Crikey at the Gunns AGM

From Crikey Sealed, Thursday, Oct 27:

2. Another woeful AGM display from John Gay

By Stephen Mayne, confirmed again today as Australia’s most unsuccessful candidate

Gunns Ltd executive chairman John Gay made Rupert Murdoch look like a corporate governance saint with his performance at today’s AGM in Launceston.

For starters, the press were locked out, something no other top 200 company does. The Sunday Age’s Claire Miller fronted up with a proxy and didn’t disclose where she worked. She fired off a succession of questions at the start of the meeting on forestry valuations and should have a good story for this weekend.

Gay, surely the most inarticulate chairman of a major public company, opened proceedings with a stuttering 8 minute address, but his profit forecast of between $95 million and $100 million for 2005-06 helped reverse the recent share price slide as the stock rose 7c from a two year low to reach $2.82 by midday.

For some unexplained reason, Gay was accompanied on stage by the auditor from KPMG, company secretary Wayne Chapman and Les Baker, the executive running the controversial $1.3 billion pulp mill project in the Tamar Valley.

The five non-executive directors got to sit in the audience and one of the blokes I was running against, Eddie Rouse’s former ENT CEO David McQuestin, was two foot from me in the next row. The “meeting room” at Gunns HQ is a hopelessly cramped and stuffy venue with no air conditioning and not enough room for the director to even sit up the front.

Asked who was the nominated senior independent director to answer questions about the executive chairman, Gay point blank said they didn’t have one and he didn’t know.

When I asked a series of questions of candidate Cornelius Van der lay, Gay at first told him not to answer a couple of the questions. Are these independent directors or John Gay puppies?

Former Liberal Premier Robin Gray got up and declared Gay was “a mere pussycat most of the time” and an absolutely “outstanding chairman and outstanding managing director” who has made lots of money for all the shareholders. Shame about the 40% slump in the share price since November 2004, something Gay partly blamed on all the negative publicity his company has received of late.

The only more fawning address came from former state Liberal MP and federal candidate in Bass in 2001, Tony Benneworth. “I really admire this great company,” he declared whilst sitting in front of Robin Gray and without pointing out his Liberal Party history. “We need Gunns in Tasmania…it would be a catastrophe if they were not here.”

It seems both major parties are sucking up to the giant tree slaughterers ahead of next year’s Tasmanian election. I asked Gay about Mark Latham’s claim that he “runs Tasmania” but he declined to expand on his relationship with Premier Paul Lennon, who Iron Mark said “wouldn’t scratch himself” without John Gay’s say so.

The vote turned out to be a comfortable win for the incumbents as follows:

Candidate For Against Abstain Undirected
David McQuestin 176.9m 15.6m 7.4m 4.9m
Cornelius Van der lay 178.6m 15.8m 10.8m 4.9m
Stephen Mayne 27.3m 158.9m 3.3m 4.9m

However, even if the outsider had got 94% of the “for” and “against” vote, I still would have lost thanks to the undirected proxies and the rort that is the old “no vacancy” tactic.

John Gay was told I’d be running for the board every year until he relented and offered himself up for election like every other executive chairman and he conceded this would now be considered, as would the “no vacancy” tactic and the retirement benefit scheme for directors which attracted a modest 15 million protest votes against the remuneration report.

The rest of the meeting was a relatively civilised affair with no interjections or shouting, as apparently occurred at the 2001 meeting when the Wilderness Society ferals took over.

Les Rochester, the former journalist who is running the Tamar Residents Action Committee (TRAC) Valley spoke eloquently, as did numerous other respectable anti-logging and anti-pulp mill shareholders or proxies. A lot of the questions were detailed and sensible and the more erudite and informed answers came from Les Baker and the company auditor. John Gay seemed to have little patience with the whole process.

Gay is clearly frustrated that the pulp mill is being so bitterly opposed when he has been pressured into doing it for decades by greenies and everyone else. He pointed out that woodchips fetching $80 a tonne would now be value added into pulp that would fetch $700 a tonne, but still the Greenies aren’t happy.

However, despite expressing confidence it will proceed, this does not appear so sure. Les Rochester was elected to the West Tamar council yesterday (HERE) and there’s every chance that the Greens could hold the balance of power after next year’s state election.

If that happens, share in Gunns would plunge below $2 as they have only prospered courtesy of sweetheart deals with successive Liberal and Labor governments over the past decade.

Thanks:
Crikey

Check the share price:
HERE