WAN saga has a way to run

Did Kerry Stokes come close or miss by a mile in his showdown with the board of WA Newspapers Holdings Ltd?

It depends which way you look at it.

For some, the raw numbers show a very tight race, especially for the board seats held by Peter Mansell and Jenny Seabrook. The chairman, for instance, received 64.9 million votes by proxy, while 65.6 million were cast against him.

The votes cast at the meeting had little impact on the result and tended to favour the incumbents.

Undirected proxies amounted to a further 11.7 million votes, which could be cast by the chairman – almost the difference between the two results. WAN’s people also dispute any suggestion that undirected proxies are an advantage of incumbency, pointing out that the proxy form states very clearly how the chairman will vote if the boxes are not ticked.

Even with those undirected proxies, Mr Mansell received a little over 53 per cent of the votes cast, a close call in almost anybody’s language.

Just 6 million shares, less than 3 per cent of the company, needed to be voted in a different direction and the April 24 WAN meeting would have produced a very different outcome.

For others, though, the same numbers tell a very different story.

They say the Stokes’ camp didn’t just lose, it lost badly.

Take out Seven Network Ltd’s 40 million shares, said one WAN source, and the results look abysmal.

On that count, apart from Mr Stokes’ own votes, just 18 per cent of votes cast in the election favoured him.

“I can’t believe there are calls for his [Mr Mansell’s] head, look at the result,” said one source.

Overall, the win for the WAN board means Mr Stokes’ high-profile campaign involving three brokerages, a PR firm, Seven’s own resources and a dedicated website, persuaded just 12 per cent of shareholders that Mr Mansell ought to go.

Little wonder, then, reports indicate that Mr Stokes was livid with his advisers. So little was needed, in reality, to win, and yet so little ground was taken.

Of course, the vote for Mr Mansell’s seat was the critical one. Given the so-called “suicide pact” or “kamikaze” call of the board, which had decided that if one went they all went, had the chairman been unseated first up, Mr Stokes would have had a clean sweep.

Amazing what 3 per cent can do in a winner-takes-all battle.

The result, though, is not that clear cut.

The WAN board have won the day, but there seems to be a very clear mood among shareholders that the WAN strategy was flawed and that Seven must be accommodated.

Outspoken shareholder and anti-Stokes campaigner Bert Reuter seemed to reflect a mood among shareholders at the meeting last week that the board’s suicide pact was wrong, limiting the choice of voters.

“I don’t think shareholders want to have a gun held to their heads,” said Mr Reuter, whose own corporate background has some coincidental intersections with that of Mr Stokes.

While the minor shareholder (33,000 shares) was opposed to Mr Stokes having two board seats, Mr Reuter saw no problem with one being available to such a large stakeholder, again mirroring a commonly held view that the WAN board must now move to accommodate Seven.

This is seen as an expected outcome.

Mr Mansell said as much during the meeting of more 800 shareholders, perhaps his one conciliatory statement, made in the knowledge that he had won a long hard fight.

He said shareholders he spoke with prior to the meeting had made it clear that a stakeholder with nearly 20 per cent could not be shut out.

“They [shareholders] have said we should try to find an accommodation with our largest shareholder,” Mr Mansell said.

Just how that occurs is yet to be seen.

There is a high chance that part of an accommodation could mean some change to the existing WAN board.

Some in the business community and shareholders feel WAN’s directors have yet to pay the price for the purchase of a half share in Hoyts, which ultimately cost some $20 million.

And, while the WAN board made much of the report by GCI Glass Lewis regarding its recommendation to institutional shareholders against the Seven bid, there was also another adviser, RiskMetrics ISS Governance Services, which, among scenarios offered, made a suggestion that some form of protest vote against Mr Mansell could be lodged.

This also appeared to translate into a higher vote against Ms Seabrook, the most recent of WAN’s board appointments, and had little to do with anything that Mr Stokes or others have criticised the company for.

An accommodation of the Seven camp is unlikely to include either Mr Stokes or his key lieutenant Peter Gammell, given shareholders directly voted against them.

Both are on the board of Seven, which gave rise to the WAN board’s concerns about a conflict of interest. That point didn’t seem to score as well with shareholders as WAN’s other key argument about Stokes wanting control without paying a takeover premium.

So we may yet see some new person proposed as more independent representative of Seven, such as former Howard government minister Warwick Smith, who now chairs the advisory panel of Mr Stokes’ private company, Australian Capital Equity Pty Ltd.

WAN has also said it will look to expand the board and would seek advice to getting appropriate candidates.

“We have listened to shareholders and it’s quite clear from our shareholders that they would like us to look at size [of the board] and the composition of the skills on the board,” Mr Mansell told the meeting last week.

This is a clear shift from the AGM last year, when WAN shrugged off similar concerns about the board’s size, at five directors, and skills set.

One candidate who put his case very well at the meeting was former telco and media executive Peter Abery.

Shareholders were clearly impressed by his presentation as an independent nominee, as had Seven been prior to the meeting in giving him its backing.

It will depend on how that support from Seven is viewed as to whether Mr Abery could end up as an independent director of WAN.

Whatever the case, expect change to occur in the next few months, as the dust settles from last week’s public confrontation.