Wow, what a meeting. Thanks to everyone who came along and thanks for the tremendous support.
Here are the results:
Resolution 2 – The re-election of David Coe
For: 124,944,317 (67%)
Against: 61,406,245 (33%)
Resolution 3: The election of Steven Johnson to the board
For: 64,439,988 (30%)
Against: 148,176,728 (70%)
Resolution 4: The election of Greg Hoffman to the board
For: 50,279,728 (24%)
Against: 162,330,138 (76%)
When you consider that the existing board and related family members own 81 million shares, its an massive vote in favour of changing the current board. Excluding the board and related parties, 62% of the remaining shareholders voted against David Coe’s re-election and 49% voted in favour of my election. Both those figures are after an estimated 14 million votes being left at the Chairman’s discretion. No prizes for guessing which way those votes were directed.
It’s an extremely clear message to the board that a substantial percentage of shareholders don’t share their vision. We’ll try and assess the situation over the next couple of days and see what the reaction from the company is. We’re also hoping we can get an audio file of the meeting. If we can, we’ll post it on the site.
Thanks again for your tremendous support. It’s been a very important day for small shareholders.
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{ 18 comments… read them below or add one }
Steve/Greg
I’m sure I speak for the majority of your supporters when I say we are very grateful for the effort you guys put in looking after our interests at RHG. We all knew it was a long shot yet you guys went ahead anyway, at considerable expense, to ensure that the RHG board “are kept honest”. Your activism has helped put the spotlight on RHG and no doubt other boards that try to treat their smaller shareholders with disdain. Heaven help Kinghorn, Coe and the other members if they try to pull any acquisition stunts without full approval. I for one will be watching them like a hawk. Thanks to you guys, I feel my investment in RHG is now that bit more secure. A job well done!
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We just got a decent run on ABC’s PM program. It’s not up yet but you’ll be able to listen to it here soon:
http://www.abc.net.au/pm/
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This maybe naive thinking but if directors get so much renumeration in shares and the like, aren’t we as shareholders putting ourselves in a difficult position. The Director can end up with a massive voting stake in the company and getting them out can end up being a hell of a task. Just a thought.
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Hi Guys
Well Done ! and thanks for your efforts. You did send a message and more shareholders should take more interst in the goings on in “their” companies
Thanks again!
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If you listen to the PM story they mention that the meeting wasn’t allowed to be recorded… http://www.abc.net.au/pm/ (scroll down a bit to find the story)
The woman at the end sounded like a PR chick they hired to speak to the press. Her little speech about the board having a clear vision was a little too rehearsed.
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Steve Johnson Reply:
November 12th, 2009 at 7:17 pm
They wouldn’t let anyone else record it but they did record it themselves. Hopefully they’ll make it available but I doubt it.
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Commiserations for not getting over the line, but I think you have already made a difference, and the level of support hopefully means they will at least take our concerns seriously and address them to some degree.
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From the Chairman’s Address:
“It is possible that over the next twelve months the Government will cease to guarantee the banks and that an RMBS market will commence to emerge. This might permit the company to refinance its warehouses on acceptable terms. It might also permit the company to commence to evaluate its future options as a non-bank mortgage lender”.
Such “very clear cut” vision leads me to think that the lady at the end if the PM interview (Google search-possible mortgage broker) may have a very clear cut vision as a leading commission broker for our potential reincarnated non-bank lender.
I hope the board might also “permit the company to commence to evaluate its future options” of paying out my fully franked dividends so I can then assess if I want my capital chewed up paying commission junkies to push more mortgage debt.
Keep up the fight guys!
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I have followed this campaign and story very closely and I actually appreciate what you have done. I don’t agree with you and voted for Coe against Johnson & Hoffman, but that’s not to say i feel angst towards your campaign. It has been quite a good marketing exercise for Intelligent Investor and i’m sure that it will be profitable for you. There will be many mum and dad shareholders reading your name and subscribing to your newsletter.
The problem I now have isn’t with the campaign but the mis-use of statistics. I wasn’t going to mention it until I just saw you got to use the skewed statistics in your SMH article so I feel obligated to point out to those interested what you are doing.
I could say, quite correctly, that taking into account the probability that all of the 16% of RHG controlled by II subscribers voted for Johnson & Hoffman and against Coe, that only 3% of the remaining people eligible to vote, voted against David Coe. And only 4% of these people voted for Steven Johnson.
The real statistics are that their are two interested parties in this election- the II subscribers and the board and their associates. So:
323m shares on issue per 09 annual report
16% owned by II & subscribers = 52m shares
Board owns 81m add 14m at chairmans discretion = 95m.
So assuming (which is a pretty safe assumption) that both parties voted along party lines the results would be as follows:
COE
For – 30m 75% of votes cast by independent voters
Against – 10m 25% of votes cast by independent voters
JOHNSON
For – 13m 20%
Against – 53m 80%
These figures pale in comparison to the 50:50 split you are trying to spruik for Steven Johnson.
I wonder how many of the large funds voted for Johnson & against Coe? With those numbers I’m pretty sure it will be not many.
My opinion – good marketing exercise but don’t mis-use statistics!!!
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Steve Johnson Reply:
November 13th, 2009 at 8:10 am
Thanks John, appreciate your comments. You may be right, although the chances that all Intelligent Investor members ended up voting is fairly slim (I only had proxies for 30m of the 60m votes I received).
The reality is that there’s the existing board (25%), us (16-20%), Australian Leaders Fund (7-8%) and Cadence Capital (a bit less than 5%). That’s pretty much the 60% that voted (based on the difference between the proxies and the poll, it seemed 5% were left at the chairman’s discretion). Our point about the 50/50 is that Kinghorn’s comment that ‘90% of the non-board shareholders are happy with the strategy’ is an out and out lie. Yesterday’s vote showed that, combined, we’re pretty close to half the non-board shares. Surely that is a block worth having a conversation with?
As I said to Greg after the meeting, the reality is that we’re not a majority and we have to live with whatever the majority wants. But we’re a lot larger minority than Kinghorn was giving us credit for.
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Thank you Steve and Greg. Your campaign was still a success in my eyes. Through your pressure, the board have now committed to a shareholder vote on any future business ventures, which is much clearer than a year or two ago. Small shareholders are a more powerful force when we band together though websites like this. Well done.
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Thank you both for putting yourselves forward to take a positive step forward for our company. Whilst disappointed with outcome I am grateful that you both took the action you did.
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Hi guys,
I attended the meeting as well, and certainly wasn’t impressed by Kinghorn and Coe (pun intended!!!). Fabulous job Steve & Greg, I realise that its cost you considerably in terms of time and $$.
I did wonder if the lady shareholder who got up and spoke so glowingly about the board was a plant. How she can be happy with a 70% (paper) loss of capital, and still give these guys her vote astounds me. Obviously, not a very intelligent investor!
My concern is that the RHG board will continue on its merry little way, doing what it wants, and small shareholders will get shafted again. Hopefully, other shareholders will take note of the votes yesterday.
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I look forward to your “where to from here”. As far as I can see, there is not much point holding on to these shares for the next year, rather keep my eye on it and look to buy late 2010 when they may make a decision. There really is no clear vision – as my wife keeps telling me, a May or Might is not clear vision. and in response to John D, I do not believe this was done as a marketing exercise, rather as a decision that enough is enough, it is time to move forward and expand or dividend. Too many possibilities and to commence evaluating means they have not started. Thank you for taking this action, your time, finance and effort. and sorry that it was unsuccessful.
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A good effort and this has brought the spotlight to bear on Kinghorn and peers. His words and therefore, his reputation and legacy, are now on the public record to be reviewed in 2 years time.
This outcome, alongisde MMC Contrarian, illustrates why it is no simple matter to profit from buying unloved shares selling at a persistent discount to their net tangible assets, even if said assets is virtually all cash. There is always a valid reason for said discount in every business I have investigated and the one that is hardest to resolve is “hostile/arrogant management”. The likes of such masters as Ron Brierley, Warren Buffett and Benjamin Graham had to commit considerable resources and personal influence to release this value.
What Greg & Steven have put in, though highly commendable, barely scratches the surface of what it takes to essentially “break open the piggy bank”.
On the plus side, RHG is pretty much an owner-manager business now so the biggest winners/losers of Kinghorn’s strategy will be Kinghorn’s circle (for now, until they surreptiously sell out).
I imagine that there are two strategies for current and future RHG shareholders:
1) Sell out immediately as the price will probably decline following the optimistic run-up in price pre-AGM
2) Buy back in when the top 20 largest RHG shareholders get complacent and start offloading. Build up a larger stake quietly and prepare for the next opportunity to spill the board.
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There are a bunch of questions on Steven Mayne’s website:
http://www.maynereport.com/articles/2009/11/13-1458-5259.html
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Gentlemen,
Firstly thank you for all your efforts and expenditure (time and money) on the action it was greatly appreciated and should be applauded. Secondly I think while you failed in making the board, at least we have some information about the company direction enabling investors to make a more informed investment decision which is your credit alone and to be honest if you were elected could you honestly see yourself working well with the current directors? Thirdly I have just read your “Where we stand after standing for the RHG board” and you should be congratulated for taking such a rational approach (and advising shareholders that value still remains within the business, despite some potential concerns) to something that no doubt has become an emotional issue for both Steve and Greg. Best wishes and good luck for the future.
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Can’t wait for pay for all that “evaluating of the options” with my dividends…..
Thanks guys for showing us that we (small retail investors) can still be heard if we band together.
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Reasonable Boards would consider that returning at least some of the funds to shareholders by way of a fully franked dividend is in the best interests of the majority of the shareholders. The delay in contemplating payment until 2011 looks to me to favour a small number of shareholders, or perhaps only one. Isn’t that when the last of the CEO’s options vest?
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Another share buyback.
I smell a plan.
Mmm… Why not get rid of those whiners by buying back their shares while they are so cheap Sir, then we can concentrate stock in our hands even more.
We don’t want any more troublemakers like those Intelligent Investor guys now do we.
Excellent plan Smithers! Make it so!
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