Heading For A Fall?

There have been warnings of another wave of corporate collapses on the horizon as the Annual General Meeting season rolls on with more than a little resistance from shareholders.

Companies Walk the Tightrope

There are new warnings that tough economic conditions could spark a fresh round of corporate collapses among the top 500 publicly listed companies. The president of the Insolvency Practitioners Association of Australia, Michael Dwyer, says insolvency specialists were already working with several unnamed, financially stretched listed companies to help them avoid the need for formal administrations. Dwyer says public companies most vulnerable to collapse were typically conglomerates with deteriorating markets, and those that had questionable corporate governance practices. Mr Dwyer also singled out the construction industry as a source of new work for insolvency practitioners.(Source: The Age)

Gunns Under Fire On Ethics

Ethical shareholders have taken to the floor at the annual meeting of Australia's largest hardwood company, Gunns, to grill it over its forest practices Environmentalists also raised questions about Gunns' forestry practices at Commonwealth Bank's annual meeting because its investment arm has a large stake in the company. Outside the Launceston meeting of Gunns, environmentalists called for the timber company to turn a new leaf or face a drop in its share price. A group of about 20 activists questioned the company's old-growth logging, its use of 1080 poison for pest management, and the effect its plantations had on water catchments. As well as logging, the Tasmanian company runs plantations, sawmills, woodchip export operations, veneer and construction plants, and a hardware chain. (Source: AAP)

Packer Family Jewels Grow

The Packer family's Publishing and Broadcasting has suffered problems in its key television and casino operations but is forecasting another year of double-digit earnings growth. PBL executive chairman James Packer has told the company's annual meeting that although the Nine Network traded below budget in the September quarter, it had recouped lost ground this quarter, putting it ahead of budget. As for Melbourne's Crown Casino, the introduction of smoking bans on September 1 had had "a negative effect on revenue", Packer admitted. The group's magazine arm had continued to perform strongly. The foreshadowed double-digit earnings growth, however, failed to do much for PBL shares yesterday, despite the analysts' upgrades. (Source: SMH)

Corning Revamp Costs 2200 Jobs

Corning Inc, the world's biggest maker of fiber-optic cable, will axe 2200 jobs and close factories in Australia and Germany in a battle for profits in the hard-hit telecoms industry Chief financial officer James Flaws said the challenge confronting the telecommunications industry was "the most serious we have faced". In Australia 90 Corning workers will lose their jobs at the Noble Park plant in Victoria. The Australian Workers Union is meeting with the workers to assist in developing a fair and reasonable closure package for its 90 Corning workers.

Newcrest Defends Exec Pay Hike

Newcrest Mining chief executive Tony Palmer has defended the gold producer's decision to increase its directors' payments by 60 per cent. The annual general meeting passed a motionto increase the total remuneration package for Newcrest directors by $300,000 to a maximum of $800,000 per annum. This was despite warnings that another two lean years lie ahead of it before the company will clear its damaging hedge book position and before it extracts the first ore from its new Telfer gold project in Western Australia. While chairman Ian Johnson says Newcrest is already on track towards posting a profit this financial year, he told shareholders at the AGM not to expect a significant improvement on last year's final dividend of 5c until 2004-05. (Source: SMH)

Perpetual Reckons Options Are OK

Singing a similar tune is Perpetual Trustees, who claims there is no case for "blanket bans" on options and retirement benefits for non-executive directors, despite the growing push to eliminate them from Australian companies. Shareholders at this week's annual meeting approved Perpetual's planned options issues - but not before the Australian Shareholders Association's David Jackson gave the group a taste of its own medicine and labelled the performance hurdles as too low. The association's members voted against resolutions regarding the grant of options and shares to managing director Graham Bradley, company secretary Gai McGrath and chief financial officer Michael Stefanovski. The association took its stand because the longstanding hurdles for the options only require Perpetual to outperform the top 300 companies, rather than peers or other more testing measures, and therefore reward only average performance. (Source: SMH)

Whack-Up at Westpac

Meanwhile, Westpac boss David Morgan had a simple answer when asked why the annual executive option and share grant expense rose from $37 million to $47 million. The bank "had a good year" and executives do disproportionately well in a good year - and disproportionately badly in a bad year. But there was some wry amusement when the next questioner pointed out that Westpac was the worst performing big bank share in the past year, down almost 10 per cent in the year to date, while the other banks are in the black. (Source: SMH)

WorldCom Fraud Snowballs

It's been found alleged that WorldCom took "extraordinary and illegal steps" to paint a rosy picture of its deteriorating finances, and the extent of the fraud will likely go beyond the $A13.7 billion previously disclosed. The report from special examiner Richard Thornburgh, a former US attorney general, also criticised WorldCom's board for letting former chief executive Bernard Ebbers leverage his company stock for more than $US1 billion in personal and business loans. That greatly exceeds the $400 million in personal loans Ebbers was already disclosed to have been granted. Thornburgh said he had significant information that WorldCom employees created false internal financial reports to conceal their fraud. His report excluded details of the accounting manipulations, it said, because the company is the subject of civil and criminal proceedings. (Source: The Age)

Enron Executive Indicted on 78 Counts

And in the other major corporate scandal, a US federal grand jury has indicted former Enron executive Andrew Fastow on 78 counts of fraud, money-laundering and conspiracy over the energy company's multi-billion dollar collapse. The US Justice Department says Fastow, the former chief financial officer, allegedly masterminded secret partnerships at Enron that allowed him and others at Enron to manipulate the company's financial results and to enrich themselves at Enron's expense. The alleged scheme, starting in early 1997, defrauded Enron, its shareholders and others, making the company appear more attractive to Wall Street investment analysts, credit rating agencies and others, according to the indictment. Each conspiracy and wire fraud charge carries a maximum of five years in prison, while the money laundering charges carry a maximum of either 10 years or 20 years in prison. (Source: ABC)