The Australian’s John Durie has been the nation’s best commentator on corporate governance issues over the past decade. So it was a little surprising to read his column on Saturday declaring the current AGM season to be benign, with corporate Australia “emerging virtually unscathed”.
The worst-governed companies tend to leave their AGMs towards the back end of the season, and the most dramatic repudiation of a board this season will probably occur at the Cabcharge AGM in Sydney.
For starters, you have to go all the way back to 2006 to find a Cabcharge AGM where all resolutions were supported by the typical 95%+ of voted shares. Institutional investors have long been revolting against the company, as follows:
- 2013 AGM results: 45% against remuneration report and 26% against director Donn McMichael;
- 2012 AGM results: 12% against Reg Kermode, 22% against Neill Ford and 39.8% against remuneration report;
- 2011 AGM results: 18% against Philip Franet and 40% against remuneration report;
- 2010 AGM results: 38% against Peter Hyer, 37.5% against Donn McMichael and 37.5% against Kua Hong Pak. Remuneration report protest peaked at 48.5%;
- 2009 AGM results: 9% against Neill Ford and 45% against remuneration report;
- 2008 AGM results: 9% against Philip Franet and remuneration report opposed by 39.5%; and
- 2007 AGM results: 10% protest votes against Peter Hyer, Neill Ford and the remuneration report.
The media keeps talking about Cabcharge being on a fourth strike above 25% on the remuneration report, but this has actually happened at the last six AGMs, when the smallest protest was 39.5% in 2008. No other ASX 300 company gets anywhere near this record.
However, when investors gather at the InterContinental on November 26, Cabcharge will join the trend outlined in this recent Crikey story of lower remuneration protests but higher protests against non-independent directors.
The death earlier this year of 87-year-old Cabcharge founder and executive chairman Reg Kermode has largely taken the heat out of the remuneration debate because he was on an excessive fixed salary of $2 million a year right until the end, with no at-risk component at all.
His internal successor as CEO, former company secretary Andrew Skelton, has a more conventional contract, although for some reason he hasn’t been appointed to the board.
Former ABC and Sydney Airport CEO Russell Balding has stepped up as the new non-executive independent chairman of Cabcharge, but he is coming under intense pressure from shareholders to deliver credible new independent directors with deep expertise in governance, technology and the payments system.
Balding made a dreadful mistake in June when he appointed a close friend, Rodney Gilmour, to the board. Investors have been crying out for genuinely independent directors, but Gilmour has been consulting to Cabcharge on PR issues over the previous three years. Even worse, the Cabcharge notice of meeting fails to disclose how much the Gilmour consultancy was worth.
Gilmour is facing the prospect of being unceremoniously voted off the board at the AGM. If so, he could potentially return to being the Cabcharge PR consultant.
Related-party transactions have long been a feature inside the Cabcharge board room. Taxi industry veteran Neill Ford, 69, has been on the board since 1996 and was promoted to deputy chairman in June this year, a move that ran counter to the impression that things would change after Kermode’s death.
Indeed, Ford now chairs the powerful corporate governance committee, which also looks after board renewal and remuneration. The other member of that committee is another taxi industry veteran, Donn McMichael, who has also been on the Cabcharge board since the 1990s.
Ford and McMichael have ongoing positions and investments in the taxi industry. Ford is CEO of Yellow Cabs, which had $1.86 million worth of business with Cabcharge in 2013-14 (see p51 of annual report).
A similar figure was disclosed in 2012-13, but that year also featured a $4.8 million payment to Ford when he sold his interest in a business called Maxi Taxi Australia to Cabcharge.
Another veteran director, Ian Armstrong, suddenly resigned in late October with no explanation given. He was chair of the audit committee, but the uncommunicative board hasn’t announced who’ll be replacing him in that important role.
As a candidate for the Commonwealth Bank board, I’m meeting chairman David Turner in Melbourne tomorrow ahead of Wednesday’s AGM.
There has been no such luck with Balding, who has been unavailable as the pressure mounts over the ongoing failure to turn Cabcharge into a conventionally governed company with a majority of independent directors.
*Stephen Mayne has nominated for the Cabcharge board as an independent director on a platform of governance reform.