May 2005 #3

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I’m fed up with the current CEO and his CFO of Australia Incorporated and demand, on behalf of all shareholders, that they resign and take with them the current Board of Directors and the alternative Board of Directors. I want them replaced immediately with Frank Lowe, Kerry Packer and the Chair and CEO of the Macquarie Bank, David Clarke and Allan Moss. At least these guys know how to create shareholder value! 

After 22 years of trying to run our country as a business, it’s quite obvious our political masters have no idea how to run a fish and chip shop let alone a multibillion dollar business like Aus. Inc.. It’s time we, as a nation of shareholders, called an extraordinary general meeting and demanded answers and some heads. Why we didn’t do this at the semi-annual general meeting we had last just last year, I’m not sure. But once again we voted the same Board in as they had promised that, if we re-endorsed them, they would deliver substantial profits and therefore dividends for us the shareholders. Well, they haven’t delivered the goods and I demand a meeting. 

In the last 15 years or so our CEOs, CFOs and their fellow directors have managed to sell off our company’s asset base to any cashed up pimp willing to resell it on for a hefty profit. Not only that, they were prepared to build into the sale deals handsome clauses that mean we, as the previous owners of the corporation, have to subsidise the operations of the new owners for many years if not for perpetuity. My fellow shareholders, it’s just not good enough! I think we need to look at some of the less that successful strategies our CEOs and CFOs employed over the last 20 or so years and the outcomes of their shabby and disgraceful financial management of Aus. Inc.. 

One of their first moves was to sell off our major financial management agency, the Commonwealth Bank. The sale of this asset started with CEO Hawke and CFO Keating. They also managed to sell of our favourite transport arm, Qantas. While they felt they were on a roll, they decided to sell off our space age satellite service AUSSAT along with one of our most promising medical franchises, the Commonwealth Serum Lab (CSL). Not satisfied with getting rid of our ‘big ticket’ items, successive Boards have managed to deplete our assets by selling off our ports and airports, our railways and defence industries along with a host of our most important infrastructure – electricity, gas, mining rights and the rights to access our forests to remove flora and fauna.

Most of these assets, which were held in trust for us and whose initial research and development was funded by our parents who passed on to us the right to hold the shares, were sold off for a song and, as already mentioned, quite often were sold with the promise that we, as shareholders would remain loyal and diligent customers, if for no other reason than we had access only to the products or services our competition now controlled. So whose pockets do we now line with the lucre we once thought would provide for our children and their children beyond that? Lets have a look at one of the successful bidders for Aus. Inc.’s assets and see how they’re doing.

Macquarie Bank stocks have shot up by $700 million in value in two days after their AGM where we found out that their top five executives were compensated to the tune of $77 million, doubling their take home pay in the 12 months since the last AGM. Allan Moss, the Managing Director received almost $19 million dollars in wages and salary and his right hand man, Nicholas Moore pocketed a cool $18 million for his sweat and blood over the last 12 months. Both these men had the opportunity to pocket, each working day, more than twice the average wage that we, the shareholders of Aus. Inc. are compensated with.

These guys aren’t greedy, they’re good managers of money. From the humble profits of just over $90 million in 1996, these captains of industry have turned the once struggling investment vehicle into a profit making monster this year boasting a little over $800 million in profit. According to an Age article if our CEO and CFO had invested $1,000 with this company last year, it would have increased ten fold by now. So how do they make all this money? It’s not as if they have invented oxygen or something. What is it they do?

It seems not much. Except going around buying up the same bits of our business successive Boards we’ve brought in have sold off. Allan and Nicholas manage things. They manage aged care facilities, roads, telecommunications infrastructure, airports, radio stations, transmitter facilities and host of smaller investments. These guys are so good that they’ve internationalised their business and now own similar infrastructure in Canada, the UK, the US and the Philippines. Do these guys know how to make money and return a dividend to their shareholders or what? We’ve got admit, they do a good job with our inheritance.

Many of us know about this bad phenomenon called “shareholder activism”. It’s usually referred to in the negative. Shareholder activists are often made out to be a bunch of reactivist, not well informed and obvious not too bright, shareholders who buy into a firm so that they can get into the AGM and cause havoc by raising issues such as why the corporation isn’t looking after the environment (which we all know is bad) or perhaps why the Board have all voted to give themselves a pay rise while our dividend is reduced. These bad people who invade the polite happenings of shareholder meetings, well, they should be excluded.

When it comes to politics, we hear the same thing. Anyone who opposes the business of government is just a part of the loony left or the radically uninformed, unwashed ignorant minority. It would seem, following this line of argument, that there is little difference between a shareholder who wants to make sure the corporation is doing its job as well as looking after the environment (or whatever) and a concerned citizen who wants to look after the investments made on her or his behalf by their parents and grandparents.

Our governments have spent the last 25 years trying to convince us that we are ‘shareholders’ in Australia Incorporated and that they will look after our investments and make sure our future funds are secure. What they have in fact done, is sell off our corporate assets to the likes of the Macquarie Bank and its sister companies from whom we then rent the opportunity to access or use what we once owned.

If I was a shareholder in Aus. Inc. and I had the opportunity to vote at the AGM, I would vote for the sacking of the current Board and move a motion that we have Frank Lowe, Kerry Packer and the Chair and CEO of the Macquarie Bank act as our Board until our share value turned around and my kids and my kid’s kids future was fully funded. After all, these guys seem to know how to increase the wealth of all their shareholders much better than the current lot. In fact, if they could increase the share value of Aus. Inc. as much as they have done their current companies, I don’t think I’d even mind if they continued to receive the obscene amounts they now pay themselves. At least then the real men who run Aus. Inc. would be accountable to the shareholders for a change.