Crikey‘s media reporter Myriam Robin produced a good deadline report of the Fairfax Media AGM in yesterday’s edition, but there are a few additional points to make about the docile affair.

Firstly, Melbourne venues continue to benefit from the rantings of feral 88-year-old shareholder activist Sydneysider Jack Tilburn. Brambles and Fairfax are two Sydney-based companies which have long been targeted by Tilburn, but they both enjoyed quiet AGMs by shifting to Melbourne yesterday.

Fairfax AGMs have traditionally attracted all sorts of colour and movement.

In 1992 — the first after a five-year stint of privatisation and receivership — it lasted four hours, attracted 800 to the Sydney Opera House and saw Communications Minister Malcolm Turnbull flogging the Conrad Black-selected board from the floor.

Twenty years later, the 2012 meeting in Melbourne also lasted four hours, featured an outside candidate in Peter Cox, had chairman Roger Corbett agree to cut his fee below $400,000 and saw Gina Rinehart’s representative John Klepec trigger a remuneration strike from the floor and provide oddball quotes to the media.

In 2009, there were three external candidates, 2010 featured this major attack from the Israel lobby and the Media Entertainment and Arts Alliance has also used it as a platform over the years to advance journalistic industrial causes.

In 2005, shortly after Fred Hilmer had finally exited, the lights went out and new chairman Ron Walker conducted proceedings with the aid of a big yellow torch.

There were almost no questions at all yesterday, after I got stuck on a lengthy conference call and turned up 45 minutes late. General business and the re-election of chairman Roger Corbett had already been silently completed and we were then onto the re-election of deputy chairman and favourite Liberal Party investment banker Peter Young. It was straight to the microphone with a question about the lack of “skin in the game” of the chairman and his loyal deputy who together own just $185,000 worth of shares and haven’t added to their combined 230,323 shares since way back in April 2009.

Compare that with these combined cash director fees from Fairfax over the past 5 years:

2013-14: $523,458
2012-13: $615,305
2011-12:  $656,171
2010-11: $632,838
2009-10: $568,144

All up, the two mates have pocketed about $3.2 million in cash since April 2009 or some 17 times the current value of their Fairfax shareholdings. And this cash drain keeps rising at more than $10,000 a week.

Presented with all this data, Roger Corbett was non-committal, saying that director shareholdings are a personal financial matter, but he later promised to look at increasingly common mandatory director share schemes which are being introduced by ASX 100 companies.

Another issue raised related to seemingly excessive staff redundancy payments which have drained $225 million of cash out of the business as follows over the past three years:

2013-14: $86.4 million
2012-13: $96 million
2011-12: $42.5 million

Bizarrely, CEO Greg Hywood gloated in the annual report that Fairfax had hired more than 1000 new staff in 2013-14, but when challenged on these huge redundancy payments he advised that overall staff numbers were down from about 12,000 to 8000 on his watch.

And all this talk about Fairfax being a competently managed and thriving diverse digital company was also challenged when it was mentioned that it now looks like about $300 million has been left on the table with the rushed and premature sale of its biggest digital play.

The Fairfax exit from Trade Me unfolded as follows:

December 2011: 34% floated at $2.07 raising $363 million
June 2012: 15% selldown at $2.70 delivering $160 million
December 2012: final 51% sold at $3.05 raising $616 million

Sure, the total proceeds of $1.14 billion vindicated the $625 million purchase in 2006, but Trade Me is now capitalised at $1.43 million, just $500 million behind the whole of Fairfax.

In hindsight, the board should have pursued a demerger so that existing Fairfax shareholders could have retained an exposure to the growing Trade Me business.

But don’t for a moment think any of this concerns the big Fairfax shareholders. The external candidate with media and governance experience challenging long-serving, under-invested and under-performing directors yesterday received support from a dismal 0.92% of the voted shares.

The turn out was less than 10% of Fairfax’s 30,000 shareholders and 77.8% of shares on issue as the big end of town, led by largest shareholder Gina Rinehart but supported by a raft of industry and for-profit funds, delivered a clear message.

My three previous Fairfax board tilts produced “for” votes of 20.58% in 2001, 8.2% in 2005 and 3% in 2009, which makes yesterday’s 0.92% particularly disappointing and rather deflating, to say the least.

Peter Fray

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