In an era when Australian shareholder meetings are becoming shorter with fewer speakers, the Ten Network Holdings AGM in Sydney yesterday was a refreshing two-hour event with widespread debate.
Executive chairman Hamish McLennan imposed a two-question limit but with an unlimited rotation policy that meant about eight shareholders asked more than 30 questions in total on a wide range of issues.
McLennan opened with an acknowledgment of the traditional owners — a first in my experience. Andrew Bolt would not approve. He then appropriately led a minute’s silence for the victims of the Sydney siege, which unfolded about 400 metres from yesterday’s AGM at the Four Seasons Hotel on George Street.
The McLennan presentation was upbeat, but there was no update on the takeover situation as Ten has so far failed to persuade anyone to make a decent unconditional offer.
We then got onto the main menu for the day, which was the woeful performance of the company and the questionable governance practices that have prevailed since James Packer and Lachlan Murdoch launched their joint assault on the company in 2010.
McLennan himself was heavily criticised by Australian Shareholders’ Association representative Allan Goldin because he’s an overworked non-independent executive chairman at Ten who is simultaneously representing rival News Corp in the chair at the unrelated listed company REA Group.
There were moments when McLennan was needlessly defensive. He declined to give an update on the August 31 figures as to how much had been drawn on the $200 million Commonwealth Bank loan, which is personally guaranteed by James Packer, Lachlan Murdoch and Bruce Gordon. Ten is burning cash, but we won’t know just how much until the half-year result in March. The Big Bash, which starts tonight, is absolutely critical.
There was also no response as to why Bruce Gordon’s nominee on the board, Paul Mallam, resigned on December 1. He was supposed to be up for election yesterday and now Gordon, the largest shareholder, is unrepresented on the board.
Bruce Gordon himself had flown in from Bermuda for the meeting and was acknowledged by the chairman in the introductions, but he made no contribution from the back row, as The Australian noted today.
The WIN Corp founder has made media statements declaring his opposition to any sale of Ten to an American company, but he voted in line with the board’s recommendations on all resolutions yesterday.
Lead independent director and former Ten chairman Brian Long came under sustained pressure during the meeting. Even The Daily Telegraph picked up on the point about him and Lachlan Murdoch making the disastrous decision to not bid for the AFL rights in 2010.
Lachlan was a director of News Corp at the time, which had management control of Foxtel and was competing against Ten for the AFL rights. Given that Lachlan also had a voting agreement with James Packer over their combined 19% stake in Ten, I believe chairman Brian Long should never have agreed to them having board seats given the obvious conflict of interests around Fox Sports.
Brian Long is billed as a pillar of the Sydney business establishment. He is a former global chair of Ernst & Young’s governance advisory council, was regarded as the leading Sydney public company auditor (AMP, Westfield, PBL etc) and now chairs the Brambles and Commonwealth Bank audit committees.
However, this same person somehow thought it was OK for Lachlan Murdoch to effectively be given management control of Ten without buying the whole company or even severing his connections to News Corp. When Lachlan’s disastrous stint on the board finally ended, Long agreed to appoint Murdoch associate Hamish McLennan as executive chairman. Even worse, it was decided that McLennan should not be put up for election so shareholders could reflect on this deviation from good governance practice.
After raising concerns in a private meeting in Sydney and then later in this Crikey story, Long finally folded yesterday and acknowledged that McLennan would face election at the 2015 AGM — if there is one.
Incredibly, Ten’s latest annual report (see p17) also claims that all of the non-executive directors are independent, including those who have served for more than 15 years and the likes of Gina Rinehart and Lachlan Murdoch’s representative Siobhan McKenna. Normally, a substantial holder with more than 5% is not regarded as independent.
None of this appears to trouble any of the substantial shareholders as the board’s recommendation sailed through comfortably yesterday.
The biggest protest of 11.4% was recorded against Gina Rinehart’s friend and Fairfax Media director Jack Cowin.
The proxies displayed at the meeting showed only 0.61% support for my board tilt, as the Rinehart-Packer-Murdoch-Gordon billionaire bloc all voted against.
However, this finished at 1.48% after the poll was given surprising support from 17 million votes in the room, compared with just 10.7 million votes by proxy.
After all of these governance breaches were outlined and the proxies were displayed showing the overwhelming rejection of a genuinely independent board candidate with media experience, one old bloke stormed out of the meeting declaring: “That’s it, I’m selling my shares.”