Crown Resorts shareholders will only have themselves to blame if they don’t don’t lob a loud protest vote when the casino operator holds its annual general meeting next week.
Deputy chairman John Horvath, who has been on the board for a decade and was the former personal physician of the late Kerry Packer; Guy Jalland, who signed off on providing guidance on Crown’s financial forecasts to Melco before the share sale was announced; and Jane Halton, who is also on the board of ANZ Bank, are all up for re-election at the October 22 AGM.
At previous annual meetings, James Packer has used his majority shareholding to fend off protest votes against remuneration packages or the re-election of directors.
But in light of the shocking evidence that has come out of the NSW inquiry into Crown’s suitability to hold a licence, it will be interesting to see whether he will try and win some brownie points with the inquiry and abstain from voting his 36 per cent holding.
Proxy adviser Ownership Matters is recommending shareholders vote against the reappointment of the three directors that are up for renewal.
As the inquiry turns its focus to the role of Crown’s directors, including what they knew, what they didn’t know and what they failed to ask, it has become glaringly obvious that the board needs a massive overhaul. The time to start is at the AGM.
Packer himself told the inquiry last week, “I think that the Crown board has a lot to think about in terms of who the right people are for the right jobs”, and “I think the board will be more independent than it was in the past”.
On Tuesday, three so-called independent directors – Andrew Demetriou, Antonia Korsanos and Horwath – gave evidence. Like Harold Mitchell’s evidence on Friday it was excruciating and confronting in different ways.
Mitchell’s response to what his conversations with Packer were about was: how to lose weight. He tried to play the daggy grandad role and make light of questions such as whether he had training in anti-money laundering, to which he said he recently completed an online module that took 30 minutes to complete “if you are slow at it”.
Mitchell has sat on the Crown board for almost a decade. His performance at the inquiry and the evidence that was heard raises serious questions about the value of his contribution to minority shareholders.
Demetriou’s appearance was equally disturbing but also enlightening. That he used secret notes during his testimony that broke the inquiry’s protocol was shocking. Even more shocking was that the prompts and reminders were about the definition of an independent director, which he wrote down in red, and a series of words in capital letters relating to corporate governance and culture.
That an independent director of any board, never mind a top 100 listed company, felt he needed to take in secret notes to answer such basic and fundamental questions, speaks volumes.
Commissioner Bergin said “Oh Mr Demetriou, why did you do it?” He did it and he should resign. It goes to his reliability as a witness and as an independent director of the Crown board, which was tested even further when an email was read out from him to Packer, in which he told Packer he was committed to “serving the best interests of Crown, and most importantly, you.”
Korsanos, who joined the board as an independent director when she was still chief financial officer of Aristocrat, a poker machine operator that supplied up to half Crown’s gaming machines in Australia, appeared more on the ball.
But when asked by Commissioner Patricia Bergin about board renewal, including whether the tenure of some might be seen as lengthy, she said “I don’t want to offend anybody”.
This reveals another problem about the Australian directors club. The club doesn’t like inquisitive directors, it wants consensus and directors that fall into line.
Horvath, for his part, responded to a number of critical questions with “I can’t accurately recall” or that he didn’t know or had no recollection.
Anyone investing in Crown Resorts would have known it is a dirty business, that Packer looms large and that it takes a special breed of director to take on the role. What they wouldn’t have known was how bad it would look and how quickly it would unravel once the public spotlight was put on it.
Packer is now a seller and Crown is in crisis. Who he chooses to sell his stake to, how much he sells it for and whether he sells the entire 36 per cent or less, will ultimately be determined by him. The rest of the shareholders have to cop it. They have the AGM to make a stand.
Source: Thanks smh.com