Featured, News - Written by Renai LeMay on Monday, November 22, 2010 8:27 - 0 Comments
Future Fund snubs Telstra
Telstra’s shareholders voted overwhelmingly in favour of three resolutions at its annual general meeting on Friday. The only problem? The company’s largest shareholder, the Federal Government’s Future Fund, issued a protest vote against all three.
On paper, the resolutions appeared relatively minor — relating to the appointment of a new director to Telstra’s board, the adoption of the remuneration report which governs the pay of the telco’s leadership, and the adoption of a modified constitution for the company. All three resolutions were passed by shareholder vote of between 75 and 80 percent.
However, in a statement issued Friday, the Future Fund — which owns about 10 percent of Telstra, worth several billion dollars — revealed it had voted against the trio of motions, stating that its decision was made based on its voting policy and principles designed to protect and enhance shareholder value.
First, the Future Fund said, it voted against the board appointment because it believed Telstra would benefit from increasing the level of telecommunications experience among its non-executive directors, “particularly given the very significant changes in the company’s operations that will have a lasting impact on shareholder value”.
Just two of Telstra’s non-executive directors have direct experience in the telecommunications sector — Geoffrey Cousins, who was the first chief executive of Optus Vision, the joint venture between Optus and Continental Cablevision which built Optus’ HFC cable network, and lawyer and US telecommunications veteran John Zeglis, who let AT&T’s Wireless Group in the US for five years from 1999 to 2004.
Furthermore, the Future Fund also objected to the changes to Telstra’s constitution.
“Resolutions to reduced the maximum number of director positions to 11 while making a further appointment have the effect of filling the board and preventing the appointment of non-executive directors with appropriate telecommunications experience,” the group wrote.
And even Telstra’s remuneration report came under pressure, with the Future Fund indicating that it had concerns about Telstra’s internal customer service overhaul, despite acknowledging the need to provide competitive remuneration to executives.
“There is inadequate detail around how the returns to be generated from the Project New reinvestment program will be measured,” the Future Fund wrote. “The Board of Guardians is also concerns at the use of a free cash flow measure as a hurdle for the Long Term Incentive Plan while the company is negotiating payments from NBN Co and the limited clarity on how this approach will align remuneration to the creation of shareholder value.”
The Future Fund is gradually and publicly reducing its share of Telstra — for example, selling down a full one percent in recent months, according to a recent Telstra statement to the Australian Stock Exchange. It is doing so with a view to rebalancing its portfolio
However, in its statement the organisation — which manages various funds worth $69.31 billion for the Federal Government, including relating to public sector superannuation — pointed out that it remained Telstra’s largest shareholder (courtesy of the transferral of shares into its coffers as part of the telco’s privatisation) and intended to “engage constructively with the company” and to exercise its ownership rights to enhance shareholder value.
Despite the fact that most shareholders voted in favour of the motions, the Future Fund wasn’t the only shareholder to pinion the telco on Friday at the AGM.
A number of small shareholders angry about the company’s dwindling share price expressed their concerns directly to the company’s management, with one accusing the beleaguered telco of having suffered “ten years of failure” in terms of its management and another branding the situation “a shocker”.
Telstra’s share price is currently languishing around the $2.60 mark, close to its 52-week low of $2.55 and close to its all-time low since it was listed in 1997. The company’s share price has steadily declined since the turn of the decade in 2000, when it was above $9.
Image credit: Telstra
Blog, Enterprise IT - Jul 5, 2014 13:53 - 0 Comments
More In Enterprise IT
- Qld’s Grant joins analyst firm IBRS
- Westpac dumps desk phones for Samsung Android mobiles
- Ministers’ cloud approval lasted just a year
- WA Govt can’t fund school IT upgrades
- Turnbull outlines Govt ICT vision
Blog, Telecommunications - Jul 5, 2014 12:12 - 0 Comments
More In Telecommunications
- Telstra gets $150m for NBN FTTN trial
- How Australia got online 25 years ago
- Palmer pushes for minimalist NBN policy
- NBN debate heats up at IEEE conference
- Spirit deploys 200Mbps FTTB to Southbank
Analysis, Industry, Internet - Jun 23, 2014 10:33 - 0 Comments
More In Industry
- ABC tech reporter founds micro-transactions startup
- Australia’s got ICT talent: So how do we make the most of it?
- ‘Thriving’ Aussie tech incubator scene a ‘mirage’
- Corporate highs: The US P-TECH model for schools in Australia?
- Facebook wants to hide its Australian earnings
Blog, Digital Rights - Jun 30, 2014 22:24 - 0 Comments
More In Digital Rights
- “Rational debate” needed around surveillance
- Web blocking technically impossible: iiNet reminds Govt of undisputed fact
- We like e-readers – but library users are still borrowing books
- Coalition, Labor support new surveillance laws
- Anti-piracy laws will increase piracy, says Budde