03/12/2008 - 15:57

WAN directors surprise with the expected

03/12/2008 - 15:57

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The decision by three non-executive directors – chairman Peter Mansell, Jenny Seabrook and Mel Ward – to quit the board of WA’s biggest publisher en masse should not be a surprise.

WAN directors surprise with the expected

The decision by three non-executive directors – chairman Peter Mansell, Jenny Seabrook and Mel Ward – to quit the board of WA’s biggest publisher en masse should not be a surprise.

The trio, along with recenty departed director Erich Fraunshiel, had threatened as much when defending themselves earlier this year against attacks by Seven Network Ltd, the biggest shareholder in WA Newspapers Holdings Ltd.

Yet less than six months after their win, when it appeared to outsiders a reasonable accommodation for Seven’s demands had been found, their decision does come as a shock.

That is especially so when combined with news that managing director Ken Steinke will also step down.

Investors, no doubt, will be wondering what happens next. Depending on how you look at it they either voted slimly or overwhelmingly for the current board over Seven’s chairman Kerry Stokes and his key executive Peter Gammell.

That was something of a pyrrhic victory for the original board because they were clearly told by the shareholders to go away and find a compromise with Seven, despite saying during their campaign that such a compromise wasn’t really possible.

As their spokesman, Mr Mansell said that his board could not work with Mr Stokes. He warned that the media magnate would throw his weight around boardroom and Seven would try to take control of the company.

Despite that, the board announced a compromise recently by adding Mr Stokes and Mr Gammell to the board and signing a deal that meant there would be a majority of independent directors.

With Seven creeping its stake towards a controlling position and taking two seats on the board, however, the reality is that the previous WAN board has lost – albeit six months after the initial skirmish.

Even with the window dressing of an independence deal, the remaining directors still had to sit at a table with someone they’d previously stated they could not deal with.

If they were going to have any integrity – and I believe all the resigning directors do have that – then that was one compromise they could not make.

Today, they did as they said they would.

Unfortunately, it is a drastic step and, as many investors warned when the threat was first made, the changes will erase much of the corporate memory at WAN.

When Mr Steinke leaves, none of the directors will have been at WAN before September this year, an amazing position for such a long-established company. Even long-term company secretary Bernie Yates retired earlier this year.

Shareholders who hoped to have the best of both worlds, an independent board held to account by a major shareholder, may find they now have the tiger by the tale.

Mr Stokes will now be in the driver’s seat, able to influence key appointments at board and executive level to drive outcomes he believed the previous board had failed to achieve.

But with a drastic downturn in the economy, he will also be answerable to all those shareholders to whom he promised a better newspaper and more profitable company.

 

 

Correction: an earlier edition suggested CFO Tom Garven was resigning, that is not the case.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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