12/11/2008 - 22:00

New Stokes challenge for Mansell

12/11/2008 - 22:00


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THE Riverside Theatre auditorium at the Perth Convention and Exhibition Centre is a vast and imposing space when it is all-but empty.

THE Riverside Theatre auditorium at the Perth Convention and Exhibition Centre is a vast and imposing space when it is all-but empty.

With less than 10 per cent of its 2,500 seats occupied for the WA Newspapers Holdings Ltd annual general meeting held last week, its vacant spaces and dark recesses seemed to highlight the isolation of Peter Mansell as he chaired the occasion.

Even the addition of three new directors on stage and a front-row conga line of dark-suited WAN executives failed to take the focus away from Mr Mansell, who spent much of the meeting standing at the lectern awkwardly dealing with the reality of playing a form of corporate role-reversal.

Just six months earlier, Mr Mansell had led a boardroom fight against Kerry Stokes and his fellow Seven Network Ltd director, Peter Gammell.

It was a very public stoush, costing WAN more than $3 million, during which shareholders were warned repeatedly about Seven's motivations for wanting its dominant shareholder inside the Western Australian publisher's camp.

Both sides engaged in a tough and, at times, personal public relations battle.

That culminated in a close loss by Seven at an April extraordinary meeting, one which contrasted to last week's AGM in so many ways - with the Hyatt's Grand Ballroom brimming with shareholders and pervaded by an almost incendiary atmosphere.

Since then, a compromise has been reached and Mr Stokes and Mr Gammell have joined the board. Despite WAN's trumpeting of a commitment to a majority of independent directors and a new conflict of interest policy, many perceive that Seven won the war.

Whatever your view on that, there must be few times more galling for any chairman than having to stand before the shareholders they represent and defend the very appointments they fought so hard against.

"I am satisfied they will act in the interests of all shareholders," Mr Mansell told the meeting on several occasions.

Worse, perhaps, for the chairman was that he repeatedly sought to deflect questions directed at Mr Stokes and Mr Gammell on matters his board had previously challenged the pair on.

Initially, Mr Mansell answered questions from shareholders to the newcomers, whose brief appointment required them to be re-elected at the meeting. At WAN meetings, he explained, individual directors were not required to speak at their re-election.

These were very awkward moments. The largely empty chamber almost echoed with the hollowness of the WAN board's victory and Mr Mansell's very difficult position.

He found himself chastised by the very shareholders he'd sought to protect six months ago and who demanded to hear directly from the Seven representatives.

"Directors are paid by shareholders and it does provide some interest and benefit to shareholders if they can look those directors in the eye and hear what they have to say when they come up for re-election," said one shareholder.

In the end, Mr Stokes relieved Mr Mansell of the torturous duty of defending his former corporate enemy by answering questions directly.

His answers to some key questions would not have filled cynically minded WAN shareholders with faith that their company was safe from a predatory Seven. Six months ago they were warned that Seven could slowly expand its grip on WAN, just as Mr Stokes had done to the television giant, via 'creep' purchases and buy-backs.

While backing current board policies, Mr Stokes gave himself plenty of wriggle room, as any self-respecting businessman would do under the circumstances.

For instance, Mr Stokes said he endorsed the policy of paying 100 per cent of profits as dividends but added a caveat.

"Obviously if circumstances change we have to look after the interests of the company," he said.

Similarly, on the subject of buy-backs, Mr Stokes gave himself an out.

"Personally, I only believe in them when a company has no borrowings and when shares are trading below what we believe they are currently worth," he said.

Even commenting retrospectively on the 3 per cent Seven had taken in WAN since the April meeting, in contrast to earlier promises not to creep up the register, Mr Stokes said that had been done to support the share price.

"We believe in the company, even though it is trading at a lot less than we paid for it," he said in his final comment prior to the closure of the meeting.

Mr Mansell remained poker-faced during all this.

One wonders, though, how he can share a boardroom with people whom he fought such a long and difficult campaign against, let alone defend them on stage.

Shareholders might even wonder how strongly he views the veracity of the agreement with Seven to maintain a majority of independent directors in the WAN boardroom. For instance, does that deal hold up if Seven emerges with, say, 30 per cent?

Perhaps Mr Mansell's legal background should make this reversal of situations easier to accept than many others would.

Lawyers often have to argue hard for client objectives, knowing full well the result may fall well short of that.

Often they also have to be the public face of acceptance of compromise, and argue what a good result it was.

The rest of us see the world in far more black and white terms than many in the legal profession. Most certainly have less experience in swallowing outcomes that don't suit us.

Nevertheless, it's a very different matter to be able to compromise to any significant degree at a personal level, no matter how much you encase it in the professionalism of a full-time director.

For that reason I would be very surprised if Mr Mansell remains on the WAN board in the short term. He's already put some distance between the original appointments of Mr Stokes and Mr Gammell, and the brave face at last week's meeting ought to be the final public act after a trying year.

While he's been on the WAN board for two years short of the 10-year guideline limit for the company, I have no doubt Mr Mansell will be gone long before he has to front another such meeting and defend his former critics.

And that's especially the case if he'd rather be telling the next near-empty auditorium: "I told you so".


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