It’s quite clear, we need transparency

19/11/2008 - 22:00


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TRANSPARENCY is a fascinating concept and last week I encountered two vastly different examples of its application, or more accurately, its absence.

It’s quite clear, we need transparency

TRANSPARENCY is a fascinating concept and last week I encountered two vastly different examples of its application, or more accurately, its absence.

One was at Wesfarmers Ltd's annual meeting held in front a crowd that swelled above 1,000, while the other was at a far more select crowd for a Committee for Economic Development Australia function entitled Lessons from the Gas Crisis.

At Wesfarmers, proxy voters took the board to task over its bonus package for managing director Richard Goyder, believing the package was not transparent enough because the five-year return on equity targets were not released due to commercial confidentiality.

In other words, the company was not transparent enough, and was berated for it.

However, as a spectator at that event, I did get the feeling that not all shareholders were as angered by the board's decision as the proxy votes showed. In fact one shareholder suggested that Wesfarmers was copping a battering due to general investor sentiment about highly paid CEOs.

That may well be true. In my view, Wesfarmers is often treated poorly by the mainly interstate investment community, which simply doesn't like the fact that this major company is Perth-based.

Of course, Wesfarmers has been hit by the global financial crisis like every other company, perhaps more so because it has stated many times that its turnaround of Coles has a further four years to run.

The fact is the fund management community has such short-term investment horizons that it can't bear this long-term approach.

To turn their short-term thinking into a governance issue over executive remuneration at one of Australia's most successful companies was a little surprising, especially when there are so many examples of poor performance being rewarded and those very same investors doing nothing about it.

So from transparency in a public company, I'll now turn my attention to the same issue in the energy field.

When it came to the Varanus Island event last week, it was, I thought, quite revealing to find how little the public knows about the security of our energy supply.

Among the excellent speakers was Ken Brown, who as general manager of system management at Western Power knows very well how close to the wire we go in terms of meeting the state's energy needs.

In discussing Varanus, and its pre-cursor when the North West Shelf supply failed for about 50 hours in January, Mr Brown revealed we have had these problems for 20 years, but only a few get out to the public.

When I quizzed the panel about whether keeping supply-side issues a secret was a good idea, Mr Brown said that care had to be taken not to create panic in the market.

Fair enough, balance has to be there. But when you see the way water has been handled, for instance, with the regular publication of storage and usage levels not creating any public hysteria, you have to wonder why energy is any different.

I would have thought increased community awareness of the fragility of our energy systems might assist business to plan, not to mention provide support for additional investment or tariff increases. If incidents are inevitable, we ought to be prepared for them.

What worries me is that information about a vital input into our economy, energy availability, is not transparent. I reckon this is far more important than any CEO's pay packet.


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