It has been years since the pokie pioneer Len Ainsworth has darkened the door of Aristocrat Leisure, but he is still costing the poker machine maker he founded in all sorts of ways.
A shareholder at yesterday's annual meeting who was lamenting Aristocrat's woeful performance noted that all the new poker machines being installed in his local pubs are from Ainsworth's new company Ainsworth Game Technology, not Aristocrat.
The point was acknowledged by the Aristocrat chairman, Ian Blackburne, who said that "Aristocrat was, quite frankly, uncompetitive", while insisting things were improving under the new broom, Jamie Odell.
One thing the dynamic duo cannot change is the largesse written into Ainsworth's contract before leaving Aristocrat. It ensures that he still receives $100,000 a year "for the term of his natural life" plus a car of his choice. "And yes, he changes cars," Odell added.
There are long odds on Odell engineering a similar deal from Aristocrat, but at least shareholders agreed to approve performance share rights yesterday that could award him more than a million shares over the next three years.
The hurdles sound quite onerous until you realise that the share price is less than 20 per cent of its 2006 levels, the dividend per share has shrunk even further and earnings per share is almost as bad.
So perhaps it was appropriate that the AGM approving the plan was held at The Mint on Macquarie Street and not at the usual venue, Star City Casino.
BIN LADEN QUERY
The chief executive of ANZ, Mike Smith, must have thought he was in the clear yesterday when he neared the end of his second-quarter update conference call to analysts without any mention of Osama bin Laden.
That was until T.S. Lim of Southern Cross Equities asked one final question. "I think [events] in Pakistan in the last 24 hours possibly could make the world a more dangerous place," Lim observed.
"I think based on your experience in terms of living dangerously, is that good for business?"
"Well, I hope he wasn't a customer of ours," said Smith, who otherwise seemed to cover all bases on the potential impact of bin Laden's death. The ANZ boss said it was a "closing of the chapter ... but the book continues".
THE KING IS BACK
The recently departed chief executive of Leighton Holdings, Wal King, might expect a less jubilant reception today when attends his first annual shareholder meeting since his rousing send-off at Leighton's annual get-together last year. King, who was honoured with a truck-sized cake and the brochure The Wal Years at that meeting, will this morning be up for re-election as a director of Coca-Cola Amatil.
One wonders whether King and his fellow Amatil directors WILL cop some collateral damage from Leighton's recent $1.1 billion pre-tax earnings downgrade.
In The Wal Years, the chairman of Amatil, David Gonski, offered one of the many testimonials about King's record at Leighton. "His contribution has been to take it from a good company and make it into a great company." Also up for election as an Amatil director today will be "La Vigneron", Ilana Atlas, the wife of the outgoing ASIC chairman, "Le Vigneron", Tony D'Aloisio.
INDEPENDENTS DAY
Keith Neate, the former right-hand man to the ex-managing director of Virgin Blue Brett Godfrey has taken up another high carbon emission-related role.
QR National yesterday named Neate as the new chief financial officer of its coal division. No word yet on Neate's salary. But one might expect he will get a pay rise from his $425,000 base salary at Virgin Blue.
QR also announced the appointment of a Credit Suisse operative, Prue Mackenzie, as its new general manager for commercial.
QR's eight non-executive directors should also be able to draw on the abilities of Mackenzie should the company ever get a takeover bid.
Apart from having worked on QR's initial public offer, one of Mackenzie's pet subjects is the premium obtained by companies with an independent board. In her honours thesis at Queensland University, Mackenzie found - based on a sample of 78 companies - that an independent board enhanced an "initial bid premium" by 20.8 per cent. She went on to co-scribe several more papers on the same subject.
"Taken as a whole, the results indicate that board composition is a statistically and economically significant contributor to the size of takeover premia," said one of her co-authored papers from 2004. One wonders if she ever passed on this advice as an investment banker.
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Frequently Asked Questions about this Article…
Who is Len Ainsworth and how is he still affecting Aristocrat Leisure?
Len Ainsworth is the pokie pioneer who founded Aristocrat Leisure and now runs Ainsworth Game Technology. The article notes that pubs in some areas are installing Ainsworth machines rather than Aristocrat’s, and that Ainsworth still receives a legacy contract payment of $100,000 a year for life plus a car from Aristocrat.
What happened at Aristocrat’s AGM regarding CEO Jamie Odell and performance share rights?
Shareholders approved a performance share rights plan that could award CEO Jamie Odell more than one million shares over the next three years. The plan passed despite comments at the AGM about Aristocrat’s recent performance and past share-price weakness.
Why were some investors concerned about Aristocrat’s competitiveness?
A shareholder at the AGM pointed out that new poker machines in local pubs were coming from Ainsworth Game Technology, not Aristocrat. Aristocrat chairman Ian Blackburne acknowledged the company was “quite frankly uncompetitive,” while CEO Jamie Odell said things were improving under his leadership.
How have Aristocrat’s share price, dividends and earnings been described in the article?
The article says Aristocrat’s share price is now less than 20% of its 2006 levels, the dividend per share has shrunk further, and earnings per share are ‘almost as bad,’ underscoring the company’s recent decline in market performance.
What notable executive and board appointments were mentioned that investors should know about?
The article reports QR National named Keith Neate as chief financial officer of its coal division and appointed Prue Mackenzie as general manager for commercial. It also notes former Leighton CEO Wal King is up for election as a director of Coca‑Cola Amatil following Leighton’s earnings downgrade.
What did research mentioned in the article say about independent boards and takeover premiums?
Prue Mackenzie’s honours thesis at Queensland University, cited in the article, found that companies with an independent board obtained a larger initial bid premium — about a 20.8% enhancement in her 78-company sample. A co-authored paper concluded board composition is a statistically and economically significant contributor to takeover premia.
How did ANZ’s CEO respond to questions about geopolitical risk in the article?
ANZ chief executive Mike Smith was asked whether events in Pakistan and the death of Osama bin Laden might make the world more dangerous and whether that was good for business. Smith quipped he hoped bin Laden wasn’t a customer and said the event represented a 'closing of the chapter... but the book continues,' indicating a measured view of the impact on business.
What practical takeaways from this article should everyday investors watch for in companies like Aristocrat?
Everyday investors should watch AGM outcomes such as approvals of executive share plans, monitor share-price and dividend trends, pay attention to competitive dynamics (for example, rival products gaining market share), and consider corporate governance signals like board composition — all themes highlighted by the Aristocrat AGM coverage.
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