The most significant concession was announced by Crown on the eve of the AGM – the abandonment of two agreements that allowed Packer unfettered access to all of Crown’s private and market-sensitive financial information.
The first is the shared services agreement that essentially allowed for the outsourcing of some significant executive duties to executives from Packer’s private company Consolidated Press Holdings (CPH). The other agreement, dreamt up after Packer left the Crown board in 2018, was the controlling shareholder protocol agreement.
It was this agreement that controversially allowed Packer to receive Crown’s earnings forecasts in 2019 while in the process of selling a 10 per cent stake and an agreement to sell a further 9.9 per cent to Lawrence Ho’s Melco. Even more contentious was the fact that Packer passed this private information to Melco.
These matters were one of the major focuses of the inquiry being conducted by the NSW gaming regulator.
It is arguably an agreement that should never have been entered into and one that was not disclosed to minority shareholders. Its existence was only uncovered during the inquiry.
This means Packer’s ability to have his say at board level will be confined to the more conventional protocol of relying on non-independent board members who represent his interests – Guy Jalland, Michael Johnston and John Poynton.
These representatives – particularly Johnston and Jalland who are executives of CPH – will become the conduits for Packer. This explains why Packer voted his 36 per cent stake in favour of Jalland who was up for board re-election on Thursday.
It would have looked strange to support Jalland and not the two other directors facing a vote at the AGM – Jane Halton and John Horvath. Halton would have narrowly made it through without Packer’s support but Horvath, a long-standing director and former physician to Kerry Packer, needed the help of the major shareholder, CPH.
Despite getting over the line, Horvath announced his impending retirement which he said was in recognition of the size of the protest vote against him. Whether he received a gentle nudge from CPH or Crown will never be known.
Halton said she thought about resigning but “on balance” considered she was sufficiently supported by shareholders, despite a 24 per cent vote against her re-election.
Jalland received a far larger protest vote and acknowledged shareholders were unhappy with Crown’s performance but wanted the opportunity to help improve it.
Packer’s nod to improved corporate governance took the unusual form of a decision to abstain from voting on Crown’s remuneration report.
This resulted in the company receiving a ‘first strike’. (A second strike at next year’s AGM could result in a company’s entire board being spilled and forced to stand for re-election.)
Jalland said this represented CPH taking a conservative approach. It thus allowed minority shareholders to score a small albeit slightly meaningless win.
Losing the remuneration resolution would have little impact on CPH or Packer – a painless concession but one that made the company appear to be making some governance strides.
Crown chairman Helen Coonan has made numerous references to the need for board renewal – both during the inquiry and at the annual meeting.
Packer stalwart John Alexander was replaced by Coonan as chairman in January this year – in a move that counsel assisting the commission of inquiry, Naomi Sharp, described as a board coup undertaken while Alexander was overseas. Alexander quibbled with that characterisation during shareholder questioning on Thursday, saying he was in the country.
He resigned as a director on Thursday but will stay on until January in an executive role – for which he will be paid $3.5 million.
Having endured the annual meeting, directors and executives will need to steel themselves for the important protest. That will come from the gaming regulator – and potentially the Australian Securities and Investments Commission.
Elizabeth Knight comments on companies, markets and the economy.