boys’ network centred around the big Australian financial institutions, which have huge debt and equity relationships with most of the top Australian companies along with unhealthy cross-directorships that work against corporate accountability.
The notice of meeting for the Fairfax Media AGM on November 10 is currently at the printers but the company has confirmed there will be only two vacancies for the four candidates contesting the election.
This is despite the fact the current board of nine will shrink to seven with the retirement of Ron Walker and Julia King at the AGM and the Fairfax constitution prescribes a maximum 12.
Deputy chairman and Walker’s proposed successor Roger Corbett has a lot of explaining to do, especially given he is the only incumbent up for re-election.
Doesn’t Corbett respect the view of Fairfax shareholders who might want to elect all three outsiders — Steve Harris, Gerard Noonan and yours truly — who have considerably more newspaper experience than any of the remaining independent directors?
Corbett has form on this front. I ran for the Woolworths board in 2000 and got almost 60% of the proxies in favour, partly because they were unable to use the no-vacancy rort.
How did Woolworths respond? They changed the constitution at the next AGM introducing the no-vacancy rort. When I ran again in 2006, the board urged shareholders to vote against the challenger because there was no vacancy and, hey presto, my vote crashed to 3%.
Shareholders need to teach the directors’ club a comprehensive lesson about this total lack of respect for the rights of owners. The perfect opportunity presents on November 10 when Corbett should be voted off the Fairfax board.