Tabcorp’s smarter investors
WE saw a refreshing and – I have to say, gob-smackingly surprising – outbreak of rationality from both shareholders and a company chairman at the AGM of wagering group Tabcorp yesterday.
This was in stark contrast to what happened at the Telstra AGM the previous day. Utterly incoherent rage hardly captures the situation where 62 per cent of shareholders vote to reject the board’s Remuneration Report, but over 99 per cent vote to reelect individual directors responsible for that very report!
Surely, if you were rational, you wouldn’t want just to make the utterly symbolic – and ultimately also utterly fatuous – gesture of voting down the RemReport; you might actually want to rather more than symbolically sack or at least reprimand at least one director.
Well, what didn’t happen at Telstra did happen at Tabcorp. Around 40 per cent of shareholders voted to reject the RemReport and 40 per cent of shareholders voted against the election of one (of two) directors.
Yes, both votes turned out to be symbolic. The 40 per cent was enough to – symbolically – record a “first strike” (of more than 25 per cent) against the RemReport; but the 40 per cent obviously did not get to the 50.1 per cent needed to sack the director.
Now, I’m making no judgment on the appropriateness of sacking this particular director. Simply, that it’s the rational thing to do or to attempt to do: to follow up a “no” vote on the RemReport with a “no” vote on at least one director responsible for it.
It’s worth further noting that the second director could not be held responsible as he was joining the board; and he got a 98.7 per cent tick. More, even nuanced, rationality.
The same comment goes for the 60 per cent who ticked both the RemReport and both directors.
At Telstra only 38 per cent of shareholders behaved rationally and coherently in doing both. Tabcorp chairman Paula Dwyer impressed by robustly defending both her board’s RemReport and executive management’s performance that justified the remuneration.
Too often – like, dare I note it, too many politicians – chairmen and boards are not prepared to “own” their decisions and their executives; in defending them and also being prepared to take the rap for them.
Even more impressively, Dwyer was defending a RemReport (and more, to stress, underlying management performance) in the context of having engaged with shareholder concerns over the structure of executive remuneration and a willingness to modify it. I guess the big puzzle is how come Tabcorp has both a chairman and shareholders who both know that nuance is not a river in France, when Telstra does not – even though they are probably much the same group of shareholders?