Shareholders lash Southern Cross board
Southern Cross received a first strike at its shareholders' meeting in Melbourne on Tuesday with more than 25 per cent of shareholders rejecting its remuneration report. Investors also recorded a strong protest vote against the re-election of directors.
More than 172 million votes were cast against its remuneration report, and about 382 million votes in favour, giving the resolution a "no" vote of more than 30 per cent.
Speaking of the first strike, Southern Cross chairman Max Moore-Wilton told Fairfax Media: "We will be addressing it and speaking to our investors in detail about any issues which they have."
About 25 per cent of votes were also cast against the re-election of director Chris de Boer.
However, it was an improvement on last year, when 43 per cent of votes were cast against the re-election of Mr Moore-Wilton and 39 per cent against another director, Leon Pasternak.
Mr Moore-Wilton was typically forthright at this year's meeting when asked if there was a cultural problem at the group's radio stations, which were responsible for high-profile gaffes and controversies, including the royal prank call.
"These incidents were unfortunate, no doubt about that," he said. "But in the immortal words of someone whose identity I cannot recall, 'Shit happens'."
A report from the Australian Shareholders Association said it was not aware of any other ASX 200 company "where a range of directors have been so unpopular with investors". The ASA was undecided on the remuneration report vote ahead of the meeting but recommended a vote against the re-election of Mr de Boer.
According to the ASA, one of the sore points for investors has been the excessive fees paid out to Macquarie Group, which listed the original media group in 2005 and remains its largest shareholder with a 26.5 per cent stake.
Southern Cross has also had the misfortune of being affiliated with the Ten Network for most of its regional television stations, which have performed poorly as a result.
A deal to sign up as an affiliate with Nine Entertainment - and possibly merge with the soon-to-be listed broadcaster - also failed.
If Southern Cross receives a second strike at next year's shareholder meeting, with a no vote on its remuneration report of more than 25 per cent, it will be forced to hold a resolution to spill its board.
Southern Cross chief executive Rhys Holleran told Tuesday's meeting the first quarter had traded positively compared with last year but advertising failed to maintain its election boost.
While July and August produced "strong results", according to Mr Holleran, "September was somewhat subdued and pulled back performance a little.
"While consumer and business confidence indices are trending positively, retail spending is still very subdued and advertising markets are still short."
Revenue declines for the Ten broadcast product have also stabilised, Mr Holleran informed the shareholders.