The best thing about public company AGMs is that the entire board and management is assembled publicly for the one time each year and they must openly debate and answer questions from shareholders, if they bother to ask any.
The 100-minute Crown Resorts AGM in Melbourne yesterday was an excellent example of how a good AGM should work, although it was disappointing there was no webcast or audio archive provided.
We got 40 minutes of formal presentations in the rather unusual order of CEO Rowan Craigie, new chairman Robert Rankin and then former chairman and controlling shareholder James Packer.
However, Packer wasn’t speaking to notes, and while he repeated some of his chairman’s remarks, none of it was lodged on the ASX announcements platform.
Rather than face headlines on pokies addiction after Tuesday night’s compelling ABC documentary Ka-ching, Packer quite deliberately and provocatively unloaded on two Macquarie creations — Sydney Airport and Transurban — for their structural avoidance of company tax. Apple also copped a serve for paying $30 million in Australian tax on $6 billion in sales. There was also much discussion about the morality of gambling, which was seemingly a big issue for Rankin before he agreed to become chairman.
When it came to questions, chair Rankin imposed a two-question limit over two minutes, but unlike the ridiculous rules imposed by Rupert Murdoch, that was only until everyone else had finished up.
With John Curry from the Australian Shareholders’ Association and me as the only speakers with multiple questions, there was a healthy one hour of debate across a range of issues.
First up was a question about Macau where the latest Packer casino has only been granted 250 tables despite banking covenants requiring 400.
Las Vegas casino mogul Steve Wynne has labelled this move “preposterous”, but the Crown brass sensibly declined to take the bait and declared their confidence that the Macau and Chinese governments would continue to support the industry.
A show of hands from the board is always fun and worked well at the 2010 Crown AGM on the question of who had read Gerald Stone’s book Who Killed Channel Nine?
However, CEO Rowan Craigie was the only person on the top table who raised his hand to confirm he had watched Ka-Ching.
Rankin said the rest were at a board dinner, although there is always Iview.
Craigie got stuck into the doco for broadcasting what he alleged were misleading claims and then stressed that Crown only has 1.5% of Australia’s 200,000 poker machines and the Woolworths AGM in Sydney on November 26 should be the real target of our questions. James Packer looked agitated during this discussion, putting his head in his hands.
There were four modest protest votes yesterday, and it seemed that the three main proxy advisers — ISS, Glass Lewis and Ownership Matters — were split in terms of what they opposed.
Whilst the re-election of adman Harold Mitchell sailed through with 99% in favour, there were protests ranging between 29 million and 79.8 million votes for three of the other directors over concerns about their lack of independence.
Rankin is not independent, and almost 15% of the independent ballots cast opposed his election. Packer gave an interesting response saying that with 50.1% he could easily assemble a “lame-duck” board but instead he personally chose quality and independent people to help him steer Crown forward.
The local proxy advisory player, Ownership Matters, took aim at the remuneration report and CEO Craigie said they were “confused” by matters pertaining to his incentive arrangements. However, after some back and forth, it wasn’t clear why the brass got bonuses based on a theoretical win rate on baccarat that was above the normal average of 1.35% and not disclosed to shareholders.
While James Packer couldn’t vote his 50.1% stake on the remuneration report, it was still supported by 81% of the independent shareholders, something he seemed quite pleased with ahead of a final board decision on just how much he should be paid as an executive director — rumour has it it is $10 million.
After 15 years of telling founders like News Corp’s Rupert Murdoch and Westfield’s Frank Lowy that they should “do a Packer” and work for free, I lament James Packer’s change of heart but agree there is no reason why he should subsidise the public company.
Remuneration committee chair Geoff Dixon, who used to be the highest-paid airline CEO in the world when he ran Qantas, said a decision would be made in two to three weeks and he had no idea where the mooted $10 million figure had come from.
It certainly looked like a kite-flying exercise when The Australian’s Damon Kitney, who gets more access to James Packer than any other business journalist, interviewed the billionaire in August and put the $10 million figure out there.
James Packer popped over for a quick handshake after the meeting but, as usual, he and the board scampered. No Packer billionaire has ever lingered for a cup of tea with their retail shareholders. James should try it one day.
Chairman Rob Rankin also said he would take on notice a request to make a full transcript of the AGM debate available to shareholders. The ASX really should intervene on this one. James Packer has never before admitted that returns from his Australian capital expenditure program had failed to meet budget, yet these comments appear in no official Crown document.
Shareholders should not have to rely on the media for this, but if you go to the Crown website, there is an audio archive of the latest profit conference call with CEO Craigie, but no audio from yesterday’s fascinating AGM discussion.
As a former broadcasting mogul who still owns 9% of Network Ten and is now back in the movie business, James Packer should not be into this AGM secrecy caper. Indeed, his hand-picked independent directors should demand that Crown provide a full public record of yesterday’s debate, which even included Andrew Demetriou talking about his probity process, Packer predicting political reasons would stop Crown winning “employer of the year” this year and the mogul joking that he couldn’t exactly move Crown Melbourne to Ireland to dodge tax, as one shareholder suggested.
Transurban, Sydney Airport and the ATO also have a right to know exactly what he said about corporate tax practices in Australia.