Why this week’s Crown Resorts AGM is a big deal

It’s hard to think of a company that has endured more leaks than Crown. Now, after a number of negative headlines and scandals, the 2019 Crown Resorts AGM in Melbourne this Thursday is tipped to be one of the most interesting shareholder gatherings of the year.

Big splashes in the Nine papers. Regular hits by whistleblowers who have been contacting independent MP Andrew Wilkie. Then, there’s James Packer’s two attempts this year to relinquish absolute control of Crown after 20 years as the dominant shareholder. This is going to be an issues-rich AGM at a company which has traditionally strived to avoid AGM scrutiny and shunned answering questions.

The notice of meeting spells out the agenda: shareholders are set to vote on the re-election of four directors — John Poynton, Helen Coonan, Harold Mitchell and Andrew Demetriou — plus the remuneration report.

Neither James Packer, who now controls 37% of Crown, nor fellow billionaire casino mogul Lawrence Ho, who controls 10%, will be in attendance but each will be able to listen to the live webcast (an innovation that was first introduced at the 2018 AGM in Perth).

The various proxy advisers have all issued their reports ahead of the meeting. The Australian Shareholders’ Association has recommended a vote against Packer board nominee John Poynton. The world’s most powerful proxy advisory firm ISS has gone against the remuneration report. Local outfit Ownership Matters, which is particularly influential with industry funds, has recommended against the re-election of advertising rich-lister Harold Mitchell on the grounds of board renewal.

Given Helen Coonan’s ridiculous workload and failure to buy any Crown Resorts shares during her eight-year stint on the board, it was surprising that CGI Glass Lewis was the only proxy adviser to recommend a vote against the former Howard-era communications minister.

Former AFL CEO Andrew Demetriou is the only candidate supported by all proxy advisers and it will be interesting to see if the Ho interests choose to vote their 10% stake on the board elections given they are yet to receive clearance to nominate their own candidate to the board.

The elephant in the room, however, will be the avalanche of allegations against Crown which have been led by Nine’s gun investigate reporter Nick McKenzie, along with the various whistleblower-fuelled attacks trotted out regularly by independent federal MP Andrew Wilkie, since early 2017. The most recent of these came to light last week.

With both the Foreign Investment Review Board and various state gambling regulators probing Crown on the media allegations, plus James Packer’s proposed $1.8 billion sale of a 20% stake in the company to the Ho interests, the AGM will provide an opportunity for some key questions to be asked.

But who exactly will be asking those questions? Crown takes AGM security more seriously than any other ASX 100 company, so visitors should not expect to gain entry. Even The Guardian’s Melissa Davey was locked out of the 2017 AGM in Melbourne. If you want to go, get one of Crown’s 50,000 shareholders to nominate you as their proxy before the proxy voting deadline of 10am on Tuesday morning.

There are currently 11 Crown directors, with James Packer nominating three of them, including executive chairman John Alexander. Surprisingly, Alexander is using the exemption afforded to CEOs to avoid election in 2019, even though he is executive chairman and was last elected in 2016.

The only other executive chairs to do this amongst ASX 100 companies over the past 20 years have included the likes of John Gay at Gunns, Rupert Murdoch at News Corp and Nick Falloon at Ten.

Billionaire executive chairmen such as Gerry Harvey at Harvey Norman and Kerry Stokes at Seven Group Holdings choose to put themselves up for election every three years. Alexander will be asked to explain his situation at the AGM.

There is also the question of Alexander’s pay at Crown. The former Fairfax newspaper editor has received a staggering $73 million from Crown and PBL over the past 16 years. Alexander is now 67 and, after spending 21 straight years as an executive with the Packers since being fired by Fairfax in 1998, there are some who doubt he’ll still be executive chairman of Crown Resorts a year from now. Famous for his cost-cutting, Alexander has his Melbourne casino workforce in open revolt. It’s an issue which is expected to flare on Thursday.

The company’s usual response to the various revelations over the past two years has been a combination of slow, overly aggressive and defensive. Can we expect more of the same? How Alexander handles the AGM, and all the issues therein, will help determine his fate.