Nearly a year after seeking board seats and more than six months after their demand became hostile, Kerry Stokes and Peter Gammell are to become directors of West Australian Newspaper Holdings Ltd.
On the face of it the deal, which comes after months of negotiation following a shareholder vote, is a big win for the Seven Network Ltd camp which Mr Stokes leads.
After failing to win majority shareholder support in April it was believed a compromise candidate would be found to represent Seven.
Since then, however, Seven has added to its shareholding, creeping to 22.4 per cent, adding to investor concerns that the extraordinary meeting showdown could be re-lived at the company's annual general meeting.
While the Seven camp lost in April, it had less than 20 per cent shareholding in WAN at the time and the result was very close. It also left a lot of shareholders disappointed that a compromise had not been found earlier.
WAN chairman Peter Mansell said Seven was always going to get board representation as WAN's biggest stakeholder and today's outcome simply placed constraints to safeguard other investors' interests.
Mr Mansell said that the addition of Mr Gammell and Mr Stokes came along with an expansion of the board to eight directors, the retention of an independent chairman and an agreed conflict of interest policy.
He said that this result dealt with the control and conflict issues that prompted the board to put Seven's demands to a shareholder vote.
Mr Mansell said Seven was legally within its rights to increase its shareholding, despite intimating prior to theshareholder vote that it would not do so.
"We have to be big, pragmatic people," he said.
"They are entitled to creep and exercised their legal right.
"There is only so much you can control.
"I can't control how many shares they buy or how they vote.
"But we can control the composition of the board, the independence of the chairman and conflict issues."
Mr Mansell said he had no regrets about the very public battle with Seven, including the narrow shareholder vote which cost the company $3.4 million, because he believed it was in all shareholders best interests.
"It was an investment I would make again," he said.
Below is the full announcement:
The Chairman of West Australian Newspapers Holdings Limited (WAN), Mr Peter Mansell, announced today that the WAN board has invited two representatives of Seven Network Limited (Seven), Mr Kerry Stokes AC and Mr Peter Gammell, to join the WAN board. Seven, WAN's largest shareholder, owns approximately 22.4% of WAN's ordinary shares.
As a result of the appointment of the two Seven representatives, the size of the WAN Board has been increased today from six to eight directors, comprising five independent directors, two representatives of Seven and the Managing Director.
The incumbent WAN board believes the concerns it raised in the lead-up to WAN's last general meeting have been addressed given the changes in board size, composition and the agreement that all WAN directors will sign and abide by a conflict of interest protocol.
WAN Chairman, Mr Peter Mansell said: "The appointment of two Seven representatives reflects Seven's ownership level and appropriately balances Seven's request for board representation with the incumbent board's desire to maintain a strong culture of board independence, for the benefit of all shareholders. As representatives of WAN's largest shareholder, the board looks forward to a co-operative relationship with Mr Stokes and Mr Gammell and to continuing to position WAN for long-term growth."
Seven Executive Chairman, Kerry Stokes, said: "We are pleased that the WAN board has accommodated our request for board representation. Peter and I look forward to making a contribution to WAN and to working for the benefit of all shareholders."
Doug Flynn was appointed to the WAN board last month to replace Erich Fraunschiel who is retiring at the WAN Annual General Meeting, which will be held on November 5, 2008. As required by the WAN constitution, Messrs Stokes, Gammell and Flynn will each stand for reelection at the AGM.
WAN has commissioned a leading search firm to assist in identifying a further independent non-executive director, reflecting the board's commitment to attracting directors of the highest calibre to WAN.