Two weeks ago, Frank Lowy spat the dummy when it looked like he wouldn’t get the support he needed to split the Westfield empire. Rather than accept that his wishes would be denied, the board postponed and rescheduled the meeting. They spent the next two weeks on the phones encouraging other shareholders to accept, and perhaps encouraging the more compliant shareholders to buy more stock.
The Westfield demerger meeting went ahead today, and this time a not-so-cranky Franky got his way.
One-sidedly, the ability to postpone the meeting sits with the board, who in this case were desperate for an ‘Aye’ vote to please their paymaster. Anyone else see the gross unfairness in all this?
Cast your mind back to last year’s Federal election. Labor were the incumbents. The polls open and everyone who wishes to vote casts their say. Counting begins in the early evening. Later that night, the counts show that Labor will lose.
But, rather than accept defeat, they abruptly postpone the election for two weeks, to see if they can smoke out more voters or change anyone’s mind. Of course, if they were leading in the original election, there would be no postponement.
If such behaviour were allowed, it would be a persistent and perfectly rational response for the incumbent to do so. It's free optionality to the incumbent – heads I win, tails let's toss again. Why not try your luck? But it’s hardly democracy.
Frank won today, shareholder democracy lost.
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Forager Funds is a boutique fund manager specialising in a value investing approach. We offer an ASX listed Australian Shares Fund as well as an International Shares Fund both aimed at delivering returns for long term investors.