Westfield EGM (2004)

Details
Company: Westfield Holdings Limited
Type: Extraordinary General Meeting
Date: 25 June 2004
Chairman: Frank Lowy (executive)
CEO: Stephen Lowy and Peter Lowy

Pre-AGM
This was the meeting to merge the three Westfield companies (Westfield Holdings, Westfield Trust and Westfield America Trust) into one "stapled security". It was essentially reversing what had been done over a decade earlier when Westfield was split up into these 3 companies for tax reasons, which were now redundant because of the dividend imputation system.

As usual with these sorts of meetings, I got a small phonebook size report to wade through. I had quite a lot of difficulty understanding this report, as would I assume most shareholders. As mentioned in my previous Westfield report, Frank Lowy is quite a dominating chairman, I personally still don't have the confidence to stand up and have a long argument with him on the floor of the meeting. So I came up with the only question that I knew I could back up almost 100%, however it was also a question that I expected to get a "yes" answer to (i.e. I was just checking someting which for whatever reason, was omited from the report).

Questions and Voting
Me: I didn't see this in the report so I was hoping you could clarify this for me. Will the audit committee of the newly formed company be comprised entirely of non-executive directors?

Frank Lowy: Yes, I think so. (One of the other directors leans over to speak with him). I've just been told that I was misinformed. The audit committee will have one executive director, but the rest are non-executive directors.

WHAT??!! Now I admit that after hearing that all I did was thank him for his question and sat down. Not because I accepted it, but because I did not expect it. Like I said before, I asked that question expecting an unequivocal yes response. To not have an audit committee comprised entirely of non-executive directors goes against virtually all the academic research for an effective audit committee. If you need to ask the management team something, call them in and ask them, but don't put one of them on the committee. I repeat, do not put one of them on the committee. You cannot expect the other members of the committee to freely express themselves if there is an executive there.

That was completely unexpected to me. Couple that with Frank Lowy's intimidating personality and I was unwilling to get up and ask a follow up question.

It's definitely the last time I'm asking a textbook question without considering that there will not be a textbook answer. If I had my time again I would have kept up my questioning on him. Frank Lowy would have disagreed, and he would have his way. But that is a blatant disregard for what should be obvious corporate practice. You don't put executives on the audit committee!!

Voting: For the merger. It was a good proposal. Some people who purchased their shares prior to 1986 would lose CGT-free status (including Frank Lowy himself), but as that didn't include me I wasn't really too concerned.

Post-AGM
Going into the meeting I was stopped by one of the security guards who asked me what my business here was. I said that I was a shareholder and was coming to vote my shares. He reluctantly let me in. Haven't you ever seen a shareholder who wears a hooded jumper with jeans, sneakers and a big backpack? :)