QAV #637 — Chairman Mabb (ASA) Returns

[00:00:00] Cameron: Hi, wel­come to QAV. This is episode 637 and we’ve got a spe­cial guest on today, but before we get to the spe­cial guest, hi TK, how are you?

[00:00:15] Tony: Hey, good Cam.

[00:00:16] Cameron: Back in

[00:00:18] Cameron: Shid­ney?

[00:00:18] Tony: Yeah.

[00:00:19] Tony: Hel­lo to every­one. I’m going to be on the Gold Coast when you’re hear­ing this, I would think, hav­ing a

[00:00:23] Tony: nice break.

[00:00:24] Tony: So thanks to Steve for com­ing on and

[00:00:27] Cameron: Hey,

[00:00:27] Tony: in for me, I

[00:00:28] Cameron: We haven’t said who the guest is. Well, I guess

[00:00:30] Cameron: they’ve prob­a­bly seen it in the title. before we get to Steve, I want to

[00:00:33] Cameron: do a shout out to Ed Nixon, who invit­ed me up to present at the Noosa Stock Doc­tor’s Asso­ci­a­tion, um, the oth­er day, that was a lot of fun, did­n’t get to see any beach, did­n’t have time, had to get back for Kung Fu, but drove two hours to Noosa, did a dog and pony show and drove all the way back, but that was, that was nice to present to the Stock Doc­tor, hel­lo to all the Stock Doc­tor peo­ple in Noosa, uh, up there.[00:01:00]

[00:01:00] Cameron: And, um, hel­lo to, Steve and Kathy, who came onto the webi­nar last night too, and they’ve been long term mem­bers, but, had­n’t real­ly met them before. They’re from the Gold Coast. So, went through the lat­est buy list and stuff with them, which was always fun. But one of the things I want­ed to just point out, one of the things that was reaf­firmed to me at the Stock Doc­tor thing that I did, these peo­ple, you know, they’ve been invest­ing for a long time, uh, all use Stock Doc­tor obvi­ous­ly, smart peo­ple, and, and I sort of did my dog and pony show, explain how QAV works, and then they, uh, uh, opened up their port­fo­lio, they have like a group port­fo­lio, and they were talk­ing about, you know, things that they could add to it.

[00:01:42] Cameron: And after I’d just spo­ken for an hour about gen­er­al phi­los­o­phy is fig­ure out what some­thing’s worth and then try and buy it for less, I was just fas­ci­nat­ed that when they were ana­lyz­ing things to add to their port­fo­lio, not once did any­one talk about what its intrin­sic val­ue was [00:02:00]and, you know, whether or not they could get it at a dis­count.

[00:02:03] Cameron: Um, and so I remem­ber from time to time would pull up my buy list or check­list and go, yeah, well, I would­n’t buy that. Uh, you know, we would­n’t buy that at the moment because it’s Prop­Caf is 53. you have to wait 53 years for it to return the price. And,I was think­ing, I don’t think any of us have got 53 years in us, unless the AI catch­es up real­ly quick­ly.

[00:02:25] Cameron: But. Yeah. it was real­ly inter­est­ing just to see that, um, a lot of investors just don’t think about, what is the intrin­sic val­ue of a share and, can I get it at a dis­count right now? I think even peo­ple that have been invest­ing for a long time, that’s just not in their wheel­house.

[00:02:43] Cameron: It just does­n’t seem to be how most ama­teur investors think about invest­ing. What I now think of as sort of the fun­da­men­tal premise of invest­ing, fig­ure out what it’s worth and then buy it if you can get it cheap, just does­n’t seem to be on the [00:03:00] radar of a lot of investors, which I always find kind of inter­est­ing.

[00:03:03] Tony: Uh, yeah, I mean there’s, I agree with you. Um, and, you know, we’ve dis­cussed this before about where do you draw the line for a buy. Um, in terms of how many years you wait for the cash to be returned to you.

[00:03:15] Tony: And it’s, that’s a great answer. Um, it’s part of the mix. That’s why we don’t just use intrin­sic val­ue as our, as the num­ber one thing on our check­list. Um, but the way I look at it is the cheap­er some­thing is, the more, as Buf­fett would say, mar­gin of safe­ty you have if some­thing goes wrong. If, if you’re pay­ing 53 times cash flow for a share, because you think it’s going to, it’s grow­ing real­ly fast, and it’s, you know, the great­est things in sliced bread, it’s a, you know, biggest AI chip mak­er in the world, or it’s the biggest cryp­tocur­ren­cy hub in the world, or what­ev­er, coin exchange, or what­ev­er, uh, it, it just does­n’t take much to knock it off the rails, and, and you’ll nev­er get that 50 times cash flow.

[00:03:59] Tony: [00:04:00] Sud­den­ly that becomes 100 times cash flow. Um, or what­ev­er. So, you know,

[00:04:04] Tony: the, the cheap­er,

[00:04:06] Tony: the quick­er you can get repaid, the less like­ly you are to be derailed is the way

[00:04:10] Tony: I look at it.

[00:04:11] Cameron: Yeah. All right. Any­way,

[00:04:13] Cameron: with that, Uh, wel­come Chair­man Mabb from the Aus­tralian Share­hold­ers Asso­ci­a­tion back to the pod­cast. This is his

[00:04:20] Cameron: annu­al proxy vote dri­ve, as I said to him yes­ter­day. Give us your prox­ies. Give us your prox­ies.

[00:04:30] Steven: I will point out, Cam, it was you

[00:04:31] Steven: that con­tact­ed me, but, uh, but I’m very, I’m shame­less­ly

[00:04:34] Steven: hap­py to pro­mote for prox­ies.

[00:04:36] Steven: today. That

[00:04:37] Tony: He’s, he’s sit­ting here in his preacher’s robes with his

[00:04:40] Steven: that’s right. Please help.

[00:04:41] Tony: Come in, come in, join the church.

[00:04:44] Cameron: How are you, Steve?

[00:04:45] Steven: I’m won­der­ful. Plea­sure to be back. Thank you so

[00:04:48] Steven: much for the invi­ta­tion. And, uh, yeah, look­ing for­ward to hav­ing a bit of a chat and, uh, you know, shar­ing, shar­ing a few insights and ideas that might be help­ful

[00:04:55] Steven: for

[00:04:55] Cameron: And dirt, lots of dirt. I hope you’re bring­ing lots of ASA

[00:04:59] Steven: Got a [00:05:00] few

[00:05:00] Steven: sto­ries. Yeah. Got a few inter­est­ing sto­ries to high­light some of the points that

[00:05:03] Steven: might be inter­est­ing or

[00:05:04] Steven: rel­e­vant for peo­ple. So yeah, look­ing for­ward

[00:05:06] Steven: to the chat.

[00:05:07] Cameron: What’s been going on?

[00:05:08] Tony: Is this

[00:05:09] Cameron: Sor­ry.

[00:05:09] Tony: this the ASA rear win­dow?

[00:05:12] Cameron: Heh. Mm

[00:05:12] Steven: Pret­ty much. I do, I do read Rear

[00:05:14] Steven: Win­dow every day and I, I

[00:05:16] Steven: I love the

[00:05:17] Steven: way Joe Aston writes

[00:05:18] Steven: as I know you’re a bit of a fan too. Tony. But, uh, Yeah. I

[00:05:21] Steven: cer­tain­ly get some, some insights from some, of the things Joe

[00:05:24] Steven: writes that helps with our mon­i­tor­ing and over­sight of some

[00:05:27] Steven: of the com­pa­nies that a s

[00:05:28] Steven: a cov­ers as well.

[00:05:29] Steven: So, yeah, effec­tive­ly we’re, maybe a lit­tle less con­tro­ver­sial, con­tro­ver­sial ver­sion of Rear Win­dow with some of the com­pa­nies that we mon­i­tor, .

[00:05:39] Tony: Mm. A lit­tle less liti­gious, hope­ful­ly.

[00:05:40] Steven: yes, I don’t have prob­a­bly the same amount of legal sup­port that Joe has, I sus­pect, when he goes

[00:05:45] Steven: after some of these peo­ple. but

[00:05:47] Steven: but yeah, look­ing for­ward to hav­ing a chat about ASA a cou­ple of

[00:05:49] Steven: oth­er lit­tle things I’ve

[00:05:51] Steven: come across per­son­al­ly that I thought might be worth shar­ing as well.

[00:05:54] Steven: So, I’m not sure if you

[00:05:55] Steven: guys have looked at this or not, but there’s a, there’s a web­site called List­Corp. which is an [00:06:00] Aussie site, list­corp. com and effec­tive­ly you can, you can put in any com­pa­ny tick­et code you like and your email and they’ll start email­ing you all the announce­ments that are made by that com­pa­ny.

[00:06:12] Steven: Just, you know, an email into your inbox. So I find it real­ly easy to be hon­est. I don’t have to. set up the alerts in Stock Doc­tor and reset them and all that kind of stuff that I used to do. I just put the tick­er into my List­corp account now and all you need to give them is your email basi­cal­ly. and that way, each and every announce­ment that comes out, it could be a red flag or a bad news sto­ry or what­ev­er it is, I’ll get pinged in my inbox now auto­mat­i­cal­ly with­out hav­ing to go, go look­ing for it, direc­tor trades, all that kind of stuff.

[00:06:37] Steven: So yeah, if any­one’s inter­est­ed, listcorp.Com I’m find­ing is pret­ty help­ful to stay on top of, all those dif­fer­ent com­pa­ny announce­ments. And then there’s anoth­er web­site I just came across recent­ly called open­brief­ing.

[00:06:50] Steven: com. And they have all of the results announce­ments or brief­in­gs by man­age­ment to the mar­ket, for [00:07:00] free on that site.

[00:07:01] Steven: So, again, you can put in the com­pa­nies that you’re inter­est­ed in or just, go there and put the tick­er in of a com­pa­ny you’re inter­est­ed in. And you can look at the, the earn­ings call, the, the update from the CEO, the chair, what­ev­er it is, nor­mal­ly with­in half an hour. But there is.

[00:07:19] Steven: So, so if you are some­one that likes to fol­low what man­age­ment are say­ing when the annu­al report or the half year reports or what­ev­er come out, that’s a pret­ty good site too, instead of hav­ing to sign up, on the com­pa­ny’s investor site or what­ev­er, and make sure you’re there at the right time or what­ev­er.

[00:07:33] Steven: This is a way to just, watch it at a time that suits you, whether it’s a video or just a, Tele­con­fer­ence, they all go on Open Brief­ing. So, so yeah, I’ve found both of those pret­ty help­ful to fol­low along with my com­pa­nies

[00:07:45] Steven: and, some of our QAVers might be, might be,

[00:07:48] Steven: might find that help­ful as well for the QAV stocks they’re hold­ing.

[00:07:52] Cameron: Thanks. I’ll check those out.

[00:07:54] Tony: Good.

[00:07:55] Steven: Yeah,

[00:07:56] Cameron: So what else

[00:07:56] Steven: best thing is they’re free

[00:07:57] Steven: as well, so, which I

[00:07:59] Steven: like. Keep your fees low.[00:08:00]

[00:08:01] Cameron: That’s good. What else

[00:08:02] Cameron: have you been, uh, keep­ing your­self busy with, Steve?

[00:08:06] Steven: Well, we’ve, we’ve had a lot of, media over the last cou­ple of weeks at ASA, par­tic­u­lar­ly

[00:08:11] Steven: around the, the Qan­tas saga that’s play­ing out. so lots of

[00:08:16] Steven: requests for, I guess ASA’s

[00:08:18] Steven: posi­tion and com­ment on,what’s been hap­pen­ing, that most peo­ple have prob­a­bly read about or heard about over the last cou­ple of weeks.

[00:08:25] Steven: So that’s, that’s been keep­ing us busy. and at the moment we’re wait­ing for the remu­ner­a­tion report there to come out, which is, I think. was due this after­noon, but I think I heard they might have delayed it till Mon­day now. so we’re very inter­est­ed to see what, what, changes, if any, the board might have made to the remu­ner­a­tion, for this par­tic­u­lar year for Mr.

[00:08:45] Steven: Joyce, giv­en the, the, the things that have been com­ing to light around the ACCC inves­ti­ga­tion that was announced and, obvi­ous­ly their, their Sen­ate appear­ance a cou­ple of weeks ago. I see the Sen­ate have asked, Both Alan Joyce and the new CEO Vanes­sa Hud­son to front up [00:09:00]again next week.

[00:09:00] Steven: I think it is or the week after over the Qatar sit­u­a­tion. So there’s a lot going on here and lots of, main­stream press look­ing for, for com­ment, which is unusu­al. Often this stuff nor­mal­ly. kind of finds its way to the finan­cial press that we might read, but this seems to be kind of main­stream news giv­en how many peo­ple I guess know and use Qan­tas.

[00:09:17] Steven: So, so yeah, we’re, we’re, for the moment we’re just wait­ing to see the report and then we’ll, we’ll make an assess­ment from there like we do every year on whether we think the remu­ner­a­tion’s, fair and rea­son­able in the cir­cum­stances and, and how the boards applied, their own rules, if you like, to, to remu­ner­a­tion for Mr Joyce for this year.

[00:09:35] Steven: so yeah, if you’re, if you’re inter­est­ed in that, you’ll be able to find all that on the ASA web­site in a cou­ple of weeks time, prob­a­bly once the, the, the report of the vot­ing inten­tions have been writ­ten up, get­ting a few,

[00:09:46] Tony: Steve, how So, take us through the process there. How do you form a posi­tion on Qan­tas or the REM report? Do you go through a com­mit­tee? Do you have poli­cies you match it against

[00:09:56] Steven: yeah, it’s an excel­lent ques­tion, TK, So,

[00:09:58] Steven: yes,

[00:09:58] Steven: we, we have,a for­mal [00:10:00] pol­i­cy around all of the var­i­ous things that share­hold­ers get asked to vote on

[00:10:04] Steven: or affect share­hold­ers and that, That does­n’t change too much from year to year,

[00:10:08] Steven: but it’s a, it’s a pub­lic doc­u­ment. And, and we then share that with the

[00:10:13] Steven: board each year of the rough­ly the ASX 200 com­pa­nies that we mon­i­tor.

[00:10:18] Steven: So what hap­pens is we have a pol­i­cy com­mit­tee, that’s made up of mem­bers, the retail share­hold­ers, just like us, that, and a man­ag­er, and they get togeth­er and, just review those guide­lines every year, make sure they’re still fit for pur­pose, and if they are, then, out they go to the com­pa­nies again to say, this is what we’ll be look­ing for when you put out your annu­al reports.

[00:10:36] Steven: And then we have a team of about 120 peo­ple that are all vol­un­teers, just, reg­u­lar retail share­hold­ers again, but have an inter­est in,good gov­er­nance and the res­o­lu­tions and the vot­ing process and all that kind of thing. So they’ll then sit down and go through the annu­al report once it’s pub­lished and from there have nor­mal­ly have a meet­ing with the boards, typ­i­cal­ly the chair of the board and the head of the remu­ner­a­tion com­mit­tee.

[00:10:59] Steven: So the [00:11:00] peo­ple that are over­see­ing, direc­tors and, and the remu­ner­a­tion of the com­pa­ny, they’ll have a meet­ing, they’ll go through, what’s in the annu­al report and what the res­o­lu­tions are that are going to be put to share­hold­ers to vote on that year. And,if there’s any­thing there that’s unclear, obvi­ous­ly we’re try­ing to clar­i­fy that with the com­pa­ny before we put a vot­ing inten­tion togeth­er, or if it’s some­thing that we’re real­ly, unhap­py about, if you like, we talk through that with the com­pa­ny and, A, let them know what we’re not hap­py about, and B, give them a chance to, to,explain why they think we might be miss­ing some­thing.

[00:11:32] Steven: And then from there, the mon­i­tor will go away and put the vot­ing inten­tions togeth­er. Nor­mal­ly comes out a cou­ple of weeks before the AGM and that way peo­ple can have a look at it and, A, see how we sug­gest you should vote and B, the rea­sons why. And we’ll share that with the com­pa­ny as well. And that same mon­i­tor then will nor­mal­ly go to the AGM.

[00:11:51] Steven: They’ll vote. any­one that’s allo­cat­ed their votes to ASA, they’ll vote those votes at the meet­ing, and they’ll also ask ques­tions of [00:12:00] the chair, the CEO, who­ev­er it is that’s rel­e­vant at the AGM so that, they pub­licly get a chance to respond to, any­thing that we think it’s inter­est­ing, con­tro­ver­sial, wor­thy of a pub­lic com­ment, if you like.

[00:12:12] Steven: So, so yeah, that’s all vol­un­teer work. No one gets paid for any of that, but real­ly we’re try­ing to do it on behalf of, small share­hold­ers that may not have the time or the inter­est or the incli­na­tion to, to go to an AGM them­selves or to vote them­selves. So that’s, a quick overview, I guess, of how the, how the process works.

[00:12:30] Tony: Do you think, do you think share­hold­ers have vot­ed with their feet already on

[00:12:33] Steven: Well, yeah, I know that, Cam and I were talk­ing about it the oth­er

[00:12:36] Steven: day. That’s obvi­ous­ly some­thing you could Do right? If you’re not hap­py with how the

[00:12:39] Steven: com­pa­ny’s being man­aged or how

[00:12:41] Steven: their remu­ner­a­tion works, of course you can sell your shares, right? That’s always an option. but some­times you get peo­ple that still believe in the long

[00:12:47] Steven: term future of the com­pa­ny, for exam­ple, and they don’t want to sell their shares in one par­tic­u­lar remu­ner­a­tion issue.

[00:12:54] Steven: They just want to be heard. So that’s where You do get some share­hold­ers that say, Hey, I want to go to the AGM or I want to against [00:13:00] the REM report. Cause I want it to change. I still believe in the future of the com­pa­ny. I’m not going to sell my shares nec­es­sar­i­ly, but I’d like, the board or the man­age­ment team to change this.

[00:13:08] Steven: So it’s dif­fer­ent for every­one, right? Every­one’s got dif­fer­ent approach­es to, whether it’s a red flag sale and they’re out or whether it’s, this is an issue that I’d like to see change, but I’d still want to be a share­hold­er. So. Just depends where you sit on that. there’s cer­tain­ly times where I’ve sold my shares based on some­thing I’ve dis­cov­ered in a com­pa­ny, but there’s oth­er times where I still like the com­pa­ny and we can prob­a­bly talk about an exam­ple in a sec­ond, where I don’t want to exit my share­hold­ing, but I do want to flag some­thing at the upcom­ing AGM that, I’d like to see how they respond to.

[00:13:36] Steven: So,

[00:13:36] Steven: there’s,

[00:13:37] Tony: Does the ASA, giv­en that, does the ASA take posi­tions and move motions them­selves out­side of vot­ing on the agen­da? So, for exam­ple, if

[00:13:44] Tony: you took a posi­tion that, if, if a com­pa­ny faced Lit­i­ga­tion

[00:13:49] Tony: or, poten­tial

[00:13:51] Tony: legal action from the reg­u­la­tor after the CEO exits, there should be a

[00:13:54] Tony: bonus

[00:13:55] Tony: claw­back, and

[00:13:56] Tony: so move a motion to

[00:13:57] Tony: say

[00:13:58] Tony: all com­pa­ny [00:14:00] con­tracts going for­ward, should have a claw­back

[00:14:01] Steven: yeah, no, we don’t, we don’t move motions of our own. We’re not that activist, but what we would say to the com­pa­ny in that cir­cum­stance is, Share­hold­ers would expect you to build this in going for­ward, or it’s some­thing we’d like to see going for­ward, and we’ll be look­ing for this again next year, And most of the time, they’re prob­a­bly get­ting sim­i­lar ish feed­back from the big proxy advi­sors, because there’s, there’s anoth­er arm to all of this. Like, the ASA rep­re­sents small share­hold­ers like all of us, but there’s these big groups called proxy advi­sors that, that are,pay for ser­vice type, type groups, basi­cal­ly, that rep­re­sent big insti­tu­tions.

[00:14:33] Steven: So they’ll typ­i­cal­ly… rep­re­sent the Super­funds, for exam­ple, or Big Fund Man­agers, and they’ll put togeth­er vot­ing inten­tions that those orga­ni­za­tions pay them for. And most of the time, we’re pret­ty aligned with the proxy advi­sors on lots of issues. So if there’s some­thing that we’re real­ly unhap­py about with remu­ner­a­tion, for exam­ple, a lot of the time, the proxy advi­sors are on the same page, and the com­pa­ny will get that feed­back from, these dif­fer­ent orga­ni­za­tions that are over­see­ing how they’re, man­ag­ing these [00:15:00] issues.

[00:15:00] Steven: And, good or engaged boards typ­i­cal­ly then will try and improve or change those things the year after. So there is some, there is some real change that comes from these things over time. If you’ve got a board or a man­age­ment team that are tru­ly inter­est­ed in what their share­hold­ers think, there’s a hand­ful of com­pa­nies that don’t care, that are just like, we’re doing it our way, we don’t care what you say, like it or lump it, but I’d say that’s prob­a­bly less than 5%.

[00:15:22] Steven: of the ASX 200. The vast major­i­ty of those com­pa­nies these days are gen­uine­ly will­ing to engage and lis­ten to rea­son­able feed­back from those share­hold­ing groups and, often do tweak things or change things a year, par­tic­u­lar­ly around remu­ner­a­tion. I think we might have talked about this last time, but there is a pret­ty, hard hit­ting, clause, if you like, around remu­ner­a­tion reports, where if 25 per­cent of the share­hold­ers or more vote against the remu­ner­a­tion report in any giv­en year, that’s what they call a first strike.

[00:15:53] Steven: So effec­tive­ly, it’s, it’s not bind­ing. The com­pa­ny can still do what they want on remu­ner­a­tion, but they’ll record [00:16:00] a first strike if 25 per­cent or more of share­hold­ers vote against the rem and play in that year. And then if it hap­pens the sec­ond year, so two con­sec­u­tive years, if they did­n’t change things, or did­n’t improve things, or, did some­thing even worse the year after, what­ev­er it might be…

[00:16:13] Steven: When they get a sec­ond strike, then you have the poten­tial to spill part of the board. So effec­tive­ly vote part of the board,off. And most boards don’t want that, obvi­ous­ly. Most direc­tors or chairs don’t want to be spilled. They don’t want to lose their jobs. So when they do get a first strike, that’s nor­mal­ly when you see some pret­ty remu­ner­at­ing or incen­tiviz­ing their man­age­ment team the fol­low­ing year.

[00:16:37] Steven: because, self inter­est kicks in and a lot of them want to, want to keep their job the year after. So, so there is some, again, some mean­ing­ful change that comes from those things when enough share­hold­ers are unhap­py and vote against some­thing that they don’t think was, was fair or rea­son­able.

[00:16:52] Tony: you, does the ASA meet with the oth­er proxy advi­sors and coor­di­nate that

[00:16:56] Steven: No, not, not for­mal­ly. I mean, we bump

[00:16:58] Steven: into them and we chat to them [00:17:00] from time to time

[00:17:00] Steven: but there’s no for­mal, you, know, tie

[00:17:02] Steven: up. We don’t

[00:17:03] Steven: dis­cuss com­pa­nies in advance or get on the same page for­mal­ly. It’s more just, we have a pro­fes­sion­al work­ing, you, know,

[00:17:10] Steven: rap­port with each oth­er but there’s no, close ties or col­lud­ing or com­par­ing of vot­ing inten­tions before meet­ings or any­thing like that.

[00:17:17] Steven: So yeah, we, we, we’re cer­tain­ly not hos­tile or, in oppo­si­tion with each oth­er, but there’s no, no, no tie up or close work­ing rela­tion­ship like that on an indi­vid­ual com­pa­ny.

[00:17:28] Tony: You find the ASA nor­mal­ly lines up with the oth­er proxy advi­sors or are there retail dif­fer­ences to their kind of

[00:17:34] Steven: Yeah, there’s, there’s a few dif­fer­ences. So prob­a­bly one of the biggest one is actu­al­ly

[00:17:38] Steven: around cap­i­tal rais­ings.

[00:17:39] Steven: So, lots of, I guess lots of lis­ten­ers have prob­a­bly had a com­pa­ny over their jour­ney that’s, raised cap­i­tal at

[00:17:45] Steven: some point, share­hold­ers for some more mon­ey. And the big­ger insti­tu­tions get a dif­fer­ent type of cap­i­tal rais­ing nor­mal­ly to what the retail share­hold­ers typ­i­cal­ly get.

[00:17:55] Steven: So, there’s a few dif­fer­ent ways I guess com­pa­nies can raise cap­i­tal. One of them is called [00:18:00] place­ments and that’s typ­i­cal­ly what does go to the, to the big insti­tu­tions, the super funds, the, fund man­agers, what­ev­er it is. And that’s done nor­mal­ly with­out retail share­hold­ers even know­ing about it at the time.

[00:18:10] Steven: It hap­pens pret­ty quick­ly. they, they ring around and then 24 hours, drum up, enough sup­port from enough peo­ple and, and do a place­ment. And then if they’re a com­pa­ny that cares about their retail share­hold­ers, they’ll hope­ful­ly then do one of a cou­ple of things after that for their small­er share­hold­ers.

[00:18:25] Steven: So the first one is, what’s called a share pur­chase plan or an SPP. And that’s typ­i­cal­ly where you get the chance to apply for up to 30, 000 worth of addi­tion­al shares at a dis­count, some kind of dis­count nor­mal­ly to what the cur­rent share price was when the announce­ment came out. And it’s a few weeks typ­i­cal­ly before you have to have your mon­ey in and those new shares would be issued.

[00:18:47] Steven: So that’s good in a way, cause you get a chance to par­tic­i­pate. the, the flip side to that is, my, my per­son­al approach to it has been, I don’t real­ly apply for more shares until a day or two [00:19:00] before the clos­ing date, because some­times the share price can drop more than the dis­count price, and you’re actu­al­ly buy­ing shares for more than you can just buy them on mar­ket any­way.

[00:19:07] Steven: so my approach has been, yeah, wait for, wait until a day or two before until you have to repay your mon­ey if you did want some more shares in the com­pa­ny. The down­side of SPPs

[00:19:16] Steven: is if you don’t par­tic­i­pate, you are get­ting dilut­ed. So, if you don’t buy some more shares, your slice of the piz­za, so to speak, is going to shrink a lit­tle bit.

[00:19:23] Steven: But, obvi­ous­ly it’s still up to you whether you want to, want to go and buy a bit more of the, the com­pa­ny at that point in time. Prob­a­bly the, the best way and the fairest way, and the way that we encour­age com­pa­nies to raise cap­i­tal, is what’s called a, a, a patrio, or a renounce­able offer. And that’s where, whether you par­tic­i­pate or not, you get com­pen­sat­ed, right?

[00:19:43] Steven: So basi­cal­ly, if you par­tic­i­pate, You buy some more shares,at the dis­count, you, you’re not dilut­ed. Even if you don’t par­tic­i­pate, the com­pa­ny, com­pen­sates you, for, for the dilu­tion that would have oth­er­wise tak­en place. So it’s not the most com­mon way com­pa­nies raise cap­i­tal, but there are [00:20:00] more com­pa­nies start­ing to do it because they rec­og­nize that it is fair­er to, to treat all the share­hold­ers equal­ly, whether they’re par­tic­i­pat­ing or not.

[00:20:08] Steven: Syd­ney Air­port was a good exam­ple. They did a Patri­ot rais­ing before they got tak­en off the. The boards, so there’s, more com­pa­nies start­ing to do it, and that’s some­thing we push for. We say, where the proxy advi­sors would­n’t be doing that. They’re more than hap­py with the place­ment.

[00:20:20] Steven: we real­ly want a patio rais­ing for, for small­er share­hold­ers so that every­one, is treat­ed fair­ly and equal­ly, if you like. Now, it’s a bit more has­sle for the com­pa­ny. That’s why they don’t all do it. It’s a bit more cost­ly for the com­pa­ny too, so there’s some down­sides to the com­pa­ny to do it.

[00:20:32] Steven: but any­way, in answer to the ques­tion, that’s, that’s what

[00:20:35] Steven: we’d rec­om­mend that might be a bit dif­fer­ent to

[00:20:36] Steven: the proxy advi­sors.

[00:20:38] Tony: Yeah, there’s a down­side to the com­pa­ny in the extra cost. I get that. But there’s also an upside, which does­n’t seem to get mined, is that they could be

[00:20:44] Tony: rais­ing a large amount of cap­i­tal from retail share­hold­ers, but they tend to cap it out at a

[00:20:49] Tony: very small amount.

[00:20:50] Tony: So, for exam­ple, if the

[00:20:51] Tony: ins­ta raise was 100 mil­lion, chances are the

[00:20:53] Tony: retail raise is capped at 10 or 20 mil­lion.

[00:20:56] Tony: Where­as they could poten­tial­ly have raised 50

[00:20:59] Tony: or [00:21:00] 60 or 100 mil­lion from the retail share­hold­ers as well. I

[00:21:02] Steven: Exact­ly. And there’s some real­ly good recent exam­ples of that. Like, both good, good and bad. I mean, in, in 2019, when, when COVID hit, there were, there were three com­pa­nies I remem­ber that did place­ment only rais­ings at the time, when they had a lot of

[00:21:17] Steven: retail share­hold­ers, I think it was Mega­port, Tem­ple and Web­ster and Zip­co.

[00:21:21] Steven: And I know none of them have prob­a­bly been QAV stocks, but, they were pret­ty pop­u­lar. Retail stocks at the time, they all did place­ments only, so they did­n’t give their share­hold­ers, their retail share­hold­ers, small share­hold­ers a chance to par­tic­i­pate. After pay did a place­ment, I know in 2020, And, they scaled it back, I think, about 86 per­cent or some­thing like that.

[00:21:39] Steven: So even if you applied for your 30 grand, you only got 14 per­cent of it, basi­cal­ly. So, so the retail share­hold­ers, even that want­ed to par­tic­i­pate, did­n’t get their fair crack at it. So there’s some bad exam­ples there of com­pa­nies. So, so I agree with you Tony, I’m not sure why. Unless they just real­ly don’t think they need any more mon­ey, they’ve got so much in the place­ment that they don’t think they need any more, but it isn’t [00:22:00] the fairest way to do it, that’s for sure.

[00:22:03] Tony: Is there, do you, does the ASA have a posi­tion on

[00:22:05] Tony: how

[00:22:05] Tony: much, what the cap should be on a com­pa­ny in

[00:22:08] Tony: terms of how much it can

[00:22:09] Tony: raise in those place­ments? Because I think from mem­o­ry the

[00:22:12] Tony: law is it’s

[00:22:13] Tony: capped

[00:22:14] Tony: out at either 10 or 20 per­cent unless it goes to the vote of

[00:22:17] Steven: think it’s 15 in any one year peri­od, unless you put it to a vote. Yeah, so I think it’s typ­i­cal­ly 15 per­cent annu­al­ly, and we’re, we’re in sync with that as a gen­er­al rule, and obvi­ous­ly if you feel like you need to raise more than that, then you have to put it to share­hold­ers. I mean, it does­n’t hap­pen very often, but occa­sion­al­ly

[00:22:33] Steven: you might see a com­pa­ny that’s race and cap­i­tal, and then wants to do anoth­er acqui­si­tion that looks like it’s a real­ly good acqui­si­tion for the busi­ness.

[00:22:41] Steven: And it might be earn­ings accre­tive, and it’s, going to add val­ue. I mean, that’d be an exam­ple where we’d typ­i­cal­ly sup­port them and say, based on every­thing we know, we’re hap­py to, for you to raise cap­i­tal again, because it’s going to grow the, the val­ue and the earn­ings of the com­pa­ny on the oth­er side of it.

[00:22:53] Steven: But it’s pret­ty rare. You don’t see it. too often. par­tic­u­lar­ly not in the ASX 200, the big­ger com­pa­nies that we cov­er [00:23:00] there, they’re nor­mal­ly a bit more cap­i­tal­ized than that. So, so yeah, we, typ­i­cal­ly sup­port the 15 per­cent rule. yeah, so there’s lots of things around cap­i­tal rais­ings, but you know, I think ide­al­ly, you just want to make sure that the com­pa­ny’s treat­ing you as fair­ly as pos­si­ble.

[00:23:13] Steven: SPP is in the mid­dle, the Patrio or the renounce­able the best. A place­men­t’s real­ly bad and I’ve had a few com­pa­nies that have done place­ments only over the years and I’ve sold them for that rea­son. I’ve thought, if you don’t care enough about me as a retail share­hold­er to even give me a chance to par­tic­i­pate, I’m not real­ly aligned with you.

[00:23:32] Steven: So, that’s been my per­son­al approach to the cou­ple of com­pa­nies I’ve had that have done place­ments only. Now, I could be wrong, they might have gone on to be big win­ners, but I just felt like if man­age­ment did­n’t, did­n’t val­ue me enough, I’m prob­a­bly back on the wrong horse. So,

[00:23:45] Steven: that’s been my

[00:23:46] Tony: Yeah, look, it’s an inter­est­ing sit­u­a­tion. I’ve spo­ken to, well, at least one small CAP chair­man who’s just, I guess because they spend their whole day talk­ing to instos, invest­ment bankers, the large end of town, so to speak,[00:24:00] I pre­sent­ed them with research and said, look, here’s the report that came out through this newslet­ter, which they weren’t aware of because it was going to retail investors.

[00:24:07] Tony: and here’s how your share price moved. And they go, Oh, Oh, I’m going, yeah, retail, the instos,

[00:24:14] Tony: tend to move slow­ly on your reg­is­ter. But look, the share­hold­ers are turn­ing over the most, the share­hold­ers that are turn­ing over the most in retail, and that’s what’s mov­ing your price, but you’re not com­mu­ni­cat­ing with them.

[00:24:25] Tony: You’re not in sync with who research­es and sends things to them. And you’re not in sync with them when it

[00:24:30] Steven: yeah, exact­ly.

[00:24:31] Steven: No, look, I get it.

[00:24:32] Steven: If you’re a small com­pa­ny and you’re real­ly

[00:24:34] Steven: busy and you’ve

[00:24:35] Steven: got five or

[00:24:35] Steven: 10 or

[00:24:35] Steven: 15 insti­tu­tion­al share­hold­ers, it’s

[00:24:37] Steven: pret­ty easy prob­a­bly to have con­ver­sa­tions with them. And then you think, well, I’ve got a few thou­sand retail share­hold­ers, it’s too dif­fi­cult

[00:24:44] Steven: to go and talk to them

[00:24:44] Steven: all I want. I kind of

[00:24:47] Steven: get the human nature side of that per­haps. but you’re right, there is more. nor­mal­ly more action or more,more trad­ing amongst retail share­hold­ers in those small­er caps. so yeah, it seems a bit self defeat­ing to me to [00:25:00] not be con­sid­er­ing them or try­ing to treat them fair­ly if you have, if you want to keep them on your reg­is­ter or keep them invest­ed with you.

[00:25:05] Steven: So yeah, any­way.

[00:25:08] Tony: what’s your feel­ing on under­writ­ing for those place­ments too? That’s often the hid­den fee that

[00:25:12] Steven: Yeah, well, it’s,

[00:25:13] Steven: look at per­son­al

[00:25:14] Steven: view, it seems to me it’s a pret­ty good

[00:25:15] Steven: busi­ness, but for some

[00:25:17] Steven: of those banks that,

[00:25:19] Steven: for

[00:25:19] Steven: 24 hours get to take a tiny amount of risk and then get a few mil­lion

[00:25:22] Steven: dol­lars for, for rais­ing, cap­i­tal for, for,

[00:25:25] Steven: for, a com­pa­ny. So, it’s not some­thing we, we have a for­mal posi­tion on per se, but I do know, that it seems like it’s a fair­ly.

[00:25:32] Steven: risk, low risk and, and, finan­cial­ly suc­cess­ful trade for the Mac­quar­ie’s of the world and oth­er kind of, bro­kers and banks that, in 24 hours can ring around and whip up a bunch of cap­i­tal and col­lect some sev­en fig­ure sums. So maybe we’re in the wrong busi­ness TK, we should be,

[00:25:46] Steven: should be bro­kers or mer­chant bankers rais­ing cap­i­tal for peo­ple.

[00:25:51] Tony: well, speak­ing of the wrong busi­ness, I guess I’m lead­ing up to a ques­tion for the ASA. Have you ever thought about

[00:25:56] Tony: putting togeth­er an index fund, a list­ed invest­ment [00:26:00] com­pa­ny or an ETF? For the

[00:26:02] Tony: ASA investors to list in and then to oper­ate under the good gov­er­nance poli­cies of the ASA and

[00:26:07] Tony: I

[00:26:07] Tony: guess, you can say you’re, you’re

[00:26:09] Tony: one of the com­pa­nies then that, that will do things by the book and not, not cut cor­ners or

[00:26:14] Steven: we actu­al­ly have. I mean, the prob­lem we’ve got at the moment is we don’t have an AFSL. So we can’t real­ly give advice on indi­vid­ual com­pa­nies. And we also, could­n’t cre­ate our own fund per se. It is some­thing we’ve dis­cussed. And look, I think, as it’s a pret­ty

[00:26:29] Steven: long and com­pli­cat­ed process to get an AFSL.

[00:26:34] Steven: So we haven’t said nev­er, we’ve just, kind of parked it for the time being and said, because we don’t have an AFSL, that’s prob­a­bly not some­thing we can pur­sue. We def­i­nite­ly have mem­bers get togeth­er. mem­ber groups, and they have a dum­my port­fo­lio of their own in their mem­ber group, for exam­ple, and the, col­lec­tive wis­dom of the, the local dis­cus­sion groups kind of putting togeth­er a port­fo­lio that they update every month.

[00:26:53] Steven: but it’s just a paper, exam­ple. It’s not a for­mal fund, obvi­ous­ly. So yeah, the short answer to the ques­tion is yes, we’ve thought about it, [00:27:00] but with­out the AFSL at the moment, it’s a bit tough to do that, or, not pos­si­ble to do that,

[00:27:03] Steven: unfor­tu­nate­ly.

[00:27:04] Tony: Right, so if some­one’s lis­ten­ing out there who’s got an AFSL and would like to part­ner with

[00:27:08] Tony: the ASA, they

[00:27:09] Steven: That’s right. Yes. We’d love to chat.

[00:27:10] Tony: Yeah. And I guess the sec­ond sort of,

[00:27:14] Tony: broad rang­ing ques­tion is what, what

[00:27:16] Tony: what does the ASA see for the

[00:27:18] Tony: future of AGMs? Both in terms of online ver­sus hybrid ver­sus in per­son, the, the, the make­up, the fre­quen­cy, the way share­hold­ers are treat­ed.

[00:27:28] Steven: Yeah, look, we’re a huge sup­port­er of the hybrid AGM. so what that basi­cal­ly means is that, they’re hav­ing an in per­son AGM for peo­ple that do want to attend in per­son, but they’re also hav­ing a

[00:27:38] Steven: live online ver­sion that allows you to vote

[00:27:42] Steven: and ask ques­tions in real time as well. and I’ve real­ly, I’m, like you, I’m in a for­tu­nate posi­tion that I’m a full time investor these days, and I am try­ing to get to all of the AGMs of the com­pa­nies that I own each year.

[00:27:55] Steven: But there’s some times where you just can’t, right? It’s a loca­tion that you’re not going to be able to get to, or there’s two on the one day in [00:28:00] dif­fer­ent places or what­ev­er it is.

[00:28:01] Steven: yeah,

[00:28:02] Steven: exact­ly. Exact­ly. So there’s times where you just phys­i­cal­ly can’t be there, of course. And Aus­tralia is a big coun­try, right?

[00:28:07] Steven: We’ve got

[00:28:07] Steven: five or six big

[00:28:08] Steven: cities that the AGMs are typ­i­cal­ly held in. And,

[00:28:11] Steven: you can’t be in

[00:28:11] Steven: all those places at once. So that’s where the online AGM, I

[00:28:14] Steven: think, has become more and more valu­able for peo­ple. If you are inter­est­ed and you do want to par­tic­i­pate, you do want to see how

[00:28:18] Steven: man­age­ment… and the chair and, the oth­er share­hold­ers are

[00:28:22] Steven: inter­act­ing, being able to watch a live web­cast and vote and ask ques­tions in real time is ter­rif­ic.

[00:28:28] Steven: I mean, a lot of com­pa­nies will his­tor­i­cal­ly would take a record­ing and they’d put the record­ing on their web­site after­wards. but you could only watch that after the fact, and it would­n’t help you with your, your vot­ing at the time or it would­n’t allow you to actu­al­ly ask a ques­tion dur­ing the meet­ing.

[00:28:42] Steven: So, so we pre­fer the true hybrid. We’re not a fan of online only meet­ings because there still is plen­ty of peo­ple that do want to go in per­son. It’s their one chance a year where they get to go and talk to the man­age­ment, talk to the board, have a cup of tea, see what they’re like, see the lights in their eyes.

[00:28:59] Steven: I mean, I know there’s [00:29:00] dif­fer­ent views on how valu­able that is, but there’s cer­tain­ly still plen­ty of retail share­hold­ers that tell us that they val­ue that and that they want to con­tin­ue to do that. so our approach is hybrid meet­ings and we did have some com­pa­nies last year that actu­al­ly, put for­ward res­o­lu­tions to change their con­sti­tu­tions to have online only AGMs so they did­n’t have to hold the phys­i­cal AGM any­more.

[00:29:20] Steven: And for­tu­nate­ly, the vast major­i­ty of those com­pa­nies with­drew the res­o­lu­tions pret­ty quick­ly because they got some pret­ty strong feed­back from both big and small share­hold­ers that that is not some­thing that they want­ed to see. They’d need a 75%. in favour vote to change some­thing like that and they were not going to get it.

[00:29:36] Steven: So most of the com­pa­nies pulled those res­o­lu­tions. There were some real­ly small caps that got it through because no one was prob­a­bly look­ing, but it has to be changed in your con­sti­tu­tion to allow that. So like dur­ing COVID we got it, it’s dif­fi­cult to get togeth­er face to face, you need an online only meet­ing, we got all of that.

[00:29:51] Steven: I mean there’s times where that might, might be the case again in the future, but as a gen­er­al rule, yeah, we like the chance to be able to either go in per­son or par­tic­i­pate online if you’re, if you’re interested.[00:30:00]

[00:30:01] Tony: you have a, do you have a

[00:30:02] Tony: pol­i­cy or a tem­plate, I guess, for how to con­duct a hybrid meet­ing?

[00:30:06] Tony: Because, yeah, you hear com­plaints from time to time of peo­ple who say, I did­n’t get my ques­tion answered. Or they edit­ed my ques­tion, they rewrote it. Or they lim­it­ed it to a cer­tain num­ber of ques­tions, 10 or 20, and I just did­n’t get a

[00:30:18] Steven: Yeah, yeah, so. So there’s a cou­ple of dif­fer­ent plat­form providers that, that allow, or, facil­i­tate hybrid meet­ings. There’s one called

[00:30:25] Steven: Lumi that we use. So like ASA has been run­ning a hybrid

[00:30:28] Steven: AGM for our, our

[00:30:29] Steven: own orga­ni­za­tion for many years, and we use the Lumi plat­form, and it’s real­ly good.

[00:30:33] Steven: So when com­pa­nies are ask­ing about it,

[00:30:36] Steven: we’ve been rec­om­mend­ing Lumi. We don’t… Get any­thing out of that. There’s noth­ing, finan­cial out of it. But, but, if com­pa­nies aren’t sure how to do it, there’s a cou­ple of dif­fer­ent plat­form providers that, have the tech­nol­o­gy to allow you to do it.

[00:30:45] Steven: As far as the ques­tions go, unfor­tu­nate­ly, it comes down to the, the char­ac­ter or the integri­ty or the process of the chair. if the chairs, real­ly, open and,transparent around the ques­tions. They’ll allow the com­pa­ny sec­re­tary or who­ev­er it is that’s tak­ing the [00:31:00] ques­tions com­ing in to ask them, and then they’ll allow them to respond.

[00:31:03] Steven: Unfor­tu­nate­ly, there are times where you get boards or chairs that will edit the ques­tions or won’t ask the ques­tions. Some­times they’ll aggre­gate the ques­tions because they might get 10 ques­tions that are real­ly sim­i­lar and they’re not going to ask the same ques­tion 10 times. So we’re fine with that, obvi­ous­ly, but where they’re delib­er­ate­ly not ask­ing legit­i­mate ques­tions, par­tic­u­lar­ly when they’ve got enough time to, we will def­i­nite­ly write to the com­pa­ny after­wards and voice our dis­plea­sure. I think when you get to real­ly big com­pa­nies like, the CBAs and the Tel­stras of the world, they have such mas­sive AGMs and so many share­hold­ers in atten­dance. Prac­ti­cal­ly they do have to try and man­age the ques­tions a lit­tle bit. Oth­er­wise the meet­ing would go for days. So depend­ing on the size of the com­pa­ny, there’s some, prac­ti­cal con­straints there around how many ques­tions they can read out.

[00:31:49] Steven: But, I’m. I own quite a few, kind of small­er or mid caps. And I find, most of those com­pa­nies, they, they nev­er run out of time to ask the ques­tions. Often ASA [00:32:00] or a cou­ple of retail share­hold­ers will be the only peo­ple even ask­ing ques­tions at those small­er com­pa­ny AGMs. So, you typ­i­cal­ly don’t find they’re edit­ing things out, which is, which is good.

[00:32:08] Steven: But yeah, I do get the big­ger com­pa­nies just have a prac­ti­cal prob­lem some­times with just how many ques­tions they’re try­ing to get through in the few hours they’ve got allo­cat­ed to the AGM.

[00:32:17] Tony: Mm. Well, I, speak­ing of AGMs, maybe you can give us a few war sto­ries. What, what was the strangest ag

[00:32:23] Steven: Yeah, absolute­ly.

[00:32:24] Steven: I, think that there’s a

[00:32:25] Steven: com­pa­ny called EML, which has been in the news a lit­tle bit. It

[00:32:29] Steven: was an ASX 200 com­pa­ny back in 2020, and it was Bris­bane based. So, I vol­un­teered

[00:32:36] Steven: to, to, to mon­i­tor EML that year. And it was back when I was using Mot­ley Fool ser­vice a lit­tle before I stum­bled across the bril­liance of QAV, obvi­ous­ly.

[00:32:45] Steven: So, so I had some EML shares and I thought, Oh, well I’ll mon­i­tor this com­pa­ny cause I’ve got a share­hold­ing and we weren’t cov­er­ing it and it was in the 200 now and went through all of that process I talked about ear­li­er. And,I dis­cov­ered that, there are a few things hap­pen­ing that, that weren’t, weren’t great.

[00:32:59] Steven: [00:33:00] in par­tic­u­lar, the, the board had decid­ed that year to use what we call dis­cre­tion to pay out, man­age­men­t’s bonus­es or man­age­men­t’s, vari­able pay that year, their incen­tives, with­out them hav­ing actu­al­ly hit the num­bers that the board had set at the start of the year. and it was dur­ing COVID and, and the board explained to us that, oh, look, it’s not fair.

[00:33:22] Steven: that was­n’t the man­age­men­t’s fault that COVID hap­pened. They’ve worked real­ly hard, and they’ve made this fan­tas­tic acqui­si­tion in Europe that, they rene­go­ti­at­ed the price down on because of, the impacts of COVID to the busi­ness. So we’re going to pay them out their bonus­es in full basi­cal­ly, or near­ly in full because they, they deserved it and it was­n’t their fault that COVID hap­pened.

[00:33:44] Steven: And we, we explained, but look, we, we under­stand that, but it also was­n’t share­hold­ers fault that COVID hap­pened and share­hold­ers are down con­sid­er­ably right now. I think the share price was down 30 or 40 per­cent at that point in time for the year. so effec­tive­ly what’s hap­pen­ing there is the board say­ing, we’ve got a [00:34:00] vari­able remu­ner­a­tion plan, but if we don’t hit it, We’ll kind of just over­ride it and pay the bonus­es any­way, regard­less of them not, meet­ing the hur­dles that we set out at the start of the year.

[00:34:11] Steven: So, obvi­ous­ly we decid­ed to vote against the remu­ner­a­tion that year, and so the AGM comes along and,the cou­ple of inter­est­ing things hap­pened in the AGM, which if you weren’t mon­i­tor­ing the com­pa­ny, or you did­n’t have some­one from ASA mon­i­tor­ing the com­pa­ny, you prob­a­bly would­n’t have heard about, obvi­ous­ly, unless you’d par­tic­i­pat­ed in the AGM per­son­al­ly.

[00:34:30] Steven: So the CEO gets up to give his address, and like most CEO address­es, you nor­mal­ly hear them say lots of love­ly things about the year and the team, and how opti­mistic they are about the future, etc. and he said that stuff, but then he said, now I also want to, sor­ry, I missed a part here, the day before they had an investor, brief­ing day, that went for about six hours, it was a big online investor con­fer­ence where they were talk­ing about, all their plans for the future and all their prod­ucts, they do like, Gift Cards, and Incen­tive Cards, and all that kind of thing.

[00:34:59] Steven: That’s [00:35:00] what the busi­ness was all about. And I watched that being a share­hold­er before the AGM, and I came away scratch­ing my head think­ing, I’m not kind of get­ting a few things here. There’s some things they’re talk­ing about, these new prod­ucts, that I just don’t real­ly under­stand. any­way, the next day comes on, the CEO gives his address, and then he fin­ish­es his address by say­ing, Now, I also want to say, To peo­ple out there that are hav­ing trou­ble under­stand­ing what we do or some of our prod­ucts, I’d say to you, you don’t need to under­stand, you just need to trust man­age­ment.

[00:35:27] Steven: And if you trust man­age­ment, you should own EML shares. So that was the first kind of yel­low flag for me. I’m like, that’s an inter­est­ing com­ment. Like he’s obvi­ous­ly got some feed­back from some­one else too that, that it was dif­fi­cult to under­stand some of what they were propos­ing. And instead of explain­ing it, he’s just said, trust us.

[00:35:44] Steven: so then the chair comes in and. Like I men­tioned, one of the jobs of the ASA mon­i­tors is to ask ques­tions at the, at the AGM to, kind of get a for­mal answer. So I push back on the remu­ner­a­tion, obvi­ous­ly, and ask the ques­tion around why they’d cho­sen to use dis­cre­tion. [00:36:00]And, the head of the REM com­mit­tee gave, gave the same kind of answer I shared ear­li­er, but then the chair comes in over the top and says, and by the way, we’re in a, we’re in a glob­al, race for tal­ent, and not only did we use dis­cre­tion this year, but we’ll use dis­cre­tion again in the future if we have to.

[00:36:17] Steven: So he was basi­cal­ly say­ing that, we don’t real­ly have a vari­able remu­ner­a­tion plan. We’re just going to use our dis­cre­tion as a board to pay out, pay out the bonus. Now, this is an ASX 200 com­pa­ny. So we’re not talk­ing about a lit­tle specky minor here that, is wild. We’re talk­ing about one of the top 200 com­pa­nies in Aus­tralia at the time by mar­ket

[00:36:34] Steven: cap. So what hap­pens from there? Well, I wrote up my AGM report for all of our mem­bers to read and called out those yel­low flags and obvi­ous­ly they already knew that we were vot­ing against the REM. A cou­ple of months lat­er, the Irish Cen­tral Bank announces an inves­ti­ga­tion into the acqui­si­tion that they’ve made for, poten­tial mon­ey laun­der­ing.

[00:36:55] Steven: So the share price craters because this fan­tas­tic acqui­si­tion that they’d alleged­ly made,[00:37:00] has a whole bunch of reg­u­la­to­ry prob­lems. It was a Euro­pean based busi­ness that they’d acquired. and since then, there’s just been one after the oth­er of,controversial or, val­ue destroy­ing announce­ments or pro­gres­sions in the busi­ness.

[00:37:14] Steven: The c e o, that I men­tioned, he sold $16 mil­lion worth of shares just before that announce­ment was made through some cre­ative loop­hole. the, he sub­se­quent­ly resigned about a year lat­er when the work, the news kept get­ting worse. The chair was then vot­ed off the board the year after, which, is very unusu­al, right?

[00:37:33] Steven: It’s pret­ty rare that you actu­al­ly get enough share­hold­ers. so dis­pleased that they’ll vote more than 50 per­cent against a direc­tor. He was­n’t will­ing to stand down, so the share­hold­ers actu­al­ly vot­ed him off the board. they’ve

[00:37:45] Steven: tak­en, hun­dreds of mil­lions of dol­lars in impair­ments, and the share price has gone from 5 to, I think it was less than 50 cents last time I looked.

[00:37:54] Steven: but that AGM was the first, or that annu­al report and that AGM was the first real indi­ca­tion you [00:38:00] got, or cer­tain­ly that I’d seen, of some things going on that, maybe weren’t aligned or in your best inter­est as a share­hold­er. So I think that’s a good exam­ple of where, par­tic­u­lar­ly new­ly mon­i­tored com­pa­nies, if you’d read that report, or you’d kind of, heard some of that com­men­tary, it might have giv­en you…

[00:38:16] Steven: Pause for thought about whether this was real­ly a busi­ness that you want­ed to stay invest­ed in, for exam­ple, and I, I obvi­ous­ly sold my shares in the com­pa­ny well before all of that hap­pened based on the way that the board and man­age­ment were approach­ing it. Now, there’s anoth­er inter­est­ing sto­ry I thought I’d share with you too from this year.

[00:38:31] Steven: Nick Scali, which I think is a, is a QAV com­pa­ny. And, and I, full dis­clo­sure, I own quite a few Nick Scali shares and, real­ly liked the busi­ness. Um, but as I read through their annu­al report a cou­ple of weeks

[00:38:42] Steven: ago, I picked up some­thing pret­ty inter­est­ing that I am going to go to the AGM and ask about.

[00:38:49] Steven: So, they appoint­ed a new direc­tor, by the name of Kathy Par­sons this year, ear­li­er this year. and she’s a for­mer, accoun­tant at Ernst Young.[00:39:00] So she looks, very qual­i­fied from a finan­cial point of view. She’s got lots of great, audit and risk and finan­cial skills, you’d assume. so there was no, obvi­ous­ly no con­cerns about that.

[00:39:09] Steven: But then when I looked at her bio, they, they basi­cal­ly declared that she also used to be the, the sign­ing part­ner for the Nick Scali, audit. And she’s been the sign­ing part­ner for six years from Ernst Young for Nick Scali up until 2018. So it’s now a five year peri­od I sup­pose between when she was the sign­ing part­ner of the audit to when she’s been appoint­ed to the board.

[00:39:34] Steven: And, check­ing in with the, the, Char­tered Accoun­tants, they say that they do like to see a five year break. That’s their, kind of pen­ciled in rule around when audit, audit part­ners, need to,have some clear air before they con­sid­er a board posi­tion at the same com­pa­ny.

[00:39:48] Steven: So, kind of checks that box, I sup­pose. But they con­tin­ue to use Ernst Young as their audi­tor. So when I looked back there, I think it looks to me like it’s at least a decade that Nick[00:40:00] Scali had been using Ernst Young as the audi­tor. And the fact that they’ve now appoint­ed the for­mer sign­ing part­ner to the board, and she’s prob­a­bly the most like­ly per­son to become the chair of the Audit and Risk Com­mit­tee going for­ward, you’d think as well, when that tran­si­tion hap­pens.

[00:40:16] Steven: It looks to me like there’s a bit of a, poten­tial con­flict here. I don’t know. I would assume she’s prob­a­bly got,friends or col­leagues at Anson Young still that, she may be work­ing with, she may not be on Nick Scal­i’s audits going for­ward if they con­tin­ue to use Anson Young.

[00:40:30] Steven: So that’s an exam­ple where I’m going to go to the AGM and I’m going to ask them the ques­tion around,when When was the last time you tend­ed the audit? When was the last time you con­sid­ered chang­ing audi­tors giv­en this giv­en this mate­r­i­al con­nec­tion? And also, why is there only one key audit mat­ter on your audit, which is around inven­to­ry?

[00:40:51] Steven: Now, retail­ers typ­i­cal­ly, I find, have two or three things that are nor­mal­ly on the list of key audit mat­ters. The oth­er one is,

[00:40:59] Tony: [00:41:00] Val­u­a­tion of

[00:41:00] Steven: it’s the leas­es and it’s also good­will for any acqui­si­tions that they’ve made. and Nick Scali has made an

[00:41:06] Steven: acqui­si­tion recent­ly, they acquired Plush,

[00:41:08] Steven: a cou­ple of

[00:41:09] Steven: years ago.

[00:41:10] Steven: So I’m

[00:41:10] Steven: not sug­gest­ing for a sec­ond that, there’s any­thing

[00:41:13] Steven: fraud­u­lent going on here, but I do

[00:41:15] Steven: think it’s an

[00:41:16] Steven: exam­ple of where, as a share­hold­er, if you’re look­ing at these kind of things, you

[00:41:20] Steven: know, it’s your oppor­tu­ni­ty to at least ask Antho­ny Scali this year. What’s his view on this? And, are they con­sid­er­ing chang­ing audi­tors?

[00:41:28] Steven: And, does he see any con­flict there, con­tin­u­ing to use the same audi­tor, A, for that long, and B, with a board mem­ber that’s so con­nect­ed to them now? I’m just inter­est­ed in what he’s, what he’s going to say there.

[00:41:37] Tony: I’m pret­ty sure I could prob­a­bly write the answer for him that

[00:41:40] Steven: yeah, I bet, but I think…

[00:41:42] Steven: Putting it on the record, and there may

[00:41:44] Steven: not be any­one to ask that ques­tion, I assume they’ll have a

[00:41:47] Steven: dis­cus­sion around it after­wards,

[00:41:49] Steven: if noth­ing else. I hope at board lev­el they’ll then go, some­one’s flagged this and, we had to answer it pub­licly. Is this some­thing we’re wor­ried

[00:41:55] Steven: about?

[00:41:56] Steven: Is this some­thing? Now, they may

[00:41:57] Steven: decide not to change, but, but I hope, my [00:42:00] inten­tion, I guess, out of ask­ing that ques­tion is at board lev­el, or at least con­sid­er it and dis­cuss it. And it’ll be on the oth­er direc­tors radars as well that, we’ve got a pret­ty close con­nec­tion here and we haven’t changed audi­tors for a long time.

[00:42:10] Steven: I did notice that she’s on anoth­er, list­ed com­pa­ny as well, Macmil­lan Shake­speare, which I think has been a QAV stock, maybe at dif­fer­ent times. and inter­est­ing­ly, She is the chair of the Audit and Risk Com­mit­tee there and she just appoint­ed Ernst and Young as the new audi­tor. So, again, not sug­gest­ing there’s any­thing nec­es­sar­i­ly wrong with that, just that there, there looks to be still some pret­ty close, ties or friend­ships, it would seem to me, for, for that change to have been made rel­a­tive­ly quick­ly after she joined the Macmil­lan board.

[00:42:41] Steven: So, so I don’t know her per­son­al­ly. I’m not sug­gest­ing that there is any­thing wrong. I just, that’s an exam­ple of, Why you would want to look at these kind of things. And I know, audits and

[00:42:49] Steven: qual­i­fied audits are a big deal for you, TK, and it’s some­thing I’ve learned a lot from lis­ten­ing to you.

[00:42:53] Steven: So I do take notice of these audit issues now and, always look for, is there any­thing here that might be a wor­ry?

[00:42:59] Tony: [00:43:00] Yeah, and I think, I mean, it might be worth­while for the ASA to, if they haven’t already, have to have a good think about poli­cies in this area. We’ve spo­ken before on our show about Chang­ing audi­tors, where mirac­u­lous­ly some com­pa­nies that have had a qual­i­fied audit sud­den­ly lose the qual­i­fi­ca­tion on the audit, and the audi­tors have changed, the fol­low­ing year, so sur­prise, sur­prise.

[00:43:21] Tony: you, you’ve high­light­ed the fact that it could be. seen as a con­flict of inter­est that, the ex audi­tor, even with a break in between, goes on the board. I’m going to go one step fur­ther and be care­ful and, and not say­ing this is the case with Nick Scali, or I, and I can’t give a case in par­tic­u­lar.

[00:43:37] Tony: But, it, it, it’s also pos­si­ble that, some­one with

[00:43:40] Tony: deep knowl­edge of the com­pa­ny is then going to over­see the future audits of that com­pa­ny. and… Be aware of where the risks are and be sen­si­tive to how they’re report­ed, which is not nec­es­sar­i­ly act­ing com­plete­ly inde­pen­dent­ly. I’m not say­ing it’s the case for Nixkali, but That’s

[00:43:58] Steven: That’s right. And I mean, don’t get me wrong, I [00:44:00] think it’s

[00:44:00] Steven: won­der­ful that you’ve got some­one that’s been an audit sign­ing part­ner on your board, right? Like, clear­ly those kind of skills

[00:44:05] Steven: would be real­ly help­ful to

[00:44:06] Steven: over­see future audits at the com­pa­ny. The ques­tion is, should you con­tin­ue to use Ernst Young for me? Or should you be switch­ing your audi­tors now after a long

[00:44:14] Steven: time with that firm in case…

[00:44:16] Steven: They’re miss­ing some­thing or you were miss­ing some­thing when you were the sign­ing part­ner that a new audi­tor or a new, CA might pick up. So, so that, and that’s real­ly why we do audits, isn’t it? We’re look­ing for an inde­pen­dent, orga­ni­za­tion to, that has exper­tise to come in and look at the com­pa­ny accounts and make sure that some­thing isn’t get­ting messed up or it does­n’t have to be fraud­u­lent.

[00:44:34] Steven: Of course, it could just be that you’re miss­ing some­thing or you’re not con­sid­er­ing some­thing that

[00:44:37] Steven: should be, so. Yeah,

[00:44:38] Steven: exact­ly. And it’s

[00:44:39] Steven: pret­ty typ­i­cal

[00:44:40] Tony: But also too, I mean,

[00:44:41] Steven: things

[00:44:41] Steven: going on at the moment with audi­tors, so it’s prob­a­bly a good

[00:44:44] Steven: time to ask that ques­tion.

[00:44:47] Tony: Yeah, and I remem­ber work­ing in big com­pa­nies, the first ques­tion an inter­nal audi­tor and some­times an exter­nal audi­tor would ask is who’s the per­son who’s been here the longest and when did they last take

[00:44:58] Tony: hol­i­days? Because [00:45:00] That’s that’s, the red flag for them. If some­one’s in the same role for a long time and they’re not

[00:45:03] Tony: tak­ing hol­i­days, in oth­er words, some­body else isn’t com­ing in to relieve them, it’s, that’s,

[00:45:09] Tony: the poten­tial there

[00:45:10] Tony: is that

[00:45:10] Steven: Yeah, right. That’s a

[00:45:11] Tony: got a scam

[00:45:12] Tony: going.

[00:45:14] Tony: Yeah. And, You could draw a long bow and say that could be the case if you’ve had a lengthy rela­tion­ship with the same

[00:45:21] Tony: audi­tor. what’s wrong with a fresh

[00:45:24] Steven: that’s right. Yeah.

[00:45:25] Steven: excel­lent point. yes,

[00:45:27] Cameron: before we move on from that,

[00:45:28] Cameron: did­n’t we appoint you as the,person to push the ASX to do some­thing about Appen­dix 4Ds and mak­ing sure com­pa­nies were issu­ing them, you know, uh, exter­nal­ly to their annu­al report? How’s that cam­paign going?

[00:45:44] Steven: We’ve raised it with the ASX and,we got a polite, it’s some­thing we’ll look at, but it’s not a pri­or­i­ty for us at the moment. And this is, obvi­ous­ly in the midst of them real­ly strug­gling their chess tran­si­tion. and they have promised us, That’s right.

[00:45:58] Steven: They have promised us that [00:46:00] there’ll be a lot of things that will change when they final­ly do fig­ure out this chess tran­si­tion. Like things, for exam­ple, like being able to allo­cate your prox­ies in a much eas­i­er way. so we haven’t dropped it. We haven’t for­got­ten it. We got the, hey, we’re too busy to focus on this at the moment, basi­cal­ly.

[00:46:16] Steven: But we will absolute­ly be re rais­ing it again once they’ve, final­ized their tech­nol­o­gy solu­tion. cause I did think it was an excel­lent idea to just make it more promi­nent and,a sep­a­rate, a sep­a­rate call out. and on that, the, the talk­ing about how you allo­cate prox­ies, I sup­pose, one of the down­sides to all of this is it’s pret­ty clunky at the moment.

[00:46:35] Steven: If, if you, don’t vote your­self and you’d like the ASA to rep­re­sent you, You basi­cal­ly have to, do it in a cou­ple of man­u­al ways. There’s no real­ly easy auto­mat­ic way to, to do it. So, prob­a­bly the, the most com­mon way is you’ll get your notice of meet­ing from the com­pa­ny that you own when the AG GM’s com­ing up and it’ll say, Hey, the meet­ing’s com­ing up on this date, and here’s your chance to vote.

[00:46:57] Steven: And that either comes in the mail if that’s how you’ve elect­ed to [00:47:00] receive it, or a lot of the time now, you might have it com­ing in elec­tron­i­cal­ly to your email. And you can just click on the link there if it’s the email, for exam­ple, or on the paper form and just write Aus­tralian Share­hold­ers Asso­ci­a­tion.

[00:47:11] Steven: So that’s prob­a­bly the eas­i­est way or the fastest way that most peo­ple do it. there is anoth­er way if you don’t want to do it indi­vid­u­al­ly for every com­pa­ny every year where you can actu­al­ly con­tact the, the reg­istry. So, Link or Board­room or Com­put­er­Share or who­ev­er the reg­istry is. You can con­tact them and ask for a stand­ing proxy form and they’ll send you a form and you can write in all the com­pa­nies with that reg­istry that you want to allo­cate the ASA as a stand­ing proxy.

[00:47:37] Steven: And that means basi­cal­ly every year from then on that you still hold those shares, they’ll, they’ll, rec­og­nize your, your proxy. You can change that at any time, obvi­ous­ly, you can change. a writ­ing proxy at any time too. If you go to the AGM, you can still vote. You don’t have to leave your prox­ies with any­one.

[00:47:53] Steven: so it’s always change­able. if you do sell the shares, obvi­ous­ly, and then re buy them, you have to re reg­is­ter [00:48:00] it, unfor­tu­nate­ly, which is a bit of a pain. So these are all very clunky things with the way that the chess sys­tem works. We’re hop­ing in, in the future it’ll be much eas­i­er where you can just check a box or some­thing like that and it’ll be a stand­ing proxy on your HIN for­ev­er or you know your share­hold­er num­ber for­ev­er.

[00:48:14] Steven: That might make it a bit eas­i­er for peo­ple to allo­cate and post to ASA or any­one else that they want­ed to. So, so any­way, that’s prob­a­bly the best way to do it if you’re not some­one that’s inter­est­ed in vot­ing. You can always read, the vot­ing inten­tions on our web­site too, so if you actu­al­ly do want to know how ASA is going to vote or what our opin­ion is with the com­pa­ny in there.

[00:48:32] Steven: Their pro­pos­als for the year. You don’t have to be a mem­ber. You can just go to the Aus­tralian Share­hold­ers web­site and go to Com­pa­nies We Mon­i­tor, put in the tick­et code and it’ll, it’ll show you the, the report. As I said, it nor­mal­ly is on there about two weeks before the AGM. So if the AGM is com­ing up in Novem­ber, it won’t be there yet.

[00:48:49] Steven: The Mon­i­tor prob­a­bly won’t have had the meet­ing with the com­pa­ny and fig­ured it all out yet. but typ­i­cal­ly about two weeks before the meet­ing, those, those vot­ing inten­tions will go up and that’s free and, easy for any­one to have a look at. [00:49:00] See what,what we think about how they’re, man­ag­ing remu­ner­a­tion, direc­tor elec­tions, any­thing else they are

[00:49:06] Steven: putting to share­hold­ers for the

[00:49:08] Tony: Yeah, good. So we can allo­cate our votes to you or we can vote along with you.

[00:49:12] Steven: year. Cor­rect. Exact­ly. Whichev­er way you want to do it. Yeah. And then, if, if you do want to fig­ure it out your­self, that’s

[00:49:16] Steven: total­ly fine as well.

[00:49:17] Steven: we just

[00:49:17] Steven: advo­cate that, try and

[00:49:18] Steven: have your voice heard, whether you’re fig­ur­ing it out your­self or you’re allo­cat­ing it to some­one else. If you don’t vote.

[00:49:24] Steven: The Chair just votes on your behalf, basi­cal­ly, and typ­i­cal­ly the Chair is going to vote based on, what they want to hap­pen, not nec­es­sar­i­ly what share­hold­ers might want to hap­pen. So, if you don’t vote, just under­stand that the Chair will be vot­ing your votes for you, effec­tive­ly.

[00:49:38] Tony: I want to just, step back a bit to what you said before about EML pay­ments and it raised a, raised a thought in my mind I just, want­ed to share with our lis­ten­ers, and it’s to do with Aus­tralian com­pa­nies, his­tor­i­cal­ly in my opin­ion being seen as a sell­er of last resort or the buy­er of last resort for par­tic­u­lar­ly and Euro­pean com­pa­nies. EML obvi­ous­ly you’ve spo­ken about, so they [00:50:00] bought an Irish, I think it was an Irish com­pa­ny. and then Uncov­ered Prob­lems. there are oth­er exam­ples like that. Slater Gor­don bought a com­pa­ny. which the prob­lems became appar­ent soon after they bought it and they had a huge write down. Uh, I think is the com­pa­ny going through it at the moment. they bought into, took over some funds I think in the UK which have had reg­u­la­to­ry issues and they’ve paid the price. going back a long time, NAB bought What’s now Vir­gin UK so Clydes­dale Bank had prob­lems. it’s almost like if some­one’s in the UK, only a com­pa­ny in there, they can see. Dark clouds on the hori­zon, they look around to sell it.

[00:50:37] Tony: Every­one local goes, not touch­ing it. Come find some­one in Aus­tralia to buy it. So it’s almost a red flag, I think, if one

[00:50:45] Tony: of the stocks you own sud­den­ly comes up with this great acqui­si­tion

[00:50:48] Tony: idea

[00:50:48] Steven: So, you’re say­ing our CEOs are not very good cap­i­tal allo­ca­tors, TK? Ha, Ha, ha,

[00:50:55] Tony: Well, it’s a dif­fi­cult, I mean, I’ve, I’ve picked that up based on my his­to­ry of watch­ing it. there was a book [00:51:00] writ­ten about the fund. The link got mixed up with recently,but I dare say most,CEOs are very oper­a­tional and don’t have time to read books on, sub­jects in the UK, even though they’re buy­ing the com­pa­ny. So, yeah, but it’s cer­tain­ly a well worn, path that when Aus­tralian com­pa­nies go to the UK, they gen­er­al­ly are buy­ing prob­lems.

[00:51:21] Steven: yeah, exact­ly. I mean, it’s like Buf­fett says, isn’t it? He thinks

[00:51:23] Steven: the CEO’s most impor­tant job is to be a cap­i­tal allo­ca­tor, but a lot of the time it has­n’t been their skillset or what they’ve done, you know, pri­or to being in the CEO role. So I think there’s anoth­er cou­ple

[00:51:33] Steven: of recent exam­ples too. I know Reece, the, the plumb­ing firm,

[00:51:36] Steven: fam­i­ly,

[00:51:37] Steven: pret­ty.

[00:51:39] Steven: Big Insid­er Own­er­ship, Fam­i­ly Run type busi­ness. I know they made an acqui­si­tion in the U. S. and it

[00:51:44] Steven: isn’t going as well as they’d hoped at this point. So we’ll see how that one plays out. I think that, as an exam­ple of,the Bun­nings. expan­sion into the UK, isn’t there, that did­n’t go as well.

[00:51:55] Steven: So there’s, there’s lots of war sto­ries, I think, isn’t there, of Aussie com­pa­nies that have either tried to expand [00:52:00] inter­na­tion­al­ly or made acqui­si­tions inter­na­tion­al­ly that, that haven’t gone well. I think that there seems to be more bad news sto­ries, does­n’t there, than good news ones. So,

[00:52:07] Steven: so yeah, I know, back to Nick Scali for a sec­ond.

[00:52:10] Steven: I did lis­ten to Nick­’s, oh, sor­ry, Antho­ny’s, Last Earn­ings Call, which I thought was a mas­ter­class in how to deal with ana­lysts. if any­one, wants to, you can lis­ten to it on Open Brief­ing that I men­tioned ear­li­er. But, there were four or five dif­fer­ent ana­lysts on the call that, asked him some ques­tions around the busi­ness and they were real­ly cheap, inch deep ques­tions, very, very min­i­mal research, I think, that the ana­lysts had done before they jumped on the call with him.

[00:52:33] Steven: And I thought he did a great job kind of swat­ting them away and just, giv­ing them some pret­ty blunt com­mon sense answers, which was, which was good. Thank you. but he did men­tion that he’s been in the UK and

[00:52:44] Steven: that they’re, they’re look­ing,

[00:52:46] Steven: look­ing at the

[00:52:46] Steven: uk. so that’ll be inter­est­ing to watch. As I said, I’m

[00:52:50] Steven: a, I’m a share­hold­er and I’m a big fan

[00:52:51] Steven: of,

[00:52:51] Steven: Antho­ny Scali per­son­al­ly and the way he is, been run­ning the busi­ness.

[00:52:55] Steven: And they have

[00:52:55] Steven: done an excel­lent job with the PLA plus acqui­si­tion, it looks like, so that that [00:53:00] has, um, deliv­ered lots of. Cost sav­ings it looks like to the busi­ness as he’s merged them and they’re get­ting,

[00:53:05] Steven: the sales growth that

[00:53:06] Steven: they kind of expect­ed and then some. So, he does look like he might be a good cap­i­tal allo­ca­tor, at least domes­ti­cal­ly.

[00:53:13] Steven: And he’s, he’s done a good job there it seems. But yeah, the UK one will be one to watch if they do decide to

[00:53:17] Steven: expand or acquire some­one

[00:53:18] Tony: Yeah, espe­cial­ly if it’s an acqui­si­tion, they’re the ones I wor­ry about, yeah.

[00:53:22] Steven: Yeah, so stay, stay tuned. He was­n’t mak­ing a for­mal announce­ment.

[00:53:26] Steven: He was just kind of teas­ing that he’d been in

[00:53:28] Steven: the UK and he’s been look­ing around there, they’re inter­est­ed in fur­ther

[00:53:31] Steven: expan­sion, basi­cal­ly.

[00:53:33] Tony: But plus also too at this

[00:53:34] Tony: stage, what­ev­er the com­pa­ny

[00:53:36] Tony: like the UK com­pa­nies are now

[00:53:38] Tony: worth

[00:53:38] Tony: twice as much giv­en the exchange rate.

[00:53:40] Steven: yes,

[00:53:41] Tony: it’s not the time to be invest­ing over­seas.

[00:53:44] Steven: yeah, good point. Good point. Yeah, I guess we’ll stay tuned and see what hap­pens there. But yeah, I think you

[00:53:48] Steven: make an excel­lent point. There’s lots of lots of

[00:53:50] Steven: bad

[00:53:50] Steven: news or war

[00:53:51] Steven: sto­ries there over the years.

[00:53:53] Tony: Yeah. Well, look, I’ve prob­a­bly derailed

[00:53:54] Tony: you from what you want­ed to talk about. I did want to cir­cle back. You’ve spo­ken about, a lit­tle bit

[00:53:58] Tony: about being approached to talk about [00:54:00] Qan­tas. What, what have you been asked about Fortes­cue Met­als Group? That’s anoth­er QAV stock and it’s been top­i­cal late­ly.

[00:54:08] Steven: Yeah, I mean, all the

[00:54:09] Steven: obvi­ous ques­tions

[00:54:10] Steven: there at the moment that peo­ple have prob­a­bly read in the

[00:54:13] Steven: press just around, board

[00:54:15] Steven: over­sight and,is, is the board, they’re

[00:54:19] Steven: A well run and well gov­erned board, or is Twig­gy kind of, run­ning things his way and hir­ing and fir­ing peo­ple with­out, good over­sight?

[00:54:28] Steven: And it’s real­ly dif­fi­cult to know that, isn’t it? If you’re not in the board meet­ings or you’re not inter­nal in the com­pa­ny, it’s very dif­fi­cult to know. How those meet­ings or those con­ver­sa­tions might be going. You can only real­ly base your assump­tions on, on the actions or the announce­ments that, that come out.

[00:54:42] Steven: So, so we haven’t tak­en any kind of, firm posi­tion on Fortes­cue yet. The, the only report in the AGM is still to come and we’ll, we’ll work our way through that, but there’s cer­tain­ly some con­cern­ing things I would think as an investor see­ing, lots of man­age­ment turnover and lots of short 10 years of man­age­ment.

[00:54:57] Steven: It does, it does raise some con­cerns [00:55:00] because when you think about it, a board­’s core job, one or one of their real­ly core jobs is to appoint and then to, to suc­ces­sion plan for CEOs. So if you’re hav­ing a, a sig­nif­i­cant amount of turnover in the C suite, it is, some­thing’s going wrong.

[00:55:16] Steven: Either you’re not You know, find­ing the right can­di­date in the first place, or you’re not man­ag­ing them well when they’re there, or,you’re not all aligned, there could be, myr­i­ads of things going on, but, but real­ly, a good board typ­i­cal­ly has, a high per­form­ing CEO on a very sen­si­ble, well aligned remu­ner­a­tion plan, and they deliv­er, good results for all the stake­hold­ers along the way.

[00:55:38] Steven: And then at some point in time, the board, plans a suc­ces­sion along with man­age­ment, tries to, hope­ful­ly, replace the CEO with some­one, as good or bet­ter in due course. I mean, that’s, that’s the ide­al sce­nario, isn’t it? But it, it looks from afar that, maybe that’s not what’s hap­pen­ing at the moment at Fortes­cue.

[00:55:52] Steven: So, so we’ll, we’ll obvi­ous­ly go and meet with the com­pa­ny and we’ll ask them these ques­tions and we’ll see if there’s any­thing else we can fig­ure out. And then we’ll put that in our [00:56:00] You know, vot­ing inten­tions. We’ll ask some of those ques­tions at the AGM, but I doubt we’ll be the only ones ask­ing those ques­tions.

[00:56:05] Steven: I’m sure there’ll be lots of oth­ers that are putting those points to

[00:56:07] Steven: Twig­gy as well.

[00:56:09] Tony: I think the ques­tion I’d be ask­ing, apart from the cul­tur­al issues, and I’m, as you say, we’re not present at board meet­ings, so we don’t know exact­ly what’s going on, although it does seem to be, around how aligned C Suite is to the vision for Fortes­cue. Um, my ques­tion would be… When is FFI going to be demerged?

[00:56:28] Tony: ’cause what the trig­ger is the Green Ener­gy Com­pa­ny doing in a iron ore minor? and then the, the fol­low

[00:56:33] Tony: up ques­tion would be is giv­en that Twig­gy For­est him­self has

[00:56:37] Tony: come out and said he does­n’t expect the returns from F f I to be as strong as the iron ore com­pa­ny. Why is he invest­ing in F F I and not iron ore?

[00:56:46] Steven: Yeah, that’s right. I mean, they’re, they’re excel­lent invest­ing ques­tions. And I

[00:56:50] Steven: did

[00:56:50] Steven: see some announce­ments this week

[00:56:53] Steven: that, I think pre­vi­ous­ly they were, they’re allo­cat­ing about 10 per­cent of,the iron ores busi­ness prof­its to FFI.[00:57:00] but I noticed, I think this week they, they announced that they’re not going to be doing that as a default posi­tion going for­ward.

[00:57:05] Steven: They’re now going to start to look at, kind of an inter­nal rate of return for the FFI projects, but it’s going to be a much low­er inter­nal rate of return than the iron ore busi­ness. So as a share­hold­er, again, that’s some­thing you’ve got to think about, isn’t it? It’s like if they’re going to divert invest­ment or prof­its to a, a low­er mar­gin or a low­er return busi­ness, Is that going to come at the cost of, the growth and future of the iron ore busi­ness?

[00:57:27] Steven: So I think as an, now ASA would­n’t give you a, an opin­ion on that because we’re not try­ing to tell you to buy or sell indi­vid­ual shares nec­es­sar­i­ly. That’s where, you need QAV to, to help you with that part of it. but obvi­ous­ly we’ll ask them, any appro­pri­ate ques­tions around those kinds of things if they’re rel­e­vant to, to direc­tors or remu­ner­a­tion for exam­ple.

[00:57:45] Steven: So, Yeah, I think if any­one has­n’t read those and you are hold­ing Fortes­cue or, look­ing at Fortes­cue, there was a cou­ple of your inter­est­ing announce­ments this week, I think, about the future of how they’re going to allo­cate the cap­i­tal between those two [00:58:00] divi­sions for what it’s worth. and I think while we’re talk­ing.

[00:58:04] Steven: Qan­tas and Fortes­cue. Chairs, one of the things that ASA is very strong on is work­load for direc­tors and, are the direc­tors in gen­er­al and par­tic­u­lar­ly the chairs able to ful­fill You know, all of their duties, if you like, to the com­pa­ny and stake­hold­ers, share­hold­ers, etc. And, one of the key things we look at there is how many oth­er posi­tions they hold, do they have, so many oth­er direc­tor­ships that when some­thing goes wrong, it might be dif­fi­cult for them to, to real­ly, Or, can they do all of the oth­er kind of soft or non finan­cial type things that you might want a great direc­tor to do?

[00:58:41] Steven: So, for exam­ple, if we look at Qan­tas, Richard Goy­der is the chair there. He’s also the chair of the AFL. Now, they’re not list­ed, but they’re a pret­ty big orga­ni­za­tion. And he’s also the chair of Wood­side. So… When you think about that, he’s chair­ing three of the biggest orga­ni­za­tions in Aus­tralia, real­ly [00:59:00] com­plex, real­ly big, big busi­ness­es.

[00:59:02] Steven: Um, and my chair­ing a small not for prof­it, I’ve got to say, it takes a lot of time. It’s a lot of time and effort and men­tal ener­gy that you devote to it. if you want to do a real­ly good job of it. And I would ques­tion per­son­al­ly, and it’s cer­tain­ly ASA posi­tion that you should not be chair­ing three orga­ni­za­tions of that size at the one time, because when some­thing hap­pens like it is at Qan­tas now, That must be con­sum­ing all of the board­’s time.

[00:59:27] Steven: So what hap­pens then at Wood­side or the AFL if there’s some­thing going on in par­al­lel? He’s, he’s human, right? He’s not going to be able to do all of those things to the best of his abil­i­ty in the same time frame. COVID was anoth­er exam­ple. if you were run­ning a two or three, or chair­ing two or three dif­fer­ent orga­ni­za­tions at the same time and COVID hits, can you imag­ine how dif­fi­cult that would have been for most busi­ness­es to try and nav­i­gate their way through?

[00:59:50] Steven: So it’s not when things are going great, But it’s the prob­lem where every­thing’s hum­ming along and the strat­e­gy is work­ing well. It’s when some­thing goes pear shaped or, when the so called black swan [01:00:00] comes out of the, out of the left field to derail you, that’s when we think it’s a big issue. So we would typ­i­cal­ly vote against a direc­tor, if they held more than five posi­tions at the one time, and the chair, in our opin­ion, counts for two.

[01:00:15] Steven: So we will seri­ous­ly con­sid­er, next time Richard Goode is up for elec­tion, whether we would sup­port his re elec­tion at one of those three organi not the AFL OMC, but the oth­er two organ­i­sa­tions, because we think he’s prob­a­bly over­loaded. Now most of the time the direc­tors say, oh we’re not, you don’t under­stand, it’s real­ly easy, like, we’ve got heaps of time, we’ve still got time to walk the dog on the beach, that’s the kind of response you get from.

[01:00:37] Steven: Some of those direc­tors, and I’m not say­ing that’s what Richard Goy­der has said to us, but I mean some of the direc­tors we push back on work­load, they tell us that

[01:00:43] Steven: it’s fine, it’s not a prob­lem. But,

[01:00:45] Tony: so do you say we’re pay­ing you too much then? Mm-hmm.

[01:00:48] Steven: yeah, well that could be the next thing, could­n’t it? But, um, yeah, we’ll typ­i­cal­ly, yeah, typ­i­cal­ly vote

[01:00:54] Steven: against

[01:00:54] Steven: a direc­tor’s elec­tion or re elec­tion if they’ve got more than five list­ed posi­tions at the one time. [01:01:00] Now that, that might be wrong, maybe it should be three, maybe it should be six, I mean who knows, but we do think work­load­’s an issue.

[01:01:06] Steven: and that if you’re spread too thin, you real­ly can’t do lots of the, the soft­er things that a good direc­tor should do. So for exam­ple, you can say I’ve got enough time to attend all the board meet­ings. Well, that might be true, but do you have enough time to go into the orga­ni­za­tion and real­ly see what’s going on?

[01:01:23] Steven: Do you have time to go and talk to staff? Do you have time to go and talk to cus­tomers? There’s a, it was a good exam­ple when,Star Enter­tain­ment implod­ed a cou­ple of years ago. where, there were lots of things appar­ent­ly hap­pen­ing in the High Rollers room that, that were not,were not legal and, there’s been reg­u­la­to­ry action tak­en against them.

[01:01:42] Steven: And there were some very smart, intel­li­gent, well cre­den­tialed direc­tors on that board at the time. My sus­pi­cion is, though, look­ing at them, most of them were pret­ty heavy work­loads. Most of them had mul­ti­ple board posi­tions. I think one of the ladies, Dr. Sal­ly Pitkin, She’s also chair­ing Super Retail.

[01:01:59] Steven: She’s one of [01:02:00] the,the kind of key edu­ca­tors at the AOCD, which is kind of the, lob­by or club for, for inde­pen­dent direc­tors. And my sus­pi­cion is she prob­a­bly had­n’t been into the high rollers, right? Well, she prob­a­bly had­n’t been look­ing at what was going on inside Star on a dai­ly basis, um, alleged­ly, even, even at a real­ly low lev­el, right?

[01:02:20] Steven: So, um. I think that’s the wor­ry for ASA or for small share­hold­ers around direc­tor work­load. Do you real­ly have the time to, to get under the hood and see what’s going on in your orga­ni­za­tion beyond just the board meet­ings? And that’s, that’s where we’d say to them, well, you know, our risk assess­ment is dif­fer­ent here.

[01:02:36] Steven: Our risk to the orga­ni­za­tion we think is high­er than yours. if you don’t think that five or more posi­tions is too many. and we can agree to dis­agree on that obvi­ous­ly, but, but that’s an offi­cial ASA posi­tion around how many

[01:02:48] Steven: jobs you should take as a direc­tor.

[01:02:49] Tony: I whole­heart­ed­ly agree with that because I think you’re right if, if, if things go swim­ming­ly for a cou­ple of years, the direc­tor for­gets the fact that they’ll be very busy when things don’t go [01:03:00] swim­ming­ly. but I want­ed to ask you, do you have a posi­tion on direc­tor work­loads? I guess if, if a num­ber of direc­tor­ships is the hor­i­zon­tal approach, do you have one on ver­ti­cal on how much work­load is being demand­ed in a par­tic­u­lar com­pa­ny?

[01:03:13] Tony: cause I have heard of. Exam­ples where, in some cas­es man­age­ment either through incom­pe­tence or by design loads the direc­tors with lots and lots and lots of work. So pre read­ings, minu­ti­ae going to the board, and it’s a way of, hid­ing things from the board if you, if you flood them with a thou­sand papers they have to read before the board meet­ing.

[01:03:35] Tony: So, I’m think­ing of like, you think of Yes Min­is­ter where they used to, uh, Give them in as the three red box­es. And the thing that was impor­tant was at the bot­tom of the third red box. I have heard of man­age­ment teams who play that same sort of game with, with direc­tors. So

[01:03:48] Tony: does the ASA have a pol­i­cy on the size of board

[01:03:51] Tony: packs, the amount of pre read­ing that’s involved,the the kind of work­load a direc­tor has just, just being a nat­ur­al

[01:03:58] Tony: mem­ber of that, of that board.[01:04:00]

[01:04:00] Steven: Yeah, no, we don’t for­mal­ly. I think the chal­lenge obvi­ous­ly would be how do you find that,

[01:04:05] Steven: infor­ma­tion out in a, inde­pen­dent, ver­i­fi­able way? I mean, you can obvi­ous­ly ask them, but I’d be sur­prised if many direc­tors said, Oh,

[01:04:12] Steven: we’re over­loaded. So I agree with you. I agree. It’s prob­a­bly an issue, but I doubt you’d get much,

[01:04:18] Steven: trans­paren­cy or admis­sion that that’s an issue at that par­tic­u­lar com­pa­ny.

[01:04:23] Steven: We do,we do ask for a real­ly good skills matrix. So we say we want you to, as a com­pa­ny, pub­lish a good skills matrix that shows the dif­fer­ent skills of each of the direc­tors and how many direc­tors you’ve got with each of these skills. And com­pa­nies are doing that to a dif­fer­ent lev­el at the moment, but it is becom­ing more and more the norm that you’ll get a good skills matrix in the annu­al report show­ing, each of the direc­tors and what, what they’re good at or what their skills are. we also, have increas­ing­ly been kind of ask­ing, for direc­tors to speak to their elec­tions. So when they’re up for elec­tion at the AGM, we’ll ask them to get up and, share with share­hold­ers at the [01:05:00]meeting. Why they think they’re a good fit and what val­ue they think they’re going to bring to the orga­ni­za­tion.

[01:05:04] Steven: And that’s when you get to see what kind of com­mu­ni­ca­tor they’re like. If they haven’t had noticed that that ques­tion’s com­ing, you get to see whether they can kind of think on their feet and speak on their feet. And then also whether they’re a con­fi­dent enough per­son to maybe chal­lenge the chair or chal­lenge the CEO.

[01:05:18] Steven: So it’s only a very small sliv­er, but some­times you’ll have sit­u­a­tions where the chair will not allow them to

[01:05:23] Steven: speak. The chair will say no, no, they don’t need to speak to their elec­tion. We’ve looked at them and we think they’re qual­i­fied. Well, that tells me that maybe that chair’s got a very dom­i­neer­ing style on that board and that they’re not nec­es­sar­i­ly, hav­ing a real­ly thor­ough engage­ment and dis­cus­sion at all.

[01:05:40] Steven: at board lev­el. So there’s some lit­tle things like that that you can pick up at AGMs with the way that you ask ques­tions and the way you give direc­tors a chance to, I guess, speak

[01:05:48] Steven: to their, to their elec­tions.

[01:05:50] Tony: you have a pol­i­cy on how many inde­pen­dent direc­tors there should be on the board and, and how you, how would you define inde­pen­dence?

[01:05:56] Steven: Yeah, we do. So that, look, that’s a

[01:05:58] Steven: con­tro­ver­sial issue because

[01:05:59] Steven: [01:06:00] there’s, there’s some school of thought, obvi­ous­ly, that you don’t need

[01:06:02] Steven: to

[01:06:02] Steven: be inde­pen­dent. You can be like

[01:06:04] Steven: Buf­fett and Munger and you,

[01:06:05] Steven: know, inde­pen­dence?

[01:06:06] Steven: does­n’t mat­ter. And my, my per­son­al view on that is, I agree. If you’ve got a whole board made up of Buf­fett and Mungers, you prob­a­bly don’t need inde­pen­dence, but it’s not the real­i­ty in Aus­tralia, right?

[01:06:15] Steven: We don’t have a whole pool of Buf­fett and Mungers to, to chair or

[01:06:19] Steven: direct our

[01:06:19] Tony: and Buf­fet Munger have gates on their board as well. So,

[01:06:23] Steven: Exact­ly.

[01:06:24] Tony: PE and oth­ers,

[01:06:25] Tony: yeah.

[01:06:25] Steven: they would say, you

[01:06:26] Steven: know, we’re

[01:06:26] Steven: not inde­pen­dent and we don’t need an

[01:06:28] Steven: inde­pen­dent, we don’t need to be, I mean,

[01:06:30] Steven: and, again, if I’m Buf­fett and Munger,

[01:06:32] Steven: I would agree, but yeah, I just don’t think we have as many

[01:06:36] Steven: tal­ent­ed peo­ple as that to fill all two and a half thou­sand ASX com­pa­nies.

[01:06:40] Steven: So what do you do in that sit­u­a­tion? Well, what, what we rec­om­mend, and it’s also what, kind of the ASX list­ing prin­ci­ples are for com­pa­nies. It’s also what the AICD, so the direc­tors group rec­om­mends as well, is that the major­i­ty of the board should be inde­pen­dent. So we’re fine if you don’t have All Inde­pen­dent [01:07:00] Direc­tors, but the major­i­ty of your board should be inde­pen­dent.

[01:07:02] Steven: Now what does inde­pen­dence mean? It means that you’re not, a for­mer CEO or real­ly mate­ri­al­ly con­nect­ed to the com­pa­ny. You can, you can know the peo­ple, you can have, worked with them in the past in some oth­er role or some­thing, but you’re not, the last CEO or the last CFO or you’re not, best friends with the CEO and have been for 50 years.

[01:07:19] Steven: Like, some, obvi­ous­ly, pub test type rules like that. and also about tenure. So, so we have a, basi­cal­ly a posi­tion that after about 12 years, so that’s four terms, four three year terms effec­tive­ly, we would­n’t con­sid­er you inde­pen­dent any­more because at that point we think you’re so con­nect­ed and part of the fur­ni­ture that You’re prob­a­bly not think­ing like an out­side, inde­pen­dent direc­tor at that point.

[01:07:42] Steven: Now, again, it does­n’t mean we’d vote against you. It just means we would­n’t con­sid­er you an inde­pen­dent mem­ber of the board any­more at that point, because there is a lot of val­ue, obvi­ous­ly, hav­ing peo­ple that real­ly under­stand the busi­ness, real­ly under­stand the indus­try, maybe have lots of shares in the busi­ness.

[01:07:57] Steven: So we’re, we’re absolute­ly fine with peo­ple [01:08:00] that have got lots of expe­ri­ence and lots of knowl­edge in the indus­try and, lots of skin in the game. but we would want the major­i­ty of you. So if you have sev­en direc­tors, for exam­ple, we’d want four of them to be con­sid­ered inde­pen­dent. You could cer­tain­ly have three insid­ers or three that aren’t.

[01:08:15] Steven: and rough­ly, some­where between sev­en to nine peo­ple, we think is about the right size for most, most list­ed board that, that seems to allow you to get. all of the skills that you need if you’re appoint­ing peo­ple well, but not such a big group that it makes it hard to make deci­sions. Cause, I can, I can say at the ASA, we’ve got an eight per­son board at the moment and we’ve, we’ve fluc­tu­at­ed between six and eight over the last few years.

[01:08:38] Steven: And it is eas­i­er to make deci­sions when you’ve got six peo­ple ver­sus eight. the less peo­ple in the room, the quick­er it gets to a deci­sion, obvi­ous­ly. so we don’t like to see the boards that have got 15 peo­ple there. We think that might be a lit­tle dif­fi­cult. But equal­ly, we don’t like to see three peo­ple on the board, because you’re prob­a­bly not cov­er­ing all the skills that you might need then.

[01:08:54] Steven: So just some, again, these things are judge­ment calls, they’re grey, peo­ple can have dif­fer­ent opin­ions on them, [01:09:00] but we do try and take a, I guess a mid­dle or a bal­anced type posi­tion on those things and then apply it, ver­sus not tak­ing

[01:09:06] Steven: any posi­tion at all.

[01:09:07] Tony: How many boards would have a major­i­ty of inde­pen­dent direc­tors on the

[01:09:11] Steven: the

[01:09:11] Steven: vast major­i­ty of the ASX 200 do, and it’s because,

[01:09:15] Steven: as I said, it’s an ASX list­ing

[01:09:17] Steven: prin­ci­ple, so it’s not a if you don’t do it, you’re going to be

[01:09:20] Steven: delist­ed, but if they don’t do it, they have to explain why not. So there’s an if not why not clause if you like, so if you have less than a major­i­ty of inde­pen­dent direc­tors, you need to explain each year why you don’t.

[01:09:33] Steven: now where that can get sticky though is some­times the board will con­sid­er some­one

[01:09:36] Steven: inde­pen­dent that share­hold­ers prob­a­bly don’t. and I see those exam­ples quite often. there’s, there’s times where some­one’s, been in man­age­ment very recent­ly or they’re, mate­ri­al­ly con­nect­ed to the, to the peo­ple at the com­pa­ny and the board will declare them as an inde­pen­dent direc­tor, for exam­ple, and we would chal­lenge them on that.

[01:09:55] Steven: and the ASX has some, some prin­ci­ples again around

[01:09:58] Steven: those things.

[01:09:59] Tony: they’ve been a,

[01:09:59] Tony: [01:10:00] long term sup­pli­er and they’re now on the board, so it’s a, it’s a reward for what­ev­er they pro­vid­ed to the com­pa­ny and did­n’t charge for in the past. Yeah.

[01:10:08] Steven: Yeah, exact­ly. And if you think about, why are these

[01:10:11] Steven: things impor­tant to you as a

[01:10:12] Steven: share­hold­er,

[01:10:13] Steven: I mean, real­ly one of the

[01:10:14] Steven: core roles again of the board is to con­sid­er all of the stake­hold­ers and espe­cial­ly the share­hold­ers, the oth­er share­hold­ers out­side of man­age­ment. So it does­n’t mean you don’t think about man­age­ment.

[01:10:25] Steven: But it does­n’t mean you only pri­or­i­tize man­age­ment either. The, par­tic­u­lar­ly your inde­pen­dent direc­tors should be think­ing about, your cus­tomers, your staff, and all of your oth­er share­hold­ers when they’re mak­ing deci­sions and help­ing over­see the com­pa­ny, not just what’s good for our CEO this year.

[01:10:41] Steven: So that’s why it’s real­ly impor­tant to you as a share­hold­er, we think, to have some inde­pen­dence on the board and to have some inde­pen­dent think­ing and some, I guess, sep­a­ra­tion from

[01:10:51] Steven: the man­age­ment or the insid­ers.

[01:10:53] Tony: Speak­ing, speak­ing of inde­pen­dence, do you have a view on or a pol­i­cy on diver­si­ty on

[01:10:57] Tony: boards, gen­der and oth­er, [01:11:00] oth­er types?

[01:11:00] Steven: We do. We’ve been a big sup­port­er of,gender diver­si­ty for a long time and ASA was one of the first groups to, to

[01:11:07] Steven: push for at least 30 per­cent female or male on a board. and then oth­er groups came along like the Proxy Advi­sors and the ASX as well. that’s now their list­ing prin­ci­ple too.

[01:11:19] Steven: we have just moved that actu­al­ly to 40 40 20, so that means 40 per­cent female, 40 per­cent male and 20%, can vary. Thanks. and I think what’s impor­tant to point out here is when peo­ple hear those tar­gets, they think, oh, you’re try­ing to give some­one a leg up or you’re try­ing to help a minor­i­ty group or those kind of things.

[01:11:35] Steven: It’s not about that at all. It’s real­ly about try­ing to have, dif­fer­ent knowl­edge and expe­ri­ence in the room to make a deci­sion and to get to a bet­ter out­come than if you have every­body who’s got the same back­ground and thinks the same way. And I have to say per­son­al­ly with the, the pri­vate com­pa­ny that I was part of.

[01:11:52] Steven: We, we obvi­ous­ly had a board, we had a board of five peo­ple, and five of us that were basi­cal­ly exact­ly the same. We’re all shoe guys, we’re all [01:12:00] a sim­i­lar age, we’re all white guys from Aus­tralia, and luck­i­ly it went well, but as I reflect­ed on it lat­er I thought, There were so many things that we did­n’t know or that we would­n’t have thought of, or prob­lems or oppor­tu­ni­ties that if it had have come along, we did­n’t have the, the pre­vi­ous knowl­edge or expe­ri­ence to deal with that.

[01:12:20] Steven: We were lucky, I think at times to scrape through, and I saw that when, actu­al­ly I went and went, did the com­pa­ny direc­tors course with the RACV, and one of the things they do there is that they put you through a mock board sce­nario. And basi­cal­ly they’ll pair you up with four or five oth­er peo­ple in the class from nor­mal­ly pret­ty dif­fer­ent or diverse back­grounds, gen­ders, expe­ri­ence, indus­tries, etc.

[01:12:42] Steven: And they give you a prob­lem. They say, here’s your prob­lem, list­ed com­pa­ny. you’re, you are the board that need to fig­ure out how to deal with this prob­lem. And, uh, I thought, God, I’ve got all the answers. I know exact­ly what to do here. And then, you then meet as your board and start to talk through it.

[01:12:56] Steven: And I very quick­ly real­ized that I did not have all the answers, or I did­n’t [01:13:00] have the best answer. And in my group, we had, The finan­cial con­troller from QSu­per, we had the gen­er­al coun­sel from Vir­gin Air­lines, we had a top, mil­i­tary offi­cer from Can­ber­ra, and then we had a, a sur­geon from one of the top hos­pi­tal sys­tems, and then myself as a, you know, retail shoe guy.

[01:13:18] Steven: and I quick­ly real­ized that these oth­er peo­ple’s expe­ri­ence from very dif­fer­ent indus­tries, Got us to a much bet­ter out­come than if I had have just gone at my way or done it, with peo­ple that thought the same way as me. So I think it’s real­ly impor­tant to rec­og­nize that when you’re hear­ing things about gen­der diver­si­ty on boards, I gen­uine­ly don’t believe it’s about try­ing to Give some­one a leg up.

[01:13:40] Steven: It’s about try­ing to have enough dif­fer­ent knowl­edge, expe­ri­ence, over­sight in that board­room to get a bet­ter deci­sion than if every­body thinks the same way. It’s like the old cliche about if every­thing, looks like a nail, sor­ry, if your only tool is a ham­mer, every­thing looks like a nail, right?

[01:13:55] Steven: That’s the prob­lem if you have every­one with the same back­ground or the same kind of expe­ri­ence and [01:14:00] some­thing comes along

[01:14:01] Steven: that isn’t a nail.

[01:14:02] Tony: yeah,

[01:14:02] Tony: and the oth­er dimen­sion

[01:14:03] Tony: too

[01:14:03] Tony: is like, like you, I prob­a­bly would have approached that same sit­u­a­tion with a tremen­dous

[01:14:07] Tony: amount of con­fi­dence because that’s what

[01:14:10] Tony: white guys do who’ve had cor­po­rate expe­ri­ence, right.

[01:14:13] Tony: in Aus­tralia. Um, yeah, and if you put five of us on the board… We’re going to have the same approach, but addi­tion­al­ly we’re going to com­pete to see who is the ham­mer that hits the nail so we can beat our chest and say we solved that prob­lem, where­as if we have

[01:14:28] Tony: the AICD board you spoke about,

[01:14:31] Tony: I’m not going to com­pete with the sur­geon, like how can I com­pete with the

[01:14:34] Tony: sur­geon on the knowl­edge they have, so it becomes all of a sud­den it becomes a coop­er­a­tive endeav­or instead of a com­pet­i­tive endeav­or.

[01:14:40] Steven: Exact­ly. Yeah, that’s right. And I think, it does­n’t mean that you should­n’t have a guy like

[01:14:44] Steven: you or me on the board. It just means that you should­n’t only have guys like you

[01:14:47] Steven: or me on the board,

[01:14:48] Tony: which is redun­dant any­way, you’re pay­ing five direc­tors fee for the same point of view, you

[01:14:52] Tony: might as well just pay one.

[01:14:54] Steven: Exact­ly. And I did think there was a great arti­cle

[01:14:56] Steven: in, in The Fin

[01:14:57] Steven: yes­ter­day,

[01:14:58] Steven: with, with, an

[01:14:58] Steven: inter­view with

[01:14:59] Steven: Mike Hen­ry, [01:15:00] the CEO of

[01:15:00] Steven: BHP, where he actu­al­ly talked about, Some of the real­ly sig­nif­i­cant finan­cial improve­ment and oper­a­tional improve­ments they’ve seen at BHP since they’ve added more gen­der diver­si­ty to their, to their man­age­ment teams and their boards.

[01:15:13] Steven: They’ve seen some, some real­ly inter­est­ing things in their life, some reduc­tions in injury rates and, some improve­ments in, finan­cial, account­ing and man­age­ment in dif­fer­ent areas as they’ve added, more. female tal­ent to some of their man­age­ment teams. So I think that’s the oth­er nice thing.

[01:15:28] Steven: This does­n’t have to come at the cost of per­for­mance. It seems to me it’s, it’s, it’s almost the oppo­site. You can get improved finan­cial per­for­mance if you’ve got a much more diverse and, and it does­n’t mean they should­n’t be qual­i­fied or expe­ri­enced, obvi­ous­ly. We’re not sug­gest­ing that, but hav­ing that, broad­er and dif­fer­ent range of expe­ri­ence def­i­nite­ly helps with deci­sion mak­ing in my expe­ri­ence.

[01:15:47] Steven: So hap­py to say ASA is a big sup­port­er of that and, and, push­es that with the com­pa­nies.

[01:15:51] Tony: yeah, look, I would­n’t be sur­prised if Four Cor­ners comes out at some stage in the near future and does an expose on min­ing

[01:15:59] Tony: camps and [01:16:00] the sex­u­al harass­ment that goes on there.

[01:16:02] Tony: Um, and has

[01:16:03] Tony: been over­looked because of male man­age­ment

[01:16:06] Tony: for a long

[01:16:06] Tony: time and it’s just start­ing to come to light now.

[01:16:09] Tony: We’ve had hawk sto­ries, but I sus­pect there’s a lot we’re not

[01:16:11] Tony: hear­ing about.

[01:16:12] Steven: yeah, that’s a great point. and that’s exact­ly the kind of thing you would think that, a more diverse man­age­ment team and or board might pick up and then might ques­tion and might start to push back on. so yeah, that’s a, that’s a great exam­ple, TK. I mean, I hope that that does­n’t

[01:16:27] Steven: come out because it’s not hap­pen­ing,

[01:16:28] Tony: Yeah. No, I

[01:16:29] Steven: know, it’s prob­a­bly naive to think that.

[01:16:31] Tony: Hope­ful­ly it’s fixed, fixed inter­nal­ly. and just on that too, does the ASA, have a pol­i­cy on, I’ll call it the Direc­tor’s Club. So in terms of, even though the direc­tors are inde­pen­dent, they tend to have been referred by some­body who’s already direc­tor.

[01:16:47] Tony: it’s, it’s obvi­ous­ly hard to get your first direc­tor­ship,

[01:16:49] Tony: but

[01:16:49] Tony: after that you often get five quick­ly.

[01:16:52] Tony: So, how do you, how do you see new blood, I guess, com­ing in on fresh set of eyes com­ing into the Aus­tralian scene?

[01:16:58] Steven: Yeah. So there’s, there’s two, [01:17:00] obvi­ous­ly two ways we han­dle that. One of them

[01:17:01] Steven: is work­load again.

[01:17:02] Steven: So obvi­ous­ly we don’t want peo­ple to take too many posi­tions and we’ll push back on

[01:17:05] Steven: that. the oth­er one is we do

[01:17:06] Steven: look at

[01:17:06] Steven: each direc­tor’s back­ground and his­to­ry. And there’s times where, there’s the direc­tors that have been involved in sig­nif­i­cant cor­po­rate fail­ings that we would not sup­port when they get put up for elec­tion at anoth­er com­pa­ny.

[01:17:19] Steven: and we would explain, why, and if the com­pa­ny does choose to put them up, we’ll then ask them to explain at the AGM why they think that’s not a prob­lem. again, you get a vary­ing degree of, coop­er­a­tion in answer­ing that ques­tion. but, that’s one of the approach­es we take, obvi­ous­ly.

[01:17:34] Steven: The skills matrix is the oth­er obvi­ous way, we real­ly ask for much more detailed skills matrix than most com­pa­nies were doing. And we’re get­ting that more and more so that, okay, you might be part of the direc­tor’s club, but are you actu­al­ly bring­ing the skills that the com­pa­ny needs and has iden­ti­fied that they need or not?

[01:17:50] Steven: And again, these things are hard to always, Guar­an­tee. but I’ll give you, I’ll give you anoth­er exam­ple there. there’s a com­pa­ny up in Bris­bane called Tech­nol­o­gy One, ASX 100 [01:18:00] com­pa­ny. It’s a enter­prise soft­ware type busi­ness. Does a lot of stuff for coun­cils and, ter­tiary edu­ca­tion, et cetera.

[01:18:05] Steven: Been a very suc­cess­ful busi­ness for a long time. Been very good for share­hold­ers as well in terms of returns. but they’ve had a non inde­pen­dent board for most of that peri­od, a founder, own­er that’s run the board, very firm­ly in our, our obser­va­tion. and I was mon­i­tor­ing them a cou­ple of years ago and, they did­n’t have gen­der diver­si­ty on their board either.

[01:18:26] Steven: So they had a bunch of insid­ers with lots of qual­i­fi­ca­tions and lots of expe­ri­ence and lots of skills, no prob­lems there, but the lack of inde­pen­dence. And This par­tic­u­lar year they had a new direc­tor posi­tion that they’d appoint­ed and he was up for elec­tion. and he was, he was a local guy that had come from one of the account­ing firms and they said the skills that he was plug­ging were audit skills.

[01:18:48] Steven: So that was basi­cal­ly what they were look­ing for, some­one with audit skills. So I put the ques­tion to the chair and said, did the, giv­en your lack of gen­der diver­si­ty on the board at the moment, and that you’re not in, sync with the [01:19:00] ASX list­ing prin­ci­ples here, did you give any con­sid­er­a­tion?

[01:19:03] Steven: to find­ing, a female for this par­tic­u­lar posi­tion. And he said, Oh yeah, yeah. We inter­viewed a cou­ple of women, but this guy was the best. He was the only guy that real­ly had the audit skills we were look­ing for. Now I find that pret­ty hard to believe that they could­n’t find a good female direc­tor in Aus­tralia with audit skills.

[01:19:20] Steven: but even if that was the case, he then went on to say, and by the way, It’s not our job to change the world. So real­ly what the chair was say­ing is I don’t real­ly val­ue that, right? I don’t real­ly believe in kind of gen­der diver­si­ty on my board or in man­age­ment, and we’re not tak­ing it seri­ous­ly. Now, a year or two lat­er, unfor­tu­nate­ly, he’s been kind of pushed, I think, by the big proxy advi­sors to, to vacate the chair role.

[01:19:44] Steven: So he’ll still stay on, I’m sure, as a big founder and,I’m sure an advi­sor to the com­pa­ny. The com­pa­ny’s still doing real­ly well. But his views are a lit­tle out­dat­ed, I think, in terms of where, many share­hold­ers or stake­hold­ers are these days around the way that the com­pa­ny should be gov­erned and the way that, I guess females in [01:20:00] his com­pa­ny should be val­ued.

[01:20:01] Steven: So, so yeah, that’s anoth­er, kind of inter­est­ing exam­ple of when you go to an AGM and ask a ques­tion, you do get an answer some­times from, from the chair or from the board that tells you what they’re think­ing or tells you kind of their phi­los­o­phy around these things. And then you can make your deci­sion whether you’re hap­py with that or not.

[01:20:15] Tony: Yeah, right. do you have a posi­tion on fees?

[01:20:19] Steven: Direc­tor fees.

[01:20:21] Steven: Yeah, so we, the best thing we can

[01:20:23] Steven: do there is we just bench­mark

[01:20:25] Steven: them to com­pa­nies of a sim­i­lar size. So if you’re, if you’re in the min­ing

[01:20:30] Steven: ser­vices indus­try and you’re in this kind of mar­ket cap range, what’s the bench­mark of both man­age­ment remu­ner­a­tion and also direc­tor fees for this par­tic­u­lar com­pa­ny?

[01:20:41] Steven: And as long as they’re not wild­ly above that kind of bench­mark, we’ll typically,support them. I’ve got to say I do find most com­pa­nies are not par­tic­u­lar­ly aggres­sive with their increas­es in direc­tor fees. They’re much more aggres­sive with the increas­es in man­age­ment remu­ner­a­tion. That’s where often the remu­ner­a­tion is [01:21:00] going up much faster than the earn­ings or the mar­ket cap of the com­pa­ny.

[01:21:03] Steven: The direc­tor fees part of it, it typ­i­cal­ly does­n’t seem to, first of all, they need to get share­hold­er approval. for direc­tor fee increas­es, which is inter­est­ing. They don’t need to get share­hold­er approval for increas­ing a, a CEO’s pay. They just, have a non bond­ing vote on that, like we talked about ear­li­er, but direc­tor fees, they do need share­hold­er approval.

[01:21:22] Steven: So maybe that’s one of the rea­sons they don’t go up as quick­ly some­times as man­age­ment, remu­ner­a­tion, but yeah, as long as they’re in that rough bench­mark for the size of the com­pa­ny and the indus­try that they’re in, yeah, we’ll typ­i­cal­ly be sup­port­ive of them, increas­ing over, over time. yeah, it’s a dif­fer­ent ques­tion about whether, any­one’s worth that much, I sup­pose, but we don’t take a judg­ment, make a judg­ment call or take a social posi­tion on that.

[01:21:44] Steven: It’s just real­ly bench­mark­ing them against oth­er com­pa­nies of a sim­i­lar size and indus­try.

[01:21:48] Tony: Do you ever find, exam­ples,

[01:21:50] Tony: of

[01:21:51] Tony: chairs who, appoint peo­ple to their boards who’ve worked for them before or worked with them before? And do you have a posi­tion on that? [01:22:00]

[01:22:00] Steven: Absolute­ly. And I think, again,

[01:22:01] Steven: it’s, it’s a judg­ment call there about whether this per­son­’s, bring­ing val­ue And skills that are

[01:22:06] Steven: going to

[01:22:07] Steven: be help­ful to the com­pa­ny or not. Because I mean, if we, think about. I guess all of our own lives. We obvi­ous­ly meet peo­ple at times that we work with or that we know, what­ev­er, that might be great addi­tions to our com­pa­ny or our busi­ness.

[01:22:17] Steven: So we don’t nec­es­sar­i­ly say you should­n’t do that. obvi­ous­ly the inde­pen­dence might be a prob­lem if the con­nec­tion is too close, or too long or too mate­r­i­al. but again, we typ­i­cal­ly assess that based on is this direc­tor qual­i­fied and bring­ing good skills to, to this par­tic­u­lar com­pa­ny that they need or not, rather than, Do they know the chair well?

[01:22:38] Steven: so yeah, that’s prob­a­bly the, the gen­er­al posi­tion we’d take there.

[01:22:41] Tony: Okay. You’ve answered all my

[01:22:44] Tony: ques­tions. Now we can get on to the real impor­tant top­ic of race­hors­ing for the race, race­hors­es and com­ing up in the spring car­ni­val. Yes. And how good Negroni’s is going to be.

[01:22:54] Steven: Oh, yeah. Well, hope­ful­ly, I

[01:22:55] Steven: mean, this is this is my

[01:22:56] Steven: first rac­ing expe­ri­ence, TK. So, so far, I’ve paid out a [01:23:00] lot of

[01:23:00] Steven: mon­ey and I haven’t seen my horse race.

[01:23:01] Tony: Yeah, that is the

[01:23:02] Tony: race­horse expe­ri­ence.

[01:23:03] Steven: that’s my invest­ment

[01:23:04] Steven: expe­ri­ence in

[01:23:05] Steven: race­hors­es so far. But, hope­ful­ly, Negro­nis is going to

[01:23:08] Steven: be a super­star and, and very

[01:23:09] Steven: well named by you too, TK.

[01:23:11] Steven: Negro­nis, we thought was a great name. And I know you

[01:23:14] Steven: talked about our oth­er

[01:23:14] Steven: race­hors­es. New­er Horse Dou­ble Mar­ket the oth­er day. So we’ve got some great QAV aligned names. So hope­ful­ly that’s a good omen. And our lit­tle hors­es are going to do very well over the next few

[01:23:24] Tony: Yeah, exact­ly.

[01:23:26] Steven: Hope­ful­ly it’ll be fun as well.

[01:23:28] Steven: I know you’ve been doing it for a long

[01:23:29] Steven: time and you’re, you’re much more

[01:23:31] Steven: expe­ri­enced at that than I am, but, yeah,

[01:23:33] Steven: hope­ful­ly

[01:23:33] Tony: It is. It’s, it’s, it’s, it’s a heap of fun Yeah,

[01:23:36] Tony: absolute­ly.

[01:23:37] Steven: Appre­ci­ate the intro. I think, I think at this

[01:23:41] Steven: time.

[01:23:41] Tony: see. All right,

[01:23:42] Steven: Well, real­ly good to chat to you guys. I appre­ci­ate the

[01:23:44] Steven: oppor­tu­ni­ty. And, yeah, hope­ful­ly that was help­ful for peo­ple. And, as I said, you can check out

[01:23:49] Steven: the web­site any­time if you want to,

[01:23:51] Steven: if you want to look at any of those vot­ing inten­tions or reports on the com­pa­nies or, you

[01:23:54] Steven: know, reach out to us if you’ve got any ques­tions and we’ll always be hap­py to help if we can.

[01:23:59] Cameron: Well, I did­n’t get [01:24:00] an oppor­tu­ni­ty to ask my two ques­tions that I had

[01:24:03] Steven: it’s very remiss of us Cam, far

[01:24:05] Cameron: shut up for the last 90 min­utes, but like, let’s be quick about it though, because I want to have some lunch. The first one was, Tony men­tioned that he had, I think you saw Mar­cus Padley on the TV the oth­er day and he was talk­ing about his, that a lot of peo­ple have been capit­u­lat­ing out of the invest­ing mar­kets, in recent times. I was won­der­ing if you have any vis­i­bil­i­ty of how are investors feel­ing? we’ve cov­ered some, um, dif­fer­ent sto­ries from the Fin over the last few months about, investor sen­ti­ment. We, saw a lot of new peo­ple obvi­ous­ly enter the mar­ket 2020, 2021 dur­ing the bull run. are you get­ting a feel­ing that peo­ple are sort of tak­ing their bat and their ball and going home?

[01:24:46] Cameron: I mean, the mar­ket is still down from where it was two years ago. It’s been a, been a very tur­bu­lent, tricky

[01:24:52] Cameron: peri­od. Got any sense on mar­ket, con­sumer, retail, investor atti­tudes, Steve?

[01:24:59] Steven: Yeah, look, it’s a good [01:25:00] ques­tion. I guess the first thing I’d say quick­ly is our

[01:25:02] Steven: mem­ber­ship’s actu­al­ly grown over the last 12 months quite sig­nif­i­cant­ly. So we’re not see­ing any kind of drop off of ASA mem­bers per se. There’s, there’s been some, more peo­ple join­ing than, than depart­ing the invest­ing world, if you like.

[01:25:15] Steven: So, so that’s been good. We are going to actu­al­ly do an investor sen­ti­ment sur­vey of our own of ASA mem­bers over the next few months. That was one thing that we, we asked the mem­bers about a lit­tle while ago and they said, yes, we’d love to see an investor sen­ti­ment sur­vey, like what oth­er mem­bers are think­ing and what they’re invest­ing in and what they’re inter­est­ed in.

[01:25:31] Steven: So. So once we’ve got that, I’ll more than hap­pi­ly share that with you guys, just for what the tem­per­a­ture is of, the ASA mem­ber­ship. Most of our mem­bers are kind of retired or pre retirees. So they’re kind of at that, towards more towards the end of their invest­ing jour­ney than the start of it, I sup­pose.

[01:25:47] Steven: So that might skew those results a lit­tle bit. I know we’ve got a lot of younger QAV mem­bers, obvi­ous­ly, which is great. but yeah, I sus­pect we’ll get more kind of skewed to the, to the retiree type. Mind­set, and larg­er port­fo­lio [01:26:00] mind­set from, from a lot of our mem­bers, but yeah, once we’ve got that sur­vey, I’ll say, but no, noth­ing oth­er than that anec­do­tal­ly that we’ve seen or heard.

[01:26:07] Cameron: Okay. Thanks. And the only oth­er ques­tion was like an after hours ques­tion.

[01:26:11] Cameron: I know you’re a

[01:26:12] Cameron: lover of great TV and film. What are you watch­ing at the moment? What’s your, what’s your num­ber one show rec­om­men­da­tion?

[01:26:18] Steven: Um, my, my old­est son and I have just start­ed, well, I’m rewatch­ing and he’s watch­ing Mr. Inbe­tween. So, I’ve already seen it. Fan­tas­tic. Love it. And just yes­ter­day he start­ed watch­ing it. he’s a bit of a film and media.

[01:26:32] Steven: Guy who’s doing media at school. So he’s been watch­ing lots and lots of clas­sic movies and I’ve been, tun­ing in and watch­ing some of those with him.

[01:26:39] Steven: So we just fin­ished The God­fa­ther and, he’s been watch­ing all of the Stan­ley Kubrick films as well. So I’ve been catch­ing up on a few of those clas­sics with him, which has been good. It’s good to have a, 17 year old that’s inter­est­ed in some, some good TV or movies rather than, social media.

[01:26:55] Steven: So, uh,

[01:26:56] Cameron: he think of the God­fa­ther?

[01:26:58] Steven: he’s, he’s [01:27:00] lov­ing all of them. Like, I’ve got to say, he’s got a

[01:27:02] Steven: real­ly mature palette, if you like, for these great films and actors, and, he even, the Stan­ley Kubrick films, he even went and, like, bought some of them on DVD now to keep a copy of it for, for the future kind of thing, which, with his pock­et mon­ey, so, yeah, he’s real­ly into, into the clas­sics, it seems, which is great, but,

[01:27:19] Cameron: speak­ing of which, I had this real­iza­tion last night, I went to, I want­ed to watch Cit­i­zen Kane, and I can’t stream it, you know, I sub­scribe to four or five dif­fer­ent stream­ing ser­vices, and I’m kick­ing myself now, I used to have hun­dreds of DVDs,and then they were sit­ting on my book­shelves in my garage for hours 15 years.

[01:27:37] Cameron: And Chris­sy kept say­ing, get rid of these things. You haven’t watched them in 15 years. They’re just tak­ing up space. If you want to watch any­thing, you stream it. Uh, final­ly, like over the last few years, I was like, yeah, yeah, fair enough. And I got rid of every­thing. Now, uh, I can’t watch Cit­i­zen Kane. I can’t watch the Shield.

[01:27:54] Cameron: You can’t stream that any­where. All of these things that I want to watch that I used to have on [01:28:00] DVD. I, can’t, they’ve locked them all up. You have to rent it or buy it. You can’t stream any of these things any­more. They did a bait and switch. Now I have to go out and buy the bloody DVD again if I

[01:28:11] Cameron: want to see these things

[01:28:12] Cameron: or down­load it, you know?

[01:28:14] Cameron: The indus­try bait and switched my ass and I’m furi­ous.

[01:28:18] Steven: Very dis­ap­point­ing. I, I did just fin­ish the grade

[01:28:20] Steven: as well. I think, did you watch the grade, TK? I can’t remem­ber if we talked about that or not, but…

[01:28:24] Tony: No, I don’t think

[01:28:25] Steven: it’s, I think it’s on Stan, isn’t it, Cam, but, yeah, very, very fun­ny, it’s,very loose and,

[01:28:30] Steven: fic­tion, you know, kind of, I guess, most­ly made up retelling of Cather­ine the Great in Rus­sia

[01:28:34] Tony: Ah, right. Yeah. Gotcha. Okay.

[01:28:37] Steven: the, is it Elle

[01:28:38] Steven: Fan­ning that plays Cather­ine the Great, Ken?

[01:28:40] Steven: Yeah, she’s fan­tas­tic in it, it’s real­ly,

[01:28:42] Steven: real­ly fun­ny, so,

[01:28:43] Steven: so, Yeah.

[01:28:44] Steven: I think there’s been three sea­sons of that and that’s well worth a watch if any­one, likes the

[01:28:47] Steven: com­e­dy, I think.

[01:28:48] Cameron: Very fun­ny, yeah.

[01:28:50] Cameron: Alright, uh, both of you heard the new Rolling Stones song, their first new song in 18 years? Angry? Just

[01:28:57] Tony: Alex and I, Alex and I watched it on [01:29:00] YouTube

[01:29:00] Tony: last night and it was just, so, we just went, this is so sex­ist from the eight­ies.

[01:29:05] Tony: It

[01:29:05] Tony: was just the film clip was hor­rid,

[01:29:08] Cameron: No, I think it’s fan­tas­tic. I mean, yes, it’s got the girl in the con­vert­ible Mer­cedes doing the sexy

[01:29:15] Tony: lying on the bon­net and Yeah. Right.

[01:29:17] Cameron: sure. But, the oth­er, I mean the most, the coolest part of It is, she’s dri­ving down on a sun­set boule­vard or some­thing, and there’s all these bill­boards of the Stones from all the dif­fer­ent eras of their career, but the, the they’re com­ing alive on the bill­boards and singing the new song, but it’s, it’s Mick and Kei­th and Ron going back from the 60s, 70s, Per­form­ing and singing the song on these

[01:29:46] Cameron: bill­boards, so they’ve used some, you know, AI, CGI, tech or what­ev­er to ani­mate them and make them look like

[01:29:52] Tony: And that was, and like was fan­tas­tic, right? That part of it was bril­liant. So why

[01:29:57] Tony: was­n’t that

[01:29:58] Tony: just the film clip? [01:30:00] Why, why, why put a girl

[01:30:01] Steven: Is the song

[01:30:02] Steven: any good?

[01:30:02] Cameron: Look, yeah, it’s pret­ty good. Like, it’s a clas­sic Stone Song. I don’t think it’s, you know, it did­n’t blow me away, but it’s a great Kei­th riff. You know, it’s, a great Open D riff, and just, uh, you know, it’s kind of fun­ny. Mick­’s talk­ing about, his girl­friend’s angry with him, they haven’t had sex for a week, a month.

[01:30:19] Cameron: He’s 80 years old, he’s com­plain­ing that he has­n’t.

[01:30:24] Cameron: At one point, he says he’s still tak­ing the pills,

[01:30:26] Cameron: and he’s going to Brazil. Brazil!

[01:30:29] Steven: Okay,

[01:30:31] Cameron: Uh,

[01:30:33] Steven: I’ll have to check it

[01:30:33] Steven: out tonight.

[01:30:34] Cameron: yeah, but Tony’s try­ing to uh, you know, Tony’s try­ing to,

[01:30:37] Tony: can­cel it. yeah,

[01:30:39] Cameron: can­cel, can­cel rock and roll. He’s try­ing to can­cel sex, drugs and rock and roll now. It’s the

[01:30:43] Tony: sit down and watch it with your 23 year old daugh­ter and you have a dif­fer­ent

[01:30:47] Steven: Dif­fer­ent per­spec­tive.

[01:30:48] Cameron: Well, that’s why I did­n’t, I nev­er had a daugh­ter Tony. So I nev­er had to have these con­ver­sa­tions. Yeah.

[01:30:54] Cameron: Yeah,

[01:30:55] Steven: Fair

[01:30:55] Cameron: Chris­sy, Chris­sy came in, I was watch­ing it last night

[01:30:58] Cameron: in bed on my iPad,

[01:30:59] Cameron: she goes, [01:31:00] What are you watch­ing?

[01:31:01] Tony: yeah,

[01:31:03] Steven: You bust­ed.

[01:31:04] Cameron: Yeah, yeah, yeah.

[01:31:06] Tony: look­ing for­ward to the album though. Paul

[01:31:07] Tony: McCart­ney’s on it and Ringo Star­r’s meant to be on it. Ste­vie Won­der, Lady

[01:31:11] Tony: Gaga. Yeah.

[01:31:12] Tony: Yeah,

[01:31:13] Steven: wow.

[01:31:14] Cameron: See, Paul and Ringo were on, um, Dol­ly Par­ton’s new coun­try rock cov­er of Let It Be, which is now on the top coun­try charts. So Paul and Ringo have now got a hit on the coun­try music charts, which they’ve nev­er had before. So it’s a first for them.

[01:31:32] Cameron: It’s not a great cov­er. I mean, I

[01:31:34] Cameron: love Dol­ly, but it’s, you know, hard to beat the orig­i­nal with them.

[01:31:39] Steven: Yeah,

[01:31:39] Cameron: All right.

[01:31:40] Cameron: Thank you, Chair­man Mabb. Thank you,

[01:31:42] Cameron: TK.

[01:31:43] Steven: All right guys, we’ll let you go. Thank you very

[01:31:45] Steven: much again

[01:31:46] Steven: for the chance to chat. Hope­ful­ly that was

[01:31:48] Steven: help­ful.

[01:31:48] Tony: Thank you, Steve. Thanks for

[01:31:50] Steven: Thanks guys. Talk to you lat­er.

[01:31:52] Cameron: Enjoy your week off, TK and the Goldie. [01:32:00] [01:33:00]