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Fairfax shareholders angered by boardroom pay -

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Fairfax shareholders angered by boardroom pay deals
Peter Ryan reported this story on Wednesday, October 24, 2012 12:20:00

ELEANOR HALL: The board of Fairfax Media has been hit by a significant investor protest vote at today's annual general meeting in Melbourne.

Around 20 per cent of shareholders voted against the company's remuneration report and the pay deals for Fairfax chairman Roger Corbett and the chief executive Greg Hywood.

Business editor Peter Ryan is at the Fairfax AGM in Melbourne and he joins us now.

So Peter, some very angry shareholders there. What did they tell the board about the reasons for their protest vote?

PETER RYAN: Well yes Eleanor, some angry and disappointed shareholders. Eighty one per cent of the proxy votes ended up being in favour of the remuneration report.

On the surface that sounds fine but it does mean that 19 per cent either voted against the remuneration report or substained (phonetic). A 25 per cent protest vote would have been the first strike under new corporate law that could force a board spill.

But here the general mood's pretty sombre. Very disappointed shareholders who've seen their shares go as low as 35 cents yesterday. They were $5 a few years ago. And a lot of concern about the chairman Roger Corbett's $430,000 pay package and Greg Hywood who's on $2.1 million. So many wanted to know for that type of money, what are they doing to turn the company around.

ELEANOR HALL: So how did the Fairfax chairman Roger Corbett respond? Did he say anything about whether they're looking at breaking up the company?

PETER RYAN: Mr Corbett, in a bit of an understatement, said that times are challenging. It was interesting to hear him reveal that Fairfax had considered all options, and he revealed that the company had considered splitting the company. Perhaps splitting off the metropolitan mastheads such as the Sydney Morning Herald and The Age where a lot of the pain is being felt at the moment.

That would have seen The Age and the Sydney Morning Herald split off as a separate business. That's not going to happen. Mr Corbett said a good part to the business shouldn't be cross-subsidising the weaker ones. But after deliberation, decided against the move. Here's what he had to say.

ROGER CORBETT: We considered whether value could be generated by breaking up Fairfax Media through a series of asset sales. A de-merger of the metro business businesses into separate listed entities. Or continue to operate an integrated media business.

Following detailed analysis, the break-up and de-merger options were ruled out. The analysis showed that it was the wrong time to break up our business. Pursuant of this option would not have added shareholder value and would undermine future shareholder value creation.

ELEANOR HALL: That's the Fairfax chairman Roger Corbett at the AGM today. So Peter, no break-up but there's been a lot of speculation about the future of The Age and the Sydney Morning Herald. Did the board give investors any comfort on that front?

PETER RYAN: Yeah that's right. Well we know that Fairfax has decided to close its big printing presses in Sydney and in Melbourne and that both the Sydney Morning Herald and The Age will be going to a narrow or some would say a tabloid format next year to get with the digital times.

Mr Hywood said that trading conditions had been difficult but he said that Fairfax had been going through what banks and the telecommunications sector has been hit with in recent years.

For example the impact of the internet changing consumer appetites and advertisers changing as well. He made the point that the rivers of gold, those big classified ads that used to turn up in The Age and Sydney Morning Herald every Saturday providing massive amounts of money for the newspapers, well they're all gone.

Mr Hywood said that Fairfax has cut $235 million in costs out of the company, losing almost 2,000 staff. But he did make the point, and he said this a number of times, that Fairfax is going to stick with printed newspapers as long as they're profitable. There's some key words. But he did flag the day that maybe in five, ten or 15 years, that Fairfax could become a digital only company.

ELEANOR HALL: And Peter, Gina Rinehart is Fairfax's biggest shareholder. Her push for board seats has been controversial to say the least. Did she attend today?

PETER RYAN: We've been looking out Eleanor. No sign though she does have a representative from Hancock Prospecting inside the annual general meeting. A number of shareholders that I've talked to this morning have expressed concerns about the way the chairman Roger Corbett has handled the Gina Rinehart matter.

That she is, after all, an almost 15 per cent shareholder of the company and should have some call on boardroom seats. She does want two seats. The former Labor senator Chris Schott, also a Fairfax investor, did ask some pretty strong questions about Gina Rinehart and the way that Mr Corbett had dealt with an issue that has really been making the headlines and damaging the reputation of Fairfax for the last few months.

ELEANOR HALL: Did he get a response?

PETER RYAN: He did get a response and said that, Mr Corbett said that they have had amiable discussions with Mrs Rinehart, wanted to try to accommodate her on the Fairfax board but certainly made no concessions and didn't give any sign that Mrs Rinehart would be making an entrance officially to the Fairfax boardroom any time soon.

ELEANOR HALL: Peter Ryan at the Fairfax AGM in Melbourne, thank you.